Healthcare Reform Quick View 2017

Healthcare Reform Proposal Overview

 

Developing Legislation Relating to:

Current Healthcare Effects on the Federal Government

 

This report will recommend that Medicare be revised to remain a four-part system; however,   but, the definitions of all four parts will be dramatically changed.

 

Medicare Part A- Under Part A the trust fund will still be active. The proposed Medicare reform rights this wrong by completely restarting and renaming the Health Insurance (HI) Trust Fund by putting in the surplus of Part A revenues into this fund, a surplus of 123 billion in the first year or 14 percent of spending. This reform would allow a reduction of projected 205.3 billion dollars of federal debt. Under the new Medicare Part A, beneficiaries will include elderly (over the age of 65), the legally disabled, and children under the age of 18. Elderly and disabled beneficiaries under the plan will be covered with a deductible of $6,000 a year and 20 percent co-pay. Under the plan each elderly or disabled beneficiary will pay $1200 a year or $100 a month as their subsidized premium; premium rates would only go up with estimated inflation. Children covered under the plan would have a deductible of $2,500 a year   2,500 dollars a year with no co-pay. Children under Medicare will be supported by their parent/s, or legal guardian with a premium of $1200 dollars a year or $100 dollars a month. Those children under the foster care system will have the premium waived.

 

To pay for this growth, Medicare Part A will have three sources of revenue: premiums by the elderly and parents, the payroll tax which will remain at a constant rate of 5.0 percent (or 2.5% of employees’ wages paid by employees and employers separately), and a healthcare income tax of 5 percent on individuals making over $100,000 in annual income.

 

Medicare Part B- Under the reform proposal, the current part B will be moved into Part A, while the modified Part B is used to insure workers of affordable health insurance if they choose it. Part B will be an optional health insurance program designed to cover everyone equally with equal premiums. All beneficiaries will have a $6,000 yearly deductible with 20% co-pay. The estimated premium would be below $100 a month for each enrollee thus providing affordable health insurance for millions of hard workers and their spouses. Part B will also completely pay for itself through the worker premiums.

 

Medicare Part C- Will allow elderly Medicare beneficiaries the option to choose private insurance to cover Part A and subsidize it from Part A to Part C. Medicare part A will subsidize 65 to 85 percent of the beneficiaries new private insurance Part A plan. The amount of money per beneficiary individuals save will then go to allow a subsidized Part C plan, a subsidy of 75 percent for each private plan will then be provided for the part C plan. Previous deductibles allowed for Part C will be financed by beneficiaries who choose the extra insurance through premiums set to cover their chosen supplement plan therefore allowing Part C to be completely self-sufficient.

 

Medicare Part D- Will change Part D into two parts; mandatory and supplementary prescription drug insurance. Mandatory- requires all individuals who choose Part A to pay the premium set equally among all the beneficiaries; Supplementary- allows anyone who chooses Part B or Part C to choose if they want to be in Part D. Part D is financed like Parts B and C with premiums set equally among beneficiaries; Part D financing is different because its two parts are set at different premium rates needed to cover each one separately.

 

Program Addendums

 

Preventative Voucher Program– All children in the United States will be given a monthly subsidy of $100 or either preventative or dental needs payable to the child’s. These funds must be spent on preventative healthcare needs by parents for the child within six months of receiving the fund, or they forfeit those funds. This guarantees preventative care for the child regardless of the parent’s ability to pay.

 

Maternity Care Program– Provides funding for every birth by a citizen of the United States. This program focuses on guaranteeing that all parents are on a financially stable footing with no healthcare debts towards their children to be able to provide future costs of healthcare for their children.

 

Infant Care Account Program– When each child is born, he is given a Medicare card with an HSA of $6,000 for the account. This will provide the necessary funds for healthcare costs well into adult life. Medicare Part A will cover all previous provisions except for the deductibles, which this preventative care proposal provides.

 

Mother and Child Care Program– Provides vouchers to the mother for regular check-ups for pre-natal care. For high-risk children   the mother is given a monthly voucher of $100 for checkups or medical care, while the low-risk mother is given a three- time $100 voucher. This voucher will be payable to the mother’s HSA account.

 

Worker Adult Care– Provides preventative care for workers and adults aged 18 to 65. Worker Care is a sole program of a preventative voucher; high-risk individuals will be given a monthly subsidy of $100 for either a doctor’s visit or dental visit, while low-risk individuals will be given a subsidy every three months. Like previous vouchers, this voucher will be payable to the HSA of each individual who makes $50,000 or less.

 

Elder Care Program– Sole provision of a preventative voucher built identical to Workers Care with high-risk individuals given a $100 a month voucher, and low-risk individuals given a $100 voucher every three months. Like the other preventative voucher programs, this subsidy will be distributed into each individual’s HSA and must be spent within six months or be forfeited to the federal government. This allows Medicare beneficiaries’ regular preventative check-ups with limited out-of-pocket costs, guaranteeing affordable preventive care and keeping costs on the market as a whole to a limited effect.

 

Disabled Care Program– Provides care for those certified as legally disabled. Disabled Care is built like the previous two provisions with a single program outlay for a prevention voucher covering all disabled individuals. Unlike previous federal disability programs, disabled care has no waiting time period; if the individual is legally declared disabled, the individual then qualifies for a voucher of $100 a month for preventative check-ups or care. Like the previous provisions, this must be used within six months of receipt.

 

Insurance Subsidy and Voucher Program– This program allows all individuals with an income of less than $50,000 a year to be provided a $150 a month voucher for receiving healthcare services or their personal Health Savings Account. The objective of this subsidy is to guarantee health insurance to all individuals under the amount where health insurance or healthcare costs would be more than 10 percent of income in a year and equally distributes healthcare costs among all groups and individuals. These provisions in Prevention Care allow equal affordability and sustainability in the Healthcare sector while cutting costs across the board through prevention savings, high deductibles, and affordable insurance coverage.

 

Medifund Program– Provides a last resort for those of high risk and unable to afford their healthcare deductible. Medifund sets aside a certain authorized appropriation a year to be used with discretion, depending on the individual status or state requirements for the fund to be administered. The fund sets aside a predetermined amount to cover individual deductibles between the catastrophic care amount of $6,000 and the receivers’ ability to pay, not exceeding $4,800 subsidy amount in a year. Medifund sets an appropriation aside for high-risk pools. Individuals who are already sick and cannot afford healthcare (individuals under $50,000) and will be covered by this separate fund. A low portion of society will be cared for by this fund, so a set appropriation of $5 billion a year will be appropriated   Individuals who choose this fund will pay a premium equal to twice of Medicare for their status. This premium will go to the financial well-being of Medifund. Individuals who can provide documentation that lack of insurance was only because of illness will be waived the premium. This fund is centered on guaranteeing affordable healthcare coverage with no long-term debt consequences for those unable to pay. Those who qualify are children whose family makes under $50,000 a year and whose HSA has been emptied under no fault of their own and whose parents cannot provide sufficient payment. The other categories that will qualify are these: disabled individuals whose HSA has been emptied because of their inability to provide for their healthcare; individuals between the ages of 18 and 65 under the income level who, due to their low income, cannot provide sustainable funds; and the elderly who have an authorization set aside for those of limited income unable to provide their deductible amount.. Medifund provides the deductible paid after the HSA is emptied. Medifund is available for these individuals whose healthcare costs exceed 5 percent of their yearly income. Medifund will not cover the five percent and below. Medifund sets a separate appropriation aside for each group type.

 

Business Related Addendums

 

Refundable Employer Health Insurance Tax Credit– Allows individuals who choose the option of employment- based health insurance the option of relinquishing this amount to the business for a yearly tax credit equal to the voucher per individual covered. If the employee covered makes more than the average wage of the previous year in his/her field, then the employer gets a further $1,200 tax credit for the employee and spouse covered under the employee’s plan. All individuals covered by employment-based health insurance, regardless of income status, are open to this tax credit as long as those individuals meet the previously stated requirement of the previous average wage in his/her field of employment.

 

Employer Child Insurance Tax Deduction– Deduction that will be set for all employers who provide their employees’ children with Medicare Part A premium coverage with specific requirements that out-of-pocket costs cannot exceed $500 annually per child and that the employee pays no further premiums on the child’s health insurance. A cap of 2,500 dollars per child will be allowed for the deduction.

 

Health Savings Account Employer Contribution Deduction- Tax deduction will be allowed to employers who choose to contribute to the financial well-being of their employees’ and spouses’ healthcare accounts. This deduction can be up to the yearly amount of $6,000 or equal to the employee’s Medicare health insurance deductible, whichever is less.

 

Proposals

  • Tax on the Uninsured is not perceived as a mandate but simply a tax on individuals who do not use the vouchers given to them for this purpose. This tax is equal to the voucher given to them and the months not insured using this voucher.
  • Tax on employers for any employees uninsured is not a mandate but simply a refund to the government of the credit that could have been awarded to the private business. This tax equals the amount of the tax credit afforded to the business that year that could have covered the uninsured individual.
  • Tax on low deductible insurance plans is a tax on individuals spending more on healthcare because of low deductibles. This will be a tax of $%100 a month on all health plans with a deductible of $1,000 or less.
  • Grant to prescription and pharmaceutical drug companies to invest in research and development of further drugs. This grant will be equal to 50 percent of research and development funds in the year 2016 and will be further adjusted to equal GDP growth. This grant will be provided to cut risk costs for business and will be made available yearly to R&D companies with only a few simple guidelines: once a drug is placed on the market, it cannot exceed original price plus inflation; drug costs across the board cannot grow at a higher rate than inflation; and if the drug or new experimental treatment is placed on the market, it must be made available at accessible rates. In return, this grant will allow funds to be accessible to the R&D developers with no strings attached to cover any research deemed necessary. 

 

With the reform and birth of these programs the current programs of the tax credits for businesses, the Affordable Care Act (ACA) and Medicaid become obsolete and their purpose is no longer needed and be counted as a surplus on the federal budget. The overview of total spending, balance, and federal balance after healthcare reform will be now stated with the programs ACA, Medicaid, and Tax credits no longer in the projected healthcare costs. If healthcare no longer appeared anywhere on the federal budget (except for military and veteran healthcare), the estimated savings would be $891.9 billion in 2016, giving a projected balance for that year at a surplus of $352.9 billion.

 

 

References

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Cohen, S. B., & Uberoi, N. (August 2013). Differentials in the Concentration in the Level of Health Expenditures across Population Subgroups in the U.S., 2010. Medical Expenditure Panel Survey.

Congressional Budget Office. (2015, March). Social Security Deisability Insurance — CBO’s March 2015 Baseline. Retrieved from CBO.gov: http://www.cbo.gov

Congressional Budget Office. (April 2014). Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act. Washington DC: CBO.

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Ferrara, P. (2011). America’s Tickin Bankruptcy Bomb. New York, New York: HarperCollins.

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Henderson, J. W. (2009). Health Economics & Policy Fourth Edition. Mason, OH: South-Wastern Cengage Learning.

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Kaiser Family Foundation. (2015). Employer Health Benefits. Health Research and Educational Trust.

Keating, R. J. (February 2009). Health Care Policy Cost Index: Raning the States According to Policies Affecting the Cost of Health Insurance. Oaton, VA: Small Business & Entrepreneurship Council.

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Livermore, G. (March 2009). Costs and Benefits of Eliminating the Medicare Waiting Period for SSDI Beneficiaries. Center for Studying Disability Policy.

Medicare Payment Advisory Commission. (June 2015). Healthcare Spending and the Medicare Program. Medpac.

National Center for Health Statistics. (2015). Health, United States, 2014: with Special Feature on Adults Aged 55-64. Hyattsville, MD: Centers for Disease Control and Prevention.

Santerre, R. E., & Stephen P. Neun. (2007). Health Economics: Theories, Insights, and Industry Studies Fourth Edition. Mason, OH: Thomson Higher Education.

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(July 2014). State Health Care Spending on Medicaid. Pew Charitable Trusts and MacArthur Foundation.

The Board of Trustees, Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. (2015). 2015 Annual Report of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Washington DC: CMS.

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Healthcare Reform Proposal for 2017

Healthcare Reform Proposal Overview

                                                              Written by: Edward M Horner

                                                              Co-authors: Samuel Bailey

Current Healthcare Effects on the Federal Government

The Federal government has four primary programs for the delivery of healthcare services to the elderly, disabled, uninsured, poor, and children; these are Medicare, Medicaid, CHIP, and the Affordable Care Act or ACA. Medicare has four parts that provide health coverage to the elderly population. Enacted in 1965 Medicare at its creation helped cut costs of out-of-pocket fees and provide an affordable efficient system. Since then it has been reformed many times to increase affordability to healthcare for seniors, and became the most efficient healthcare system in the world. Yet with all these increases or, (in the case of the ACA) dramatic cuts, Medicare has now failed. Failure of a federal program should be stated as beneficiaries having the same outcome as before the program was first enacted and that is now the case in 2017.

Medicare has a massive effect on the federal budget with 18 percent, the second largest outlay in the budget. The federal deficit currently stands at a loss of $559 billion in 2017, Medicare with all offsetting receipts attributes to 59 percent of this. By the end of the projection period or 2027 realistic projections have Medicare contributing $706 billion to the national deficit, which is projected to be $1,408 billion; Medicare will then contribute 50 percent of the deficit.

The deficit caused by Medicare equals 8.3 percent of overall spending. According to the Congressional Budget Office (CBO), a 5.5 percent reduction would be needed across all federal spending to keep debt at its current level. Changing Medicare to be a solvent program alone allows the federal government in one move to put America back on an affordable and sustainable path for federal debt and deficits.

Medicare Proposal

This report will recommend that Medicare be revised to remain a four-part system; however, the definitions of all four parts will be dramatically changed. Under the new Medicare Part A, beneficiaries will include elderly (over the age of 65), the legally disabled, and children under the age of 18. Elderly and disabled beneficiaries under the plan will be covered with a deductible of $6,000 a year and a 20 percent co-pay. Under the plan each elderly or disabled beneficiary will pay $1200 a year or $100 a month as their subsidized premium; premium rates would only go up with estimated inflation. Children covered under the plan would have a deductible of $2,500 a year with no co-pay. Children under Medicare will be supported by their parent/s, or legal guardian with a premium of $1200 a year or $100 a month. Those children under the foster care system will have the premium waived.

Currently, Medicare Part A is funded by the Payroll tax and small premiums paid by the elderly. With the increase of beneficiaries (due to the increase of the aging population and the addition of children) and the expansion of Part A’s role the cost of Medicare Part A will be increased. To pay for this growth, Medicare Part A will have three sources of revenue: premiums by the elderly and parents, the payroll tax which will remain at a constant rate of 5.0 percent (or 2.5% of employees’ wages paid by employees and employers separately), and a healthcare income tax of 5 percent on individuals making over $100,000 in annual income. This is the most effective way of charging each individual an affordable rate for children and elderly healthcare while making sure Medicare is solvent well into the next century.

The only regulation in the entire Healthcare proposal will be the Part A sustainable growth rate formula (SGR). The only way to keep public healthcare costs sustainable is to keep them leveled at the same rate of Gross Domestic Product (GDP) which the SGR will do. The SGR will be set equal to the entire economic growth rate and only be applicable to Medicare Part A costs and beneficiaries, allowing Medicare to be sustainable into the next century.

These reforms allow the continuation of the Medicare Trust Fund on an actual reserve standing. According to the Trustee Report for Medicare, the HI Trust fund has a reported $199 billion in the reserve, yet even the Trustee Report states that these are just I.O.U.s from other agencies of the government. In essence, this is a robbery of the Medicare Trust Fund vastly cutting out the foundation of Medicare and increasing the likelihood of a quicker collapse of Medicare. If reform is enacted, then a write-off of $199 billion in federal debt can occur. Medicare Trust Fund will therefore be guarded by a “lock-box” clause, which guarantees funds for Medicare Part A only.

Part B, as described by Congressional Research Service, “covers a broad range of medical services, including physician care, laboratory services, durable medical equipment, and outpatient hospital services. Enrollment in Part B is optional; however, most beneficiaries with Part A also enroll in Part B.” Under the reform proposal, the current part B will be moved into Part A, while the modified Part B is used to insure workers of affordable health insurance if they CHOOSE it. Part B will be an optional health insurance program designed to cover everyone equally with equal premiums. All beneficiaries will have a $6,000 yearly deductible with 20% co-pay. The intent of Medicare Part B is to allow an opportunity for every individual who wishes to be on an efficient public insurance program to have that opportunity. The estimated premium would be below $100 a month for each enrollee thus providing affordable health insurance for millions of hard workers and their spouses. Part B will also completely pay for itself through the worker premiums and any revenue that is a surplus will be distributed into the HI trust fund.

Part C or Medicare Advantage (or MA), as described by the Congressional Research Service, “is a private plan option for beneficiaries that covers all Parts A and B services, except hospice.” Individuals choosing to enroll in Part C must be eligible for Part A and also must enroll in Part B.” Part C will be revised to allow individuals who are enrolled in either Part A or Part B to have the option of either private or public healthcare options to cover the difference in deductibles or the co-pay. The previous deductibles allowed for Part C will be financed by beneficiaries who choose the extra insurance through premiums set to cover their chosen supplement plan therefore allowing Part C to be completely self-sufficient and any revenue that is a surplus will be distributed into the HI trust fund

Part C will also allow elderly Medicare beneficiaries the option to choose private insurance to cover Part A and subsidize it from Part A to Part C. Medicare part A will subsidize 65 to 85 percent of the beneficiaries new private insurance Part A plan. The amount of money per beneficiary individuals save will then go to allow a subsidized Part C plan, a subsidy of 75 percent for each private plan will then be provided for the part C plan.

Private Part A plans under Medicare Advantage will be judged into twenty brackets each with five percent of total plans. Each bracket will be based on one percentage point of the rebate given. The lowest bracket holds the least competitive plans (based on availability, quality, and out of pocket costs) with the highest bracket providing the highest quality plans. Each bracket will be given a higher percentage point of rebate given to the insurer, the higher the quality of the plan the higher the percentage point given. This promotes quality of care and competition among private insurers for better rebates.

Each insurance provider must provide at least one insurance plan for part A and Part C, separately, for each county of operation. Each Part C plan submitted will only be judged on the premise that it cannot raise any premiums. The amount saved each year by Part C from Part A will then be used for further rebates for Part C plans. Each dollar will be distributed with higher quality plans getting 20 percent of the rebate dollar and the lowest plans receiving 2.5 percent of the rebate dollar. This allows Part C to be entirely revenue neutral and provide quality care for beneficiaries.

Currently, Part D, as described by the Congressional Research Service “covers outpatient prescription drug benefits.” Part D reform proposal changes Part D into providing a supplementary prevention and drug program for all medical costs under the $6,000 a year deductible for Medicare beneficiaries under Part A with a cap of $1200 a year spending and a 20 percent co-pay. This program will be supplemented by the HI trust fund and a premium of $600 a year for Part A beneficiaries. Those under Part B who would like to be under Part D would be allowed to buy into the program at the rate of total Part B beneficiaries Part D coverage expenses divided equally among beneficiaries.

Medicare reform allows there to be a framework in place to hold up the public and private insurance markets and allow affordable competition for the consumer. Medicare reform allows healthcare not to affect the federal budget negatively but to be a completely offsetting receipt program. Under this proposal the government, from the framework of the new Medicare, can lay a support plan for the rest of society to be insured at a sustainable rate for the federal budget.

Medicaid and Preventative Healthcare Reform

With Medicare Reform leading to the obsoleteness of current Medicaid and CHIP, the federal budget would have a surplus of funds to be reallocated to a more calculated program. Medicare reform also puts a framework in place to allow either a public or private option to encompass it without changing the core. The option would allow for a more mobile and fluid policy to fit the times and needs of the people. Currently, the most pressing needs of the people is the purpose of proposing a preventative healthcare reform proposal in addition to, yet not affecting, the Medicare proposal.

The preventative proposal is designed to hang on the framework of public and private markets that the New Medicare allows and affects four primary groups: children, workers, the elderly, and the disabled. Individuals or anyone in a household with an income under $50,000 (except for the disabled, for everyone disabled qualifies) qualifies for the preventative care programs. Preventative care will be financed through general revenues and state matching funds, designed to allow the biggest bang for the smallest federal buck.

The federal preventative and supplementary program is designed exclusively on making individual choices affordable and accessible to all individuals. The cornerstone of this proposed preventative care system is the individual health savings accounts. HSA’s should be further deregulated to make them family-friendly and sustainable to cover future healthcare growth. Each account allows individuals the key to securing their future healthcare choices. This program is based on the HSA and a cash subsidy that directly impacts these accounts.

Childcare is the first provision under the proposal aimed at the objectives of guaranteeing quality care to all children, providing all children regular healthcare needs, and providing a financial safety net for their young lives. The first program under Childcare is the Preventative Voucher Program. The aim is to fulfill the need of providing children with regular healthcare needs, allowing all children monthly funds for those needs. All children in the United States will be given a yearly subsidy of $1200 or either preventative or dental needs payable to the child’s HSA. This guarantees preventative care for the child regardless of the parent’s ability to pay.

The second program under Childcare is Maternity Care, which provides funding for every birth by a citizen of the United States. This provides the healthcare deductible of up to $6,000 for all healthcare needs for the delivery of the child. Medicare Part A will cover all previous provisions except for the deductibles, which this preventative care proposal provides. This program focuses on guaranteeing that all parents are on a financially stable footing with no healthcare debts towards their children to be able to provide future costs of healthcare for their children. The next program aims to add on that financial stability by providing a Health Savings Account (HSA) for each child born in the US through the program Infant Care Account. When each child is born, he is given a Medicare card with an HSA of $6,000 for the account. This will provide the necessary funds for healthcare costs well into adult life.

The last program under Childcare also focuses on the birth and quality of care for the birth of a child. Called Mother and Child Care, it provides vouchers to the mother for regular check-ups for pre-natal care. For this the mother is given a monthly voucher of $100 for checkups or medical care. This voucher will be payable to the mother’s HSA account. Childcare is the largest expenditure in the Preventative Care program, but it allows each child from birth to be set on a financially stable and self-sustainable path well into adulthood.

The second provision under Preventative Care is called Worker (Adult) Care, with the sole objective of providing preventative care for workers and adults aged 18 to 65. Worker Care is a sole program of a preventative voucher; high-risk individuals will be given a monthly subsidy of $100 for either a doctor’s visit or dental visit, while low-risk individuals will be given a subsidy every three months. Like previous vouchers, this voucher will be payable to the HSA of each individual who makes $50,000 or less. Workers Care allows all workers making under $50,000 a year the availability of preventative and dental care, which will reduce overall costs since there is regular preventative care.

The third provision under Preventative Care is Elder Care for everyone over the age of 65. Elder Care also has a sole provision of a preventative voucher built identical to Workers Care with high-risk individuals given a $100 a month voucher, and low-risk individuals given a $100 voucher every three months. Like the other preventative voucher programs, this subsidy will be distributed into each individual’s HSA and must be spent within six months or be forfeited to the federal government. This allows Medicare beneficiaries’ regular preventative check-ups with limited out-of-pocket costs, guaranteeing affordable preventive care and keeping costs on the market as a whole to a limited effect.

The fourth part of the Preventative Care is Disabled Care for everyone certified as legally disabled. Disabled Care is built like the previous two provisions with a single program outlay for a prevention voucher covering all disabled individuals. Unlike previous federal disability programs, disabled care has no waiting time period; if the individual is legally declared disabled, the individual then qualifies for a voucher of $100 a month for preventative check-ups or care. Like the previous provisions, this must be used within six months of receiving.

The last provision in Prevention Care is the Insurance Subsidy and Voucher Program. This program allows all individuals with an income of less than $50,000 a year to be provided a $150 a month, or $1800 year, voucher for receiving healthcare services or their personal Health Savings Account. The objective of this subsidy is to guarantee health insurance to all individuals under the amount where health insurance or healthcare costs would be more than 10 percent of income in a year and equally distributes healthcare costs among all groups and individuals. These provisions in Prevention Care allow equal affordability and sustainability in the Healthcare sector while cutting costs across the board through prevention savings, high deductibles, and affordable insurance coverage.

Medicaid

With the changing of the entire fabric of the American healthcare system presented in this proposal, Medicaid beneficiaries (before Obamacare Expansion) must be given a vehicle of providing suitable healthcare needs inside this fabric of future reform. Therefore this proposal provides a Medicaid reform proposal allowing those who wish to remain on Medicaid be a further public option program provided by individual states.

Medicaid applicable individuals would change to be those under the Federal Poverty Level (FPL) of 133 percent (excluding 25 to 65 unless pregnant) or disabled. These individuals would have the option to keep their preventative care program or forfeit those benefits and CHOOSE their state Medicaid health insurance program. Current Medicaid beneficiaries will be automatically enrolled until otherwise notified. Each beneficiary would then be enrolled in the suitable part of Medicare that suits their eligibility. While each state would THEN be given a block grant to cover the beneficiary costs. The block grant amount provided to the state would be the beneficiaries’ deductible (up to providing only a $600 deductible per beneficiary) and premium for enrollment. The state would then have discretion to provide the best services to the enrollee for competition of the grant money.

 

 

Medifund

Medifund is the last program to be formed under the overall recommendation for Healthcare Reform. Medifund is a tax credit provided to any beneficiary under Medicare, regardless of income, to guarantee the citizens of the United States will not pay more than 10 percent of beneficiaries’ income on healthcare. The only requirement is that the beneficiary must be insured by Medicare for the tax credit to be applicable for any period of time.

This fund is centered on guaranteeing affordable healthcare coverage with no long-term debt consequences for those unable to pay. The tax credit will be added after all healthcare costs for the year and subsidies are formulated together and if the remaining balance is over 10 percent then that amount will be credited on the tax return of the beneficiary. This guarantees affordable equal access to all Americans.

Business Related Reform

This proposal also lays out a new opportunity for private businesses to invest in the health and financial stability of their employees. Current law allows businesses to deduct the expenses made towards employer health insurance premiums yet severely restricts the employee’s ability to transfer the insurance plan. This system was designed in 1951, when employees were more likely to keep their job for life. The new proposal will modernize the system to allow employees to choose or keep their insurance provider and place their vouchers or credits where needed.

This proposal repeals the current tax deductions in favor of a Refundable Employer Health Insurance Tax Credit, Employer Child Health Insurance Tax Deduction, and the primary HSA Employer Contribution Deduction. The proposed system allows workers making under $50,000 a year a voucher of $150 a month, or $1800 a year. The Refundable Employer Health Insurance Tax Credit allows individuals who choose the option of employment- based health insurance the option of relinquishing this amount to the business for a yearly tax credit equal to the voucher per individual covered. If the employee covered makes more than the average wage of the previous year in his/her field, then the employer gets a further $1,200 tax credit for the employee and spouse covered under the employee’s plan. All individuals covered by employment-based health insurance, regardless of income status, are open to this tax credit as long as those individuals meet the previously stated requirement of the previous average wage in his/her field of employment.

The Employer Child Insurance Tax Deduction is a tax deduction that will be set for all employers who provide their employees’ children with Medicare Part A premium coverage with specific requirements that out-of-pocket costs cannot be placed on the child and that the employee pays no further premiums on the child’s health insurance. A cap of $2,500 per child will be allowed for the deduction and will only go up the equal amount of the Medicare Part A premium increase.

The cornerstone of the new tax code for business relating to healthcare will be the Health Savings Account Employer Contribution Deduction. This tax deduction will be allowed to employers who choose to contribute to the financial well-being of their employees’ and spouses’ healthcare accounts. This deduction can be up to the yearly amount of $6,000 or equal to the employee’s Medicare health insurance deductible, whichever is less.

Other

The last points towards reform are separate proposals to stabilize the health insurance market while limiting government intervention and providing a check system against individual and business waste. First is the tax on employers for any employee’s uninsured is not a mandate but simply a refund to the government of the credit that could have been awarded to the private business. This tax equals the amount of the tax credit afforded to the business that year that could have covered the uninsured individual. Second, the tax on low deductible insurance plans is a tax on individuals spending more on healthcare because of their low deductibles. This will be a tax of $100 a month on all health plans with a deductible of $1,000 or less.

For the objective of lowering prescription drug prices, a proposal is offered for a grant to prescription and pharmaceutical drug companies to invest in research and development of further drugs. This grant will be equal to 50 percent of research and development funds in the year 2016 and will be further adjusted to equal GDP growth. This grant will be provided to cut risk costs for business and will be made available yearly to R&D companies with only a few simple guidelines: once a drug is placed on the market, it cannot exceed original price plus inflation; drug costs across the board cannot grow at a higher rate than inflation; and if the drug or new experimental treatment is placed on the market, it must be made available at accessible rates. In return, this grant will allow funds to be accessible to the R&D developers with no strings attached to cover any research deemed necessary. The only requirement is that companies offer proof that they operate in efficiency greater or equal to 2016 levels.

 

Financial Overview of Healthcare Proposal

The financial overview of the healthcare proposal gives financial estimates from 2017 to 2027 of the costs in all new programs proposed, and this section estimates the costs of new programs calculated next to current projections. This provides an overview of the financial benefits the government is giving and receiving. This paper provides financial figures at the most expensive path for the federal government to provide the best estimate at controlling healthcare costs.

Currently, Medicare as a whole in 2017 will cost an estimated $705 billion while the proposed Medicare will cost an estimated $1,068 billion, an increase in spending of 51 percent. Revenue for current Medicare is distributed between offsetting receipts (like the payroll tax) and general revenues, offsetting revenues attribute $374 billion in revenue while the other $331 billion come from burdening the general revenue. Proposed Medicare will solely be distributed among offsetting receipts bringing in $1,138 billion, an increase of revenue of 204 percent, making Medicare self-sufficient while not affecting general revenues. Medicare spending and revenue do go up but mainly in offsetting premiums that are cheaper and more affordable to the average individual, saving income that can go into different consumer avenues.

The Current Medicare is estimated to cost from 2017 to 2027 a total of 11,034 billion in spending or 20 percent of total spending for that period. Proposed Medicare will spend an estimated 14,272 billion over the same period an estimated total spending of 27 percent. Revenue income projected for the current Medicare comes to a sum of $5,743 billion or 12 percent of revenues, causing a deficit of $5,291 billion over the period from 2017-2027. The current Medicare contributes to 53 percent of all projected debt during that period. The proposed Medicare Plan contributes $14,848 in revenue, a total 26 percent of revenue. Proposed Medicare plan, therefore, gives a surplus of $576 billion over that entire period, not contributing to one cent of federal debt.

The first part of Medicare part A currently covers roughly 73 percent of the entire Medicare budget. The projected Part A will dramatically increase the jurisdiction of Part A from just elder and disabled inpatient care to all elder, disabled, and childcare over the deductible and co-pay amounts. The spending covering the current Part A and Part B will be estimated into the comparison of spending for the proposed Part A since the current Part A and Part B are now in the Jurisdiction of the proposed part A. Currently, Medicare Part A and Part B make the majority of Medicare spending is projected at $606 billion in 2017, while the proposed Part A spending is projected to be $780 billion, an increase of spending of 29 percent. Revenues for the current Part A and Part B include most of the offsetting revenue (except for some premiums under Part D) yet over two thirds of the general revenue burden. The proposed Medicare Part A will bring in through three sources of offsetting receipts a total of $910 billion.

Under Part A the trust fund will still be active, currently the Hospital Insurance (HI) trust fund has 199.1 billion dollars in assets yet these assets are counted in federal debt due to the money being lent out to other departments. The proposed Medicare reform rights this wrong by completely restarting and renaming the Health Insurance (HI) Trust Fund by putting in the surplus of all Medicare revenues into this fund, a surplus of 69 billion in the first year.

The current depletion date for the HI trust fund is 2030, currently the fund is projected to be at 199.1 billion dollars in 2017 and by 2025 at $151 billion after which it is projected to decrease sharply until 2028. To date, Congress has never allowed the fund to become depleted. The proposed reform allows the fund to remain solvent until 2097 if circumstances remain the same. The first year alone has 69 billion dollars going into the fund where the balance rises quickly to 766 billion in 2027. The balance to the fund is positive until the projected average is year 2050 where by that time the funds in the trust account can remain solvent until 2097 with no change. Medicare will be a guaranteed healthcare policy for nearly a century.

The proposed Part B of Medicare reform will be completely voluntary and financial projection will depend on the amount of individual workers who choose to be covered by the plan. The estimates are calculated from 25 percent of the population accepting the Medicare Part B plan, these calculated estimates are based on current Medicare beneficiaries seeking options and those currently under insured or uninsured. Under this estimate beneficiaries spending is estimated to be 65 billion dollars for the year in 2017, with a revenue of 65 billion dollars; a surplus of 22 million dollars will go into the HI trust Fund. The surplus to the federal budget over the period 2017-2027 will be over 450 million dollars.

Part C will be supplementary health insurance program both private and public and the financial estimations are highly fluctuating, thus the projections are based off the likelihood of individuals choosing public plans on Medicare’s current supplementary percentages. The projected spending under these estimates for the proposed part C is $64 Billion in year 2017; while revenues are the exact same due to the premium designs at $64 billion. Part C does not add any or subtract any from the federal budget because of the balancing act.

Part D is mandatory preventative and drug coverage plan for the individuals under Part A and is based on a premium system like Part B. The spending projected under the proposal is $135 billion in the year 2016, with a revenue projection of $73 billion, giving a deficit in 2017 of $62 billion taken from the Part D Trust Fund. Part D’s expensed are mainly due to the added supplementary coverage given to the elderly.

Total current Medicare Costs are estimated to increase from 3.7 percent of GDP in 2017 to 5 percent of GDP in 2027. These massive rises will increase government deficits dramatically if Medicare is not reformed. Since the current Medicare system only covers some disabled and the elderly the healthcare effects to overall healthcare is staggering, in ten years spending increases 1.3 percent of GDP which is equivalent of an extra unfunded liability of $249 billion in 2017 dollars. These increases spell disaster for Medicare. The proposed Medicare reform, partly to the GDP Growth Cap of Part A, keeps healthcare costs at a stagnant sustainable rate of 5.6 percent of GDP while covering six times the populace. Equivalently Medicare Reform covers six times the population at only twice the cost of current Medicare, while keeping costs at an affordable sustainable rate and not affecting the federal budget in any negative way.

Preventative Care is a new Healthcare spending program providing preventative care and insurance to low-income individuals and family and allowing every individual in America the opportunity of health insurance at financially responsible terms. Preventative Care’s total outlay is $288 billion in 2017, by 2027 it will cost $382 billion; overall the program is to cost $ 3,688 billion over ten years. These costs are provided by both Federal and State matched funds at 50 percent each, keeping costs to the federal budget at $144 billion for year 2017 at a cost to the federal budget of $1,844 billion over the entire decade from enactment.

Preventative Care has five main outlay programs: Childcare, Worker Care, Elder Care, Disabled Care, and the Comprehensive Insurance Voucher Program. The first program and second largest outlay, the Child Care Program, provides needed care to individuals from pre-natal care to the age of 18 at a cost of $51 billion in year 2017 and increases to only $52 billion by year 2027. Worker Care, which provides workers with preventative care, has an outlay of $52 billion a year, increasing to $65 billion by 2027. Elder Care providing preventative care for over the age of 65 has an outlay of $22 billion in 2017, rising to $37 billion in 2027. Disabled Care provides preventative Care for the disabled in a limited amount not calculated in due to most costs being carried by the Medicaid proposal. The largest Outlay to Preventative Care is the Comprehensive Insurance Voucher Program providing vouchers of insurance for any individual under an income of $50,000 or less. The costs of the voucher program starts at $165 billion in 2017 and rise to $229 billion in 2027, costing over half of all preventative care appropriations. Preventative Care allows all individuals in America to have the healthcare provision needed to sustain long healthy lives at long-term affordability and access. Prevention Care will not only provide preventative care, driving down costs of healthcare across all economic factors but will provide low-income individuals with a subsidy, making insurance competitive and allowing more money for everyday needs.

Medicaid will be reformed to provide coverage for those currently under Medicaid until other means can be achieved or they wish through their own needs to stay under this program. Medicaid will be reformed into a state based health insurance program that offers those in poverty a long-term insurance plan. This program will cover deductibles and Premiums for the beneficiaries. Medicaid will be a complete federal based block grant with no need of state financial requirements other than those stated above; therefore the Federal government will bear all costs. Medicaid in 2017 will then cost an estimated $300 billion rising to an estimated $372.3 billion in 2027. This will dramatically reduce state constraints to current Medicaid and guarantee financial sustainability for the Federal budget.

The last Program proposed under the healthcare reform proposal is Medifund. Medifund is a large Tax credit based safety net for Medicare beneficiaries. Medifund will guarantee that these individuals will not pay more than ten percent of their income on out of pocket costs. Any out of pocket costs AFTER their benefits are excluded will be calculated and capped at ten percent after which the federal government will provide a tax credit to spending over this limit. The estimated costs for this proposal is a loss of revenue of $62 billion in 2017 rising to $90 billion in 2027.

Proposed changes in the business tax code will have immediate and long-term budgetary effects that will be satisfactory to the financial health of this nation. Current law allows for businesses to deduct health insurance premiums and other deductions to affect the collection of revenues accounting for $281 billion in 2017 and quickly growing to $490 billion by 2027. The proposed law will clean the slate and focus on three new tax lines.

The first is the Refundable Employer Health Insurance Tax Credit, which will allow employers access to employee’s health insurance vouchers. This tax credit is estimated to receive funds already applied towards the prevention services and then apply a further credit of $1200 per beneficiary for those over the average wage level for their field of employment, which will cost $35 billion in 2017 and rise to $45 billion in 2027 where it will remain for the projection period.

Next is the Employer Child Health Insurance Tax Deduction, which allows employers the opportunity to provide insurance to the children of workers at affordable rates to government subsidies. This deduction caps out at $2,500 per child covered, which will cost the federal government in revenue $34 billion in 2017, rising to $43 billion by 2027.

Last is the cornerstone of this business proposal intended to provide each worker with a suitable HSA through the HSA Employer Contribution Deduction. This deduction allows employers an amount of up to $6,000 a year to go into employee’s (making under $50,000) Health Savings Accounts. This deduction is the largest at $104 billion in 2017 yet remaining stable throughout the period rising to only $108 billion in 2027. These changes allow revenues to increase from a loss of $281 billion in 2017 under current law to $174 billion under proposed law; an increase in revenue of $107 billion in that year alone. The long- term budgets provide even more; in 2027 the tax break on business will cost an estimated $490 billion; under proposed law this will be $195 billion, a savings of $295 billion in the year 2027.

Other provisions of this proposal change the financial status of the proposal in three ways: a revenue source through a tax on businesses who employ uninsured individuals, a revenue through a tax on high-deductible plans, and an outlay of an investment grant for retail and non-retail drug R&D. The tax on business is limited to the credit provided and estimated to raise $19 billion in 2017 to $23 billion in 2027. The last tax on low deductible plans is estimated to be the largest revenue source at $132 billion in 2017 rising slightly to $138 billion by 2027, primarily because of individuals basing their plans on HSAs. The last Outlay to this proposal will be a grant to drug and prescription R&D facilities in supporting the development of new drug research; this outlay is estimated to cost $26 billion in 2017 and rise to $32 billion by 2027.

It is important to note that if this healthcare reform proposal were enacted, it would provide the opportunity for a balanced budget and the substantial consequence for that would be a stabilization of interest. The stabilization of interest, if calculated after a two-year implementation of healthcare reform, would allow the rate to stabilize around $470 billion dollars in 2018 and remain around such from there for the budget projection period. This action alone would save an estimated $20.6 billion of federal revenue in 2018 alone, and by 2027 save the federal government an estimated $510 billion a year– a total savings in federal revenue for that period of $2,598 billion.

With the reform and birth of these programs, the current programs of the tax credits for businesses and the Affordable Care Act (ACA) become obsolete and their purpose is no longer needed and can be counted as a surplus on the federal budget. The overview of total spending, revenue, and federal balance after healthcare reform will be now stated with the programs ACA, Medicaid, and Tax credits no longer in the projected healthcare Costs.

If Healthcare no longer appeared anywhere on the federal budget (except for military and veteran healthcare), the estimated savings would be $1,051 billion in 2017, giving a projected balance for that year at a surplus of $492 billion. If every part of the Healthcare Reform Proposal were enacted in year 2017, the balance after would be a deficit of only $64 billion , allowing a balanced federal budget by 2018 where healthcare would affect the budget by an overall federal surplus of $278 billion by 2027, with no other budgetary effects calculated in. This Reform Proposal allows not only the opportunity to balance the federal budget but to provide comprehensive health insurance for every individual in America.

 

 

 

 

References

Bureau of Economic Analysis. (2014, August 5). Table 2.5.5 Personal Consumption Expenditures by Function. Retrieved from Bureau of Labour Statistics: http://www.BLS.com

Centers of Medicare & Medicaid Services. (2013). 2013 Actuarial Report on the Financial Outlook for Medicaid. Washington DC: Department of Health & Human Services.

Cohen, S. B., & Uberoi, N. (August 2013). Differentials in the Concentration in the Level of Health Expenditures across Population Subgroups in the U.S., 2010. Medical Expenditure Panel Survey.

Congressional Budget Office. (2015, March). Social Security Deisability Insurance — CBO’s March 2015 Baseline. Retrieved from CBO.gov: http://www.cbo.gov

Congressional Budget Office. (2017). The Budget and Economic Outlook: 2017 to 2027. Washington DC: CBO.

Congressional Budget Office. (April 2014). Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act. Washington DC: CBO.

Congressional Budget Office. (December 2008). Budget Options, Volume 1: Health Care. Washington DC: CBO.

Congressional Budget Office. (January 2015). The Budget and Economic Outlook: 2015 to 2025. Washington DC: CBO.

Congressional Budget Office. (June 2015). The 2015 Long-Term Budget Outlook. Washngton DC: CBO.

Congressional Budget Office. (November 2003). Baby Boomers Retirement Prospects: An Overview. Washington DC: CBO.

Congressional Budgetary Office. (June 2015). Budgetary and Economic Effects of Repealing the Affordable Care Act. Washington DC: CBO.

Congressional Research Service. (January 7, 2009). SSDI and Medicare: The 24-Month Waiting Period for SSDI Beneficiaries Under Age 65. Washington DC: CRS.

Cuckler, G., Martin, A., Whittle, L., Heffler, S., Sisko, A., Lassman, D., & Benson, J. (2011). Health Spending by State of Residence, 1991-2009. Washington DC: Centers for Medicare & Medicaid Services Center for Strategic Planning.

Davis, P. A. (2015, August 10). Medicare Financial Status: In Brief. Retrieved from http://www.crs.gov: http://www.crs.gov

Ferrara, P. (2011). America’s Tickin Bankruptcy Bomb. New York, New York: HarperCollins.

Getzen, T. E. (2004). Health Economics Fundamentals and Flow of Funds Second Edition. Minion: Leyh Publishing LLC.

Henderson, J. W. (2009). Health Economics & Policy Fourth Edition. Mason, OH: South-Wastern Cengage Learning.

Johnson, L. B. (1971). Vantage Point. HEC Public Affairs Foundation.

Kaiser Family Foundation. (2015). Employer Health Benefits. Health Research and Educational Trust.

Keating, R. J. (February 2009). Health Care Policy Cost Index: Raning the States According to Policies Affecting the Cost of Health Insurance. Oaton, VA: Small Business & Entrepreneurship Council.

Litow, M. E. (January 2006). Medicare versus Privite Health Insurance: the Cost of Administration. Milliman.

Livermore, G. (March 2009). Costs and Benefits of Eliminating the Medicare Waiting Period for SSDI Beneficiaries. Center for Studying Disability Policy.

Medicare Payment Advisory Commision. (June 2015). Healthcare Spending and the Medicare Program. Medpac.

National Center for Health Statistics. (2015). Health, United States, 2014: with Special Feature on Adults Aged 55-64. Hyattsville,MD: Centers for Desease Control and Prevention.

Santerre, R. E., & Stephen P. Neun. (2007). Health Economics: Theories, Insights, and Industry Studies Fourth Edition. Mason, OH: Thomson Higher Education.

Schoen, C., Radley, D., & Collins, S. R. (January 2015). State Trends in the cost of Employer Health Insurance Coverage, 2003-2013. The Commonwealth Fund.

(July 2014). State Health Care Spendind on Medicaid. Pew Charitable Trusts and MacArthur Foundation.

The Board of Trustees, Federal Hospital Insurance and Federal Supplemntary Medical Insurance Trust Funds. (2015). 2015 Annual Report of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Washington DC: CMS.

Truman, H. (1956). Volume Two: Years of Trial and Hope. Garden City, N.Y.: Doubleday & Company, INC.

U.Himmelstein, S. W. (July/August 2002). Paying for National Health Insurance — And Not Getting It. The People to People Health Foundation.

U.S. Census Bureau. (2014, July 1). POP1 Child Population: Number of Children (in millions) Ages 0-17 in the United States by Age, 1950-2014 and Projected 2015-2050. Retrieved from ChildStats.gov: http://www.childstats.gov

 

Bureau of Economic Analysis. (2014, August 5). Table 2.5.5 Personal Consumption Expenditures by Function. Retrieved from Bureau of Labour Statistics: http://www.BLS.com

Centers of Medicare & Medicaid Services. (2013). 2013 Actuarial Report on the Financial Outlook for Medicaid. Washington DC: Department of Health & Human Services.

Cohen, S. B., & Uberoi, N. (August 2013). Differentials in the Concentration in the Level of Health Expenditures across Population Subgroups in the U.S., 2010. Medical Expenditure Panel Survey.

Congressional Budget Office. (2015, March). Social Security Deisability Insurance — CBO’s March 2015 Baseline. Retrieved from CBO.gov: http://www.cbo.gov

Congressional Budget Office. (April 2014). Updated Estimates of the Effects of the Insurance Coverage Provisions of the Affordable Care Act. Washington DC: CBO.

Congressional Budget Office. (December 2008). Budget Options, Volume 1: Health Care. Washington DC: CBO.

Congressional Budget Office. (January 2015). The Budget and Economic Outlook: 2015 to 2025. Washington DC: CBO.

Congressional Budget Office. (June 2015). The 2015 Long-Term Budget Outlook. Washngton DC: CBO.

Congressional Budget Office. (November 2003). Baby Boomers Retirement Prospects: An Overview. Washington DC: CBO.

Congressional Budgetary Office. (June 2015). Budgetary and Economic Effects of Repealing the Affordable Care Act. Washington DC: CBO.

Congressional Research Service. (January 7, 2009). SSDI and Medicare: The 24-Month Waiting Period for SSDI Beneficiaries Under Age 65. Washington DC: CRS.

Cuckler, G., Martin, A., Whittle, L., Heffler, S., Sisko, A., Lassman, D., & Benson, J. (2011). Health Spending by State of Residence, 1991-2009. Washington DC: Centers for Medicare & Medicaid Services Center for Strategic Planning.

Davis, P. A. (2015, August 10). Medicare Financial Status: In Brief. Retrieved from http://www.crs.gov: http://www.crs.gov

Ferrara, P. (2011). America’s Tickin Bankruptcy Bomb. New York, New York: HarperCollins.

Getzen, T. E. (2004). Health Economics Fundamentals and Flow of Funds Second Edition. Minion: Leyh Publishing LLC.

Henderson, J. W. (2009). Health Economics & Policy Fourth Edition. Mason, OH: South-Wastern Cengage Learning.

Johnson, L. B. (1971). Vantage Point. HEC Public Affairs Foundation.

Kaiser Family Foundation. (2015). Employer Health Benefits. Health Research and Educational Trust.

Keating, R. J. (February 2009). Health Care Policy Cost Index: Raning the States According to Policies Affecting the Cost of Health Insurance. Oaton, VA: Small Business & Entrepreneurship Council.

Litow, M. E. (January 2006). Medicare versus Privite Health Insurance: the Cost of Administration. Milliman.

Livermore, G. (March 2009). Costs and Benefits of Eliminating the Medicare Waiting Period for SSDI Beneficiaries. Center for Studying Disability Policy.

Medicare Payment Advisory Commision. (June 2015). Healthcare Spending and the Medicare Program. Medpac.

National Center for Health Statistics. (2015). Health, United States, 2014: with Special Feature on Adults Aged 55-64. Hyattsville,MD: Centers for Desease Control and Prevention.

Santerre, R. E., & Stephen P. Neun. (2007). Health Economics: Theories, Insights, and Industry Studies Fourth Edition. Mason, OH: Thomson Higher Education.

Schoen, C., Radley, D., & Collins, S. R. (January 2015). State Trends in the cost of Employer Health Insurance Coverage, 2003-2013. The Commonwealth Fund.

(July 2014). State Health Care Spendind on Medicaid. Pew Charitable Trusts and MacArthur Foundation.

The Board of Trustees, Federal Hospital Insurance and Federal Supplemntary Medical Insurance Trust Funds. (2015). 2015 Annual Report of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. Washington DC: CMS.

Truman, H. (1956). Volume Two: Years of Trial and Hope. Garden City, N.Y.: Doubleday & Company, INC.

U.Himmelstein, S. W. (July/August 2002). Paying for National Health Insurance — And Not Getting It. The People to People Health Foundation.

U.S. Census Bureau. (2014, July 1). POP1 Child Population: Number of Children (in millions) Ages 0-17 in the United States by Age, 1950-2014 and Projected 2015-2050. Retrieved from ChildStats.gov: http://www.childstats.gov

MEMO: Choices of Strategy against the Insurgent Forces of the Islamic State of the Levant (Jan 2016) written by Edward M Horner

 

This memo will focus on the choices of action available to the United States and her allies focused solely on the Islamic State and the conflict it instigates. There are three overall main choices of actions available to the United States government in how it wishes to conduct its involvement against ISIL and the choices and circumstances expand exponentially from each choice: complete alienation of the region, containment of ISIL, and the eradication of ISIL. This paper will outline the moral arguments, economic decisions, social environments, and military questions involving intervention in this crisis in the middle east with the best available information to the public with as limited bias towards the choices and circumstances the government now faces.

The United States has been directly involved with Iraq now for over thirty years, so in light of this it is important to distant the decisions one will make from past involvement and before this brief focuses solely on strategy, it will ask fundamental questions that must be taken with the utmost regard towards policy and its circumstances. These questions mark a viability of action and sacrifice that each decision must be based on. What is America’s long-term objective in the environment that ISIL now operates? How does ISIL effect those long-term objectives? To what extent must ISIL be neutralized in order not to affect these objectives (if they do)? To what extent is the government willing to go to neutralize the threat of ISIL? If America chooses war, what are the American objectives in war vs ISIL? Could a coalition be formed to fight ISIL? Would the US armed forces or allies of forces be able to subdue ISIL effectively? Would the United States government be able to coordinate a long-term strategy to effectively solve this problem?

There are many question outside these factors including length of time to obtain objectives, sacrifice to obtain these objectives, choices of action and so forth that will be discussed to each option available below. As for these questions I cannot speak of the choices the government will and in time must choose, I will just give my most vaid opinion and observations of actions. Each question will be dicussed in detail below.

  1. What are America’s long-term objectives in the environment that ISIL now operates?

The region ISIL now operates in ranges from the borders of Israel and Turkey to the outskirts of Baghdad. Now I cannot and will not speculate of America’s long-term geopolitical ambitions but I will speak of American commitments in the region. Yet American attitude in the region should be one based on long-term stability in the region in order to expend economic and political possibilities through long-term indirect cooperation. It is the authors belief that longterm direct involvement of American forces, as seen through previous colonial powers, would create long-term hostility towards America and her ideals. Hurting both American power projection and the nations involved themselves. It is further the recommendation to only become involved in the region when a clear Arab or Muslim majority is behind such action.

  1. How does ISIL effect those long-term objectives?

America since 1949 has had an alliance through NATO with Turkey, the larger ISIL grows the more its eyes will shift to its wealth northern neighbor. War is not the only threat to Turkey, refugees and insurgency on the borders is real concern to the long-term security of an ally.

Yet it is the unspoken commitment that is most troublesome to US foreign policy. America has an unspoken commitment to Israel and Saudi Arabia that is shaken at the moment due to Obama’s policies towards Iran. The added stress caused by the Islamic state, if not adjusted in due time, could cause a break of relations with Israel and Saudi Arabia; which would place the American strategic position in the middle east in a dangerous and friendless position.

If America seeks long-term stability and through that economic and social growth in the region, ISIL is contradictory to all of the American objectives. Not only does ISIL effect the core of the Middle East but create a conduit at home and abroad for radicalism to take shape and expand (we are seeing this point through social media). ISIL is not only a threat in the Middle East but as we’ve seen through recent terrorist attacks a threat to western civilization. A nuclear threat cannot be ruled out on this premise either for as long as a money supply is available to a rogue state they will seek weapons of mass destruction.

  1. What extent must ISIL be neutralized in order not to affect these objectives (if they do)?

To take the Nuclear threat and terrorist threat ISIL presents to the world seriously the only available option then is the neutralization of that threat and to completely eradicate the Islamic State and to out live and out prove its ideology.

  1. To what extent is the government willing to go to neutralize the threat of ISIL?

It is speculative to suggest which nominee or even party will win the election of 2016 and therefore shape American policy in the region, yet each candidate proposes either status quo bombings or direct military involvement. Yet whichever candidate or party wins there must be a clear line of long-term policy that is directed by the President, approved by Congress, and supported by the American people. The importance of the greater majority of Congress supporting the need for action is mandatory in order for the populace not to create another Vietnam syndrome. Whatever long-term option is chosen it must be exercised with long-term prudence.

  1. If America chooses war, what are the American objectives in war vs ISIL?

Objectives against ISIL must be based on the greater objectives for the region, because of this the chief objective must be stability in the area ISIL now controls and the end of Islamic radicalization. These two points go hand in hand but must be carried out with the knowledge that time must be given. ISIL is strongest as a counter-insurgency and that will be how they are perceived, only time will win this fight.

The first objective, stability, must be the key objective for the area ISIL can affect. Coalition and/or American forces must be willing to keep a substantial amount of boots on the ground for at least a five year period to provide normalcy and civilization back to these lands. In detail we will explain the exact plans later but with this objective we must also consider the redrawing of borders to meet the natural landscape of the middle-east.

As stated before since 1920 this action could have been predicted due to the unnatural drawing of borders by the treaty of Sevres. Currently ISIL controls the predominantly Sunni populations of Iraq and Syria that are fighting governments controlled by Shia Muslims therefore this is a sectarian war and must be treated as such. With this knowledge the only way to provide a stable region is to separate these areas and provide efficient local governance not demonized because of a religious difference. In time nature will redress the balances in the region but this would be a good first step to provide a sustainable government supported by the people able to go through the natural civilization process.

The second objective, the end of Islamic radicalization, must be the overall objective in how America sees the Islamic world community. Since 1979 Islamic radicalism by both Sunni and Shia factions have spiked and a root cause towards the massive instability we now face across the entire Middle East. The destruction of Islamic radicalism is the sole purpose of the war on terror and without this accomplishment; ISIL will be a continuing story with different names.

This objective will only be achieved through stringent crackdown worldwide of radical Islamist from Saudi Arabia to Libya. We must offer better education instead of madrassas and an access to worldwide thinking. Social engineering and grants will be needed to provide for a stronger modern society in these nations we face Islamic radicalism. This paper will address this conclusion in more detail later, but the truth is we need to help modernize the middle east into global affairs and radicalism will lose appeal.

These two objectives must be the sole objectives in a war verses ISIL and what it stands for and we must not get bogged down trying to establish democratic rule. Now this statement might be controversial but for the establishment of governments in the regions we must support the local populace right of choice in whichever form of government they wish to take. For if we accomplish the second objective correctly through public works, education, judicial structure at the basic levels, and moderation the rest will come in time.

  1. Could a coalition be formed to fight ISIL?

It is the recommendation of this paper and many strategic minds that since America is the great military power in the world, that we should never single handily confront an enemy; for if we can’t convince western nations with similar beliefs of the worthiness of our cause then we should reevaluate our intentions. Yet in this situation it is clear the world is in need of a strong global power to take charge of the situation and lead its way for then others will rally, if the United States does not do this it leaves the opportunity of a challenger in world affairs. This is a situation where other nations will not sit idle by, as we’ve seen after the terrorist attacks on France and their intervention. The time for coalition building is upon us and western nations are ready, the question then becomes will Arab leaders join?

It is the opinion of this paper that moderate Islamic leaders will join in the fight if they have a clear way forward by a strong American administration. The need for Arab support is key in achieving the second goal of eradicating Islamic radicalism. If the Arab nations are willing to join a global cooperation led by the US instead of a single US intervention, then the best estimate would lead that they would be willing to crack down on Islamic radicalism at home.

  1. Would the US armed forces or allies of forces be able to subdue ISIL effectively?

This question can only be answered by each individual nation willing to join a coalition; for the fight against ISIL will be a greater undertaking then the second Gulf War. Militarily there is no doubt that if the Islamic forces faced the coalition or simply American forces that the Islamic forces would lose the confrontation. The risk comes in being able to subdue the Islamic forces over a matter of great time.

For if ISIL simply waited until Coalition forces retook key areas and bid their time of attack then there is reason to believe in a prolonged confrontation that coalition forces would ultimately fail at their objectives due to increasing in casualties and uncertainty at home. Each nation then must ask itself if it is willing to commit a substantial amount of troops over a prolonged amount of time and if so then the odds are in the coalitions favor.

  1. Would the United States government be able to coordinate a long-term strategy to effectively solve this problem?

Currently the United States government is divided amongst itself in parties and agencies and at this rate cannot adhere to a single policy. If the American government does not correct its fundamental structural problems of long-time strategy planning then America will become unreliable on the world stage. These structural difficulties must be addressed in the State department, the Defense Department, Congress, and even the Presidency. There must be a clear fundamental policy this nation follows over a course of decades to achieve its means. In the Cold War all branches came together to fight a common enemy, well they must again or Terrorist attacks will continue and world instability increase.

Answering these questions as best as a civilian can, these are the fundamental question the United States government must ask itself. A congruent Policy across all departments agreed by the American people is needed to address the increase of world instability and America place in it. This brief outlines a single crisis that has occurred due to a lack of congruent Middle East policy by our government as a whole.

To provide a congruent choice on foreign policy and provide a clear picture of due course is the sole objective of this paper. If we intend to combat the spread of Terrorism then we must make choices. These are the choices the American government has.

The Loss of the Philippines and the Greatest Foreign Policy Blunder of the Obama Administration

 

By Edward M. Horner

 

On October 20, 2016 President of the Philippines, Rodrigo Duterte, severed ties with the United States of America in self-proclamation of an alliance with Russia and China. Not since the loss of Philippines in 1941, by the Japanese, has the United States lost its key position in the Pacific. This paper will show the cause and affects of this horrendous betrayal and its affect to American power projection in the Pacific.

In the 1898 war with Spain, America for the first time proved its capability of projecting power worldwide. America won victories and possessions in the Caribbean and the more important the Philippines. The conquest of the Philippines by then President McKinley allowed McKinley to enforce an Open Door Policy for American goods into China at the time. Between this period and World War Two, it gave America the window into Asia it needed; providing a key base in naval and coal stations on a major shipping route between Japan, China and the west. It also allowed the American Pacific Fleet a forward operating base when Japan was beginning its path of expansion.

When World War Two came to America on December 7th 1941, Japanese forces attacked the American positions on the Philippines knocking out a majority of fighters and bombers that would impede Japan’s conquest of the Pacific rim. The Philippines was a primary target in the first months of the war and allowed the Japanese to gut the American response in Asia during the first half of the war. This was able to be achieved due to the Philippines pivotal geopolitical placement in Asia.

The Philippines sits on the edge of the Asian continent just southeast from China and straight east from Southeast Asia. This position requires that most trade of the pacific region, which travels from Japan, Korea, China and Taiwan in the north to the west, must pass through the South China Sea. The South China Sea is a straight that runs between China and the Philippines. General MacArthur knew the ground he was giving up when he heroically proclaimed “I will return”.

After America’s re-conquest of the Philippines and throughout the Cold War, the Philippines rose in importance with it becoming a crucial link in the chain for American worldwide strategy. America at this time created a three-layer ring of protecting American assets in the Pacific and in Asia. Containment against Communist forces where the battle cry and American Strategist took it upon themselves to create this with the backing of the American government. Guam and Okinawa became the direct beacons of American liberty where the American Pacific Fleet would directly train and operate out of the next layer was the main coastal Islands Philippines and Japan. The last layer of containment was the direct military interventions on the mainland that stemmed the communist tie: Korea, Taiwan, Vietnam, Laos, and Malaysia. The second layer of allied nations was never cracked in the entirety of seventy years, until now.

The Philippines allowed this indirect link for interventions in Laos, Cambodia, and Vietnam against Communist forces. The Philippines allowed American forces to contain and battle communism in Southeast Asia. Without the Philippines American forces would not have control or even access to Southeast Asia. At the time of the Vietnam War, the dominoes of Southeast Asia would have fallen without the Philippines operating as a base for American counter-insurgency; which would have caused Thailand, Malaysia, Burma and maybe even India to fall to Communist ideology.

Since the end of the Cold War the importance of keeping the Philippines as an American ally grew with the emergence of Middle East oil and gas and the emergence of Chinese power. China for years has been putting pressure on American allies in the region testing American resolve and our allies resolve through direct intervention in Korea, their support of the Vietcong, their pressure on Taiwan, their aggressiveness towards Japan, and their provocation of American power.

The balance of power in Asia between America and China has existed due to the American support of Japan and South Korea which balances North Korea and China. As long as this balance lasts, peace can be maintained in this region. The balance of power in Asia has been maintained since 1953 yet the importance of the loss of the Philippines has forever changed American geopolitics.

The importance of gas and oil in the South China Sea cannot be overstated, 1/8th of the world’s oil or 4 trillion barrels of oil (11 billion bbl/d) and 6 trillion cubic feet of liquefied natural gas pass through these waters every year. Without this trade economies of Asia would dry up in a matter of days and collapse. These are the reasons for the great geopolitical importance of this alliance.

The Obama Administration has underestimated the need of the Philippine alliance during these implications by China to their peril. Obama during his administration has tried shifting American focus to the Pacific realm by improving relations with the Southeast Asian nations while provoking China. Yet with the loss of the Philippines, in geopolitical terms, is the ball game for that region. The loss of the Philippines is the largest mistake in foreign policy to the current administration.

If war between the Philippines, China and Russia versus the United States and her allies were declared, this loss would now drastically limit the capability of American military power. If war occurred, the South China Sea straights would be inaccessible without the Philippines thereby cutting off all oil and gas to the Asian giants. With this one stone each giant would fall. America would find herself without allies in the Asian Sphere, Japan would be helpless due to trade and her financial position, Korea would then be overrun by the North, and Taiwan would be forced to region China. Everything Obama worked for in preparing this nation against China’s interventions was for naught.