Former HHS Secretary Tommy Thompson told healthcare executives that the way to provide health insurance for all Americans is to keep elected officials out of the benefit-design process and craft a "no-frills" option for the uninsured. He also proposed a radical change in the federal-state funding split for Medicaid in hopes of spurring innovation.
Describing his plan for the uninsured to the Nashville Health Care Council, Thompson said healthcare providers and insurers would fund one-third of a reinsurance system to limit businesses' losses from employees with catastrophic illnesses. The federal government would fund the remainder. A federal law would require each state to set up insurance pools for uninsured residents and small business that don't offer insurance and to solicit bids, which would include benefit packages, from insurers.
Lawmakers would neither design the benefit packages nor be able to mandate benefits, he said.
Thompson, now independent chairman of the Deloitte Center for Health Solutions and a partner at the law firm Akin Gump Strauss Hauer & Feld in Washington, said the reinsurance system would kick in after insurance costs for a beneficiary reached $75,000 to $100,000. He said the $81 billion President Bush proposed for health-insurance tax credits over 10 years should instead be allocated to states to lower the cost of purchasing insurance from the pools.
Regarding Medicaid, Thompson said states should cover 85% of acute-care costs and the federal government 85% of long-term-care costs. Making each side largely responsible for one type of care would spur innovations to raise quality and lower costs, he said.