CAP Rolls Out “Medicare Extra for All” Plan to Replace ACA
February 23, 2018
A new report
from the Center for American Progress outlines a “Medicare Extra for All” plan, which would allow all Americans, including employees, to enroll in a health care plan modeled on Medicare and give employers four options for providing health care benefits. The proposal, which contains some interesting aspects for large employers, is likely to be a significant part of the reform debate going forward. Provider payment rates, including those for employers, would be pegged to Medicare rates so employer plans could take advantage of the savings, and the new program would negotiate prices for prescription drugs, medical devices, and durable medical equipment. Although the report provides few details, under the proposal, employers could choose to:
- Continue to sponsor their own coverage with an actuarial value of at least 80 percent, while contributing at least 70 percent of the premium;
- Sponsor Medicare Extra for all employees and contribute at least 70 percent of the program’s premium;
- Make maintenance-of-effort payments equal to their health spending in the year before enactment inflated by consumer medical inflation; or
- Make aggregated payments in lieu of premium contributions that would range from 0 to 8 percent of payroll depending on employer size (small employers would not have to make any payment or offer any coverage).
The current tax exclusion of health care benefits for employers would only continue to apply for the first option above. If employees do not select a plan, employers would automatically enroll them into employer coverage. Premiums and out-of-pocket costs for Medicare Extra would be means-tested by income, and the current tax treatment of employer-provided health benefits would be limited for high-income employees. The report’s authors also acknowledge the plan would require other significant tax increases on employers and high-income individuals and could take ten years to phase in.