Q.  Having already gone through the horrors of one botched roll out, how can you assure us that this won’t be another complicated mess?

A.  It’s an ill wind that doesn’t blow someone some good.  By building on some things already associated with the Affordable Care Act (ACA), subsidies, the individual mandate and the IRS, we think we can convert the Affordable Care Act (ACA)  to Dave’s Plan in 2 1/2 tax filing years without too much misery.  In the first year, the IRS would change their filling forms to include the individuals Personal Benefits Accounts (PBA) information and reporting requirements by financial institutions.  More importantly they would upgrade their payment software to incorporate the appropriate income and age levels for depositing the proper Medicaid and subsidy payments to the PBAs.  Governments both Federal and State would have to determine what they are paid out in the previous year on average for subsidies and Medicaid by income and age group and get the numbers to the IRS in time to incorporate them in the following year.  This could be a little tricky as medicaid varies between the states. However, in is this age of big data this shouldn’t be a problem. They should have this information anyway.  With the IRS organized, providers and financial institutions could start gearing up for the changes.  The institutions would have to incorporate payments for the qualified Catastrophic Policy whether they sold it or the account holder bought it elsewhere. Then their medical care only credit cards would have to be coordinated with providers probably through card companies (Visa, MasterCard etc.).  Businesses would have to decide whether to drop benefits and just be responsible for payroll deductions and transfer to the employee’s PBA or go to or maintain a contractual system where they where would remain responsible for Health and retirement.  If it’s the latter, the info would be included in their W2s.  Health Insurance policies wherever purchased for the next year would be extended to Oct. 15 of the following year (Approx 18mos.)

Year two would see the migration to the PBAs.  Employers not going the contract route could  start anytime after their employees set up their PBAs but in any case by the first paycheck of the following year.  Individuals must open a PBA at a qualified financial institution and consolidate exiting IRAs and 401Ks into it.  Further they would sign up for a qualifying Catastrophic Policy to start October 15th of the following year and convey policy info that to their PBA’s administrator.  The policies, of course, could be bought across state lines.  All prior health policies other than contractual would terminate on that date.  Those that can’t attain those policies at a reasonable cost because of existing conditions would apply for coverage through the high risk pools starting at the same time. Everybody tests their systems to eliminate glitches.   The IRS sets up to help with the new forms.  The same effort to help filers with the Earned Income Tax Credit in the past could be extended to all the first timers.  Everyone files their returns on or before April 15th.  Extensions in  the first year would be limited to 90 days so everyone can start in six months.

As the PBAs are set up the first $10,000 in each would be invested in the pool that subsidizes  the high risk pools securities.  The overseeing government entity would work with the states to arrive at reasonable way to provide equivalent treatment to those with pre-existing conditions in the high risk pools.. Possibly it would offer to pay 100% of the lowest state costs 95% for those within 5% of the lowest and so on. Medicaid as a state-federal program will require some negotiation on how to handle pre-existing conditions in the program, but in any case must be structured in a way eliminate them in the future. Finally the fund would set up a facility to provide short-term overdraft protection to smooth out chargers and income for the associated credit cards..

The last six months  IRS processes everyone’s returns and sends out the proper checks to the PDAs.  Everyone if they haven’t already can start evaluating  medical treatment alternatives beyond their Catastrophic Policy.  Financial institutions send out the associated medical credit cards effective Oct 15th.  On that date everyone legally in the United States would have health coverage.

Q. How would this plan actually work for the average family?

A. Using the Census Bureau’s quick facts median family annual income figure $53,000, such a family would deposit $5,300 in their PBA.  Say they have two kids, they would also deposit 10% or $540 of their EITC.  Based on the family’s prior year’s taxable income, the IRS would  deposit the age & income appropriate subsidy to their PBA.  Their PBA plan administrator would pay the premiums on their Catastrophic Issuance Policy and issue them the associated Medical Credit Cards.  Now little Johnny gets pink eye and you take him to a CVS minute clinic, a neighborhood urgent care clinic or maybe the emergency room at the local hospital.  Your choice. It’s your money.  They treat Johnny and prescribe needed medications.  You pay for everything with your medical credit card.  Because it’s on your credit card, you just might notice the actual price you’re paying.  If you chose the emergency room you might be the one who is sick.  You’re spending your money and it might become clear that there might be cheaper choices.  Given the size of the market, there will be no lack of offers.  We just don’t know what they actually would be.  Whatever the case, you would use your card to pay medical charges just like any other credit card.  Still over the course of the year, some might exhaust their account.  The administrating financial institution would cover the over charges and forward the bills to the pool that covers abnormal experience and the high risk pools for repayment plus a small fee (the institution would be loaning the money to the government not an individual.)  The agency would evaluate the bills to determine to see if  they are normal, possibly fraudulent or if this individual should actually be moved to a high risk pool.  Anything left in the account at the end of the year would be yours to keep and grow.

Q. What if I lose my job and would’ve qualified for Medicaid?

A. The administrative agency would cover charges if the account is depleted.  When filing your next return you would also file an amendment requesting the appropriate Medicaid amount.  The agency would direct the IRS to deposit that amount minus what was advanced to your PBA.  No lapse in coverage.