No. of Recommendations: 5
Calculate the cost of adding individuals to Medicare, allow individuals (or employers) to pay for it just like they pay for a health insurance from an insurance company.
But that's the hard part, and why we don't do this.
The cost of adding individuals to Medicare depends on what the expected medical costs of those individuals will be. But it's politically infeasible to charge different people higher premiums because they're going to cost more - that's the "pre-existing conditions" problem. But if you charge everyone the same premium (or the same within narrow differences of community rating), then when people have the choice of whether to go to Medicare or not, the system gets filled up with people whose medical costs are higher than the premium rather than folks whose medical costs are lower than the premium. That's the "adverse selection" problem.
That will be especially likely if employers are allowed to participate. Employers tend to have a much better sense of what the actuarial cost of their insurance coverage is than individuals. Every employer whose worker pool has a higher cost than the Medicare premium will dump them in Medicare, but all the employers whose pools have lower costs than the Medicare premium will keep them private.
Single-payer systems work because everyone (or a large, not self-selected slice of everyone) is automatically in the pool. You don't have an adverse selection problem.
