Before getting into politics, John Delaney started and ran two financial-services companies that turned healthy profits and made him wealthy. So he understands that you can only spend what you can afford.
After three terms as a Congressman from Maryland, Delaney is now among the small army of Democrats running for president in 2020. And while he’s focusing on health care, like other Democrats, he’s not advocating a hyper-expensive “Medicare for all” program that would centralize all health care in Washington. Instead, he’s proposing a basic set of federal benefits for all Americans—and a way to pay for it. There would still be room for private-sector coverage offering additional perks and services.
“I favor a government plan for every American as a right … and then the ability of individuals to buy supplementals,” Delaney told Yahoo Finance in a recent interview in Washington, DC. “The basic idea is everybody would have some basic level of coverage provided by the government. But a lot of people would want to get more benefits on top of that.”
Delaney estimates his plan would cost around $13.1 trillion over a decade, or $1.3 trillion per year. To pay for that, he’d end the tax deductibility of employer-sponsored health insurance, which costs the government about $280 billion per year. He’d let the government negotiate drug prices, saving an estimated $85 billion per year. Since his plan would replace the Affordable Care Act, it would eliminate subsidies that cost about $76 billion per year. Rolling in government costs for Medicaid (including what states pay) would provide another $770 billion per year. The rest would be covered by patient co-pays, with exemptions for lower-income people.
There would still be a form of private insurance for people who wanted more coverage than the government plan provided. Individuals could purchase it on their own, or companies could offer it as a perk, to lure and retain workers, much as they do now. But there’d be no tax break for private-sector insurance, as there is now, which means companies might choose not to offer it, and would focus on other benefits instead. In that case, individuals could buy their own supplemental coverage.
Several other countries, including Switzerland and Germany, have hybrid systems in which the government provides basic care, with private coverage accounting for 20% to 40% of the market. One advantage of such a system is that health care is not tied to employment. “I have four daughters,” Delaney tells Yahoo Finance. “They might have 10 jobs [in their careers]. They shouldn't be making decisions about their jobs or maybe starting a business around health care.” Some leading businesspeople—including Warren Buffett—agree.
What could go wrong? Everything. While some Democrats are energized about a larger government role in health care, Republicans remain adamantly opposed and many centrists simply distrust the government and don’t want it getting any bigger. Plus, health care is a giant for-profit industry, with Big Pharma, hospitals, insurers, doctors, testing companies, equipment makers and many others lobbying day and night inside the Beltway to make sure nobody diminishes their slice of the pie.
Voters do want more affordable health care, with better access to providers and less worry about losing a job or undergoing some other change that could leave them without coverage. And with Medicare running short of money as early as 2026, budget math will eventually force health care reforms that might be politically fraught today.
When that happens, the only viable plans will be ones the nation can pay for. “A lot of people talk about universal health care, single payer, all that stuff. They have no idea how to pay for it,” Delaney says. “That's why I talk about how my plan has a pay-for.” Voters should ask every candidate for that.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman