Senator Wyden's new “Free Choice Proposal” has recently gotten some positive attention (Ezra Klein, Jonathan Cohn). His idea is interesting but politically very problematic. There are also several important policy issues that would need to be worked out.
Basically, it would destroy the employer provide insurance system. Technically it would allow all employers to continue to provide health insurance or they could give their employees a voucher equal to at minimum “70% of the lowest cost Exchange plan.” Employees would use these vouchers to select any plan they wanted to on the Exchange. I'm sure a few companies might continue to provide insurance, but the vast majority would switch to providing vouchers. Wyden's plan would be politically problematic, because it would result in millions losing their current coverage.
Interestingly, he links the size of vouchers to the lowest cost plan on the Exchange. A new Medicare-like public plan would almost always be the lowest cost plan. The more robust the public plan, the cheaper the lowest cost plan will be.
Wyden's Free Choice Proposal would give businesses a huge incentive to fight for including the strongest possible public plan. If all businesses choose to provide a minimum voucher instead of insurance, simply including a strong public plan as part of reform should save them around $500 billion over a ten year window.
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