Gwen Moritz

Let's Think This Through

Gwen Moritz Editor's Note

Let's Think This Through

I was expecting a recession this year since the sugar high of the 2017 federal tax cuts was already wearing off. Even with recession-level deficit spending as far as the eye could see, economic growth slowed in 2019 and never achieved anything like the “4, 5, and maybe even 6%” growth rate that President Trump predicted after the tax law was adopted.

Being the longest economic expansion since World War II is sort of like being the oldest living person, isn’t it? The end has to come sooner rather than later.

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The last recession, the one called the “Great Recession,” ended in the third quarter of 2009, although its effects dragged on for several more years. Part of the political fallout of an unemployment rate that touched 10% was the Affordable Care Act — Obamacare — which expanded Medicaid to the working poor and offered government subsidies so that middle-income families could afford the kind of health insurance the law required everyone to buy.

It was that “individual mandate” to have insurance that ideological conservatives objected to most vociferously, even though it was originally proposed by the conservative Heritage Foundation in 1989 as a form of personal responsibility. The part about the ACA that bothered me, as I have expressed in this space repeatedly over the years, is that it cemented in place the completely artificial connection between where one works and what kind of health insurance one gets.

If the lesson from 2008 was that people can’t pay their mortgages if they are laid off because of a housing bust caused by foolhardy mortgage lending, what’s the lesson of 2020? People can’t pay their medical bills if they lost their health insurance because they were laid off because of a pandemic.

Exactly how this thing will play out is anyone’s guess, but the thing I would most like to see is a serious discussion of decoupling where one works from the type and cost of health insurance. “Medicare for All” was not politically feasible and didn’t even survive the Democratic presidential primary, but I still think there could be broad acceptance of the concept known as Universal Catastrophic Coverage. I’ll probably keep talking about it until someone shows me a better idea.

My interest in some kind of government-sponsored catastrophic health insurance dates back more than a decade, but it was Ed Dolan of the libertarian think tank Niskanen Center who called my attention to the wonkery of Kip Hagopian, a California venture capitalist, and Dana Goldman, an expert in health care economics from the University of Southern California. Hagopian and Goldman offered up a detailed proposal in 2017 that continues to spark my imagination.

Here’s how it could work: Standard catastrophic coverage would be paid for by taxpayers, and it would probably be government-run, although it might be sold by private insurers. It would not replace Medicaid for the poorest, but it would protect the rest of us from what Dolan described as “those relatively rare but ruinous healthcare expenses that are truly unaffordable.”

But the definition of ruinous depends on resources. Hagopian and Goldman proposed a scalable deductible depending on household income. One suggestion was 10% of household income above the level eligible for expanded Medicaid; for simplification, let’s say that’s $40,000 for a family of four.

Under this formula, a family earning $100,000 would have a deductible of $6,000 per person, perhaps with a cap of twice that much for the entire family. After reaching that deductible, the UCC policy would pay 100%. For a household with $1 million in annual income, the deductible would be $96,000. Ouch.

But that’s the beauty of UCC: Families that could afford it — as a household earning seven figures certainly could — would be able to buy supplemental private insurance to hedge against that enormous deductible. With the upper level of the private carrier’s exposure being limited, it is easy to imagine a robust, competitive private market of highly personalized “gap” insurance — sort of like “name your price” auto insurance with variable copayments and deductibles.

Another beautiful thing: Employers could get out of the health insurance business without fear that employees would be uninsured. Or they could offer gap insurance — perhaps group plans — as an attractive benefit.

And when the business cycle churns, as it does even without pandemic shocks, losing one’s job would no longer mean losing one’s health insurance entirely.

Email Gwen Moritz, editor of Arkansas Business, at and follow her on Twitter at @gwenmoritz.