Information Frictions and Adverse Selection: Policy Interventions in Health Insurance Markets

By Benjamin R. Handel, Jonathan T. Kolstad, Johannes Spinnewijn
The National Bureau of Economic Research, November 2015
NBER Working Paper No. 21759

Abstract

A large literature has analyzed pricing inefficiencies in health insurance markets due to adverse selection, typically assuming informed, active consumers on the demand side of the market. However, recent evidence suggests that many consumers have information frictions that lead to suboptimal health plan choices. As a result, policies such as information provision, plan recommendations, and smart defaults to improve consumer choices are being implemented in many applied contexts. In this paper we develop a general framework to study insurance market equilibrium and evaluate policy interventions in the presence of choice frictions. Friction-reducing policies can increase welfare by facilitating better matches between consumers and plans, but can decrease welfare by increasing the correlation between willingness-to-pay and costs, exacerbating adverse selection. We identify relationships between the underlying distributions of consumer (i) costs (ii) surplus from risk protection and (iii) choice frictions that determine whether friction-reducing policies will be on net welfare increasing or reducing. We extend the analysis to study how policies to improve consumer choices interact with the supply-side policy of risk-adjustment transfers and show that the effectiveness of the latter policy can have important implications for the effectiveness of the former. We implement the model empirically using proprietary data on insurance choices, utilization, and consumer information from a large firm. We leverage structural estimates from prior work with these data and highlight how the model’s micro-foundations can be estimated in practice. In our specific setting, we find that friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare. Risk-adjustment transfers are complementary, substantially mitigating the negative impact of friction-reducing policies, but having little effect in their absence.

From the Conclusion

After establishing that information frictions have a substantial impact increasing demand for generous coverage, we investigate the implications of a policy that reduces the impact of information frictions (e.g. through information provision). We find that a policy that reduces the impact of information frictions by 50% reduces the market share of consumers enrolling in more generous coverage from 85% to 73%, and that a policy that fully removes information friction further reduces the market share in generous coverage to 9% (with corresponding welfare reductions). We illustrate that this negative impact of reducing frictions occurs because the mean and variance of surplus are low relative to the mean and variance of costs. We also show that as friction-reducing policies become stronger, effective insurer risk-adjustment transfers are more important. When frictions are fully present, fully effective risk-adjustment increases the market share in generous insurance from 85% to 88%, but when there are no frictions that same risk adjustment policy increases this share from 9% to 64% (with corresponding welfare increases).

http://www.nber.org/papers/w21759

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Comment:

By Don McCanne, M.D.

At the risk of losing important subtleties in this technically complex paper, I’ll try to simplify it by saying that the more information that a buyer has when deciding about the coverage of a plan (the goal of transparency in the insurance markets), the greater the risk of adverse selection (concentrating high cost patients in a plan), making risk-adjustment transfers more imperative in order to shift costs from plans enrolling more expensive high-risk patients to plans enrolling less expensive low-risk patients. Without effective risk-adjustment transfers, the market would unravel due to adverse selection.

Stated another way, information frictions (lack of information provision, plan recommendations, and smart defaults that would improve consumer choices) lead to suboptimal plan choices. More information leads to better choices but increases adverse selection. Risk-adjustment transfers have little impact when information frictions are fully present (the insurance purchaser is in the dark), but risk-adjustment transfers are essential when there are no frictions (fully informed insurance purchaser).

What can we make of this? On the face of it, shopping in the dark is bad. But the results of informed shopping require effective risk-adjustment transfers to counter adverse selection. To date, risk-adjustment processes (e.g., hierarchical condition categories) are capable of correcting only about one-tenth to one-fifth of the consequences of adverse selection. Since four-fifths or more of the excess burden cannot be transferred by today’s methods, we should be concerned about the authors’ finding that “friction-reducing policies exacerbate adverse selection, essentially leading to the market fully unraveling, and reduce welfare.”

It is unlikely that risk-adjustment will improve significantly. The insurers have already demonstrated how easy it is for them to game risk-selection adjustments, and there is no end to their ability to innovate.

The problem is really very simple. The private insurers, for their own benefit, continue to impair the functioning of our health plans, and then inflict upon us outrageous administrative charges for doing so.

The solution is simple. Replace them with a single payer national health program. Patients would not have to shop plans since everyone would be covered by the same single comprehensive plan. Patients would not have to worry about information frictions, whether or not they understood them.

This year’s model: PPOs in 2016 offer less out-of-network coverage

By Katherine Hempstead, PhD
Robert Wood Johnson Foundation, December 3, 2015

Preferred Provider Organization plans (PPOs) are health insurance products that offer both a relatively “broad” provider network, along with some coverage for use of out-of-network providers. Since last year there has been a significant reduction in the number of PPOs offered in the Affordable Care Act (ACA) marketplaces. A prior analysis showed that of the 131 carriers offering silver PPO products in 2015, only about one-third remained unchanged in 2016, while the rest were either reduced in scope or eliminated.

Since changes in the generosity of out-of-network coverage don’t affect a plan’s actuarial value (AV), carriers can adjust these features without affecting the AV status. Plans new to the market in 2016 provide less coverage for out-of-network providers as compared to those that are continued from last year.

Fewer plans have a cap on out-of-pocket spending for out-of-network services

The out-of-network coverage offered in a PPO usually consists of some kind of cost-sharing—most often co- insurance—for visits to out-of-network providers. This benefit is usually subject to a separate out-of-network deductible, in addition to which there may be an annual out-of-network Maximum Out-Of-Pocket cost (MOOP). While an out-of-pocket maximum is required by the Affordable Care Act (ACA) for in-network coverage, there is no similar requirement with regard to out-of-network coverage.

There has been a sharp decline in the prevalence of out- of-network MOOPs in PPOS in 2016. While only 14 percent of PPO plans offered in 2015 did not have an out-of-network MOOP, this is the case for 45 percent of plans newly offered in 2016. For the market as a whole, the percent of PPOs with no MOOP doubled from 14 percent in 2015 to 30 percent in 2016.

Average MOOPs for out-of-network services have increased

For plans that have MOOPS, the annual cap has increased as well. Figure 2 shows the mean MOOP has increased to $16,700 in 2016 from $14,500 in 2015. Among plans new to the market in 2016, the average out-of-network MOOP was $17,900. For 25 percent of plans on the market in 2016, the MOOP was greater than $19,000. For plans that stayed in the market from 2015 to 2016, the average increase in the MOOP was approximately $1,000, although six plans increased their MOOP by more than $10,000.

Both the reduction in the number of PPOs and this “skinnying” of coverage within existing, and particularly new PPOs should be viewed as part of a broader carrier trend designed to reduce exposure to higher cost out-of-network providers. These changes are ostensibly being made to preserve affordability for marketplace products, which consumers have repeatedly indicated they value most. However, it remains to be seen to what extent consumers will continue to be willing to trade access to providers for lower premiums.

http://www.rwjf.org/content/dam/files/rwjf-web-files/Research/2015/PPO_This%20Years%20Model.pdf

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Comment:

By Don McCanne, M.D.

After a few decades of experiencing insurance company innovations designed to keep their premiums affordable, we should not be surprised by their ingenuity in figuring out new ways to avoid paying for health care. Now that networks are narrower and yet more prevalent, such that more patients are inadvertently receiving care out-of-network, the PPO plans are introducing further innovations to avoid paying for much of the out-of-network care that is often unavoidable for many patients.

Plans are increasing the maximum out-of-pocket costs (MOOP) that patients must pay for care obtained out-of-network. But an even more alarming trend is that almost half of the newer PPO plans are totally eliminating MOOP, which could expose patients to truly catastrophic expenses. To add to the insult, these expenses do not apply to in-network deductibles and MOOP.

We can anticipate that we will see continual erosion in health plan benefits as the private insurers contrive to find ever new ways of welshing on paying for our legitimate medical bills. This behavior is inherent in their DNA. They are structured to optimize their self-serving business model rather than to optimize patient service. That’s the nature of markets.

When markets fail us, we can turn to our own public entity, established to serve all of us, and that is our government. We don’t need a government-owned health care delivery system since the private, non-profit sector functions reasonably well for us, but we do need a publicly-owned and publicly-administered health care financing system – a single payer national health program dedicated to patient service.

We Are Better Than This

How Government Should Spend Our Money

By Edward D. Kleinbard

This book argues that the strand of contemporary American political thought that defines itself through its hatred of taxation is narcissistic self-pleading wrapped in a flimsy sheath of economic lingo. Personal economic liberty, of course, is one foundational principle of our country and our economy, but it is not the only principle that defines us; and the emaciated government that this philosophy demands is not the way to promote the happiness of society, if by that we actually mean the society composed of all of us who identify ourselves as Americans. Our fixation on taxation means that we have turned our thinking upside down: instead of focusing on what government might usefully do, and whether we can afford it, we obsess over the taxing side of things, and ignore the purposes to which those tax revenues are applied.

**

We do not pursue the path of of our society’s happiness, including our collective prosperity, by pursuing abstractions like the sanctity of markets if by doing so we waste $1 trillion or so every year in healthcare spending, and further leave tens of millions of Americans without adequate healthcare coverage, thereby condemning them to worse long-term health outcomes and to risks of bankruptcy. To the contrary, the markets here are telling us something quite clearly, which is that healthcare for all members of a society is a load that private markets cannot lift alone. And what is true of healthcare of course is even more apt for broader forms of insurance against the vicissitudes of life.

The alternative – a national single-payer system – is so obvious, and so powerful in its logic, that it beggars belief that the Obama administration abandoned it in the debate leading up to the Affordable Care Act. There is a reason, after all, why virtually all other developed countries rely on this solution (whether in those words, or through combinations of policy instruments that have the same effect), and why the United States itself relies on it for all its seniors (through Medicare) and all its veterans (through the VA system, which actually is a single-provider system). At one stroke, the fundamental problem of adverse selection disappears, because all members of society participate. Premiums are easily collected through the existing tax administrative machinery. A patchwork of largely monopolistic local sellers now faces a monopsonistic buyer. Operating administrative costs are reduced, as we see today in Medicare administration. There is more than enough value on the table here to compensate the medical community fairly and still reap hundreds of billions of dollars of savings every year.

**

This book has examined how we are doing in investing in ourselves, and in offering coherent social insurance programs. The answer is not very well. We starve ourselves of investment in infrastructure, and we underinsure ourselves in many respects. The result is a less happy society, to return to Adam Smith’s injunction to us, and also a less prosperous one. Well-designed social insurance programs increase our appetite for economic risk, rather than depress it, and public infrastructure investments yield positive economic returns, just as private investments do. These are the functions that our government is good at and to which this book has been addressed. Once one moves beyond police powers and the like, what we call government spending and taxing in many respects is really investing and insuring, with those investments and insurance premiums collected through the mechanism of taxation.

This book has further considered whether we have reached some natural limit in  our ability to finance collective investment and insurance through the intermediation of government. The answer is no. We face budget deficit issues today because we have chosen systematically to undertax ourselves since 2001, not because the engine of our economy cannot supply any more revenues than those we currently collect.

In short, for the last decade or more we have allowed the existence of deficits to determine the contours of our government spending – the uses to which we put our government. This is backward. What this book has urged is that the right way to think about things is to ask this question: What investment and insurance opportunities are there for all of us, acting together, to advance the happiness of our society? In answering this question, we need to be mindful of a great many dynamics – the frustration and unhappiness that comes with paying taxes, the deadweight loss of taxation, the estimated positive economic and social returns on that collective spending, the limited competencies of government agencies, and so on. But the starting point in every case should not be determined by establishing an arbitrarily small amount of tax to collect, and then treating the government like an institutional Procrustes, whose only responsibility is to amputate the welfare of our fellow citizens to suit that amount.

(Edward Kleinbard is the Johnson Professor of Law and Business at the University of Southern California’s Gould School of Law and a Fellow at the Century Foundation. He previously served as Chief of Staff of the U.S. Congress’s Joint Committee on Taxation, the nonpartisan tax resource to Congress.)

http://kleinbard.usc.edu/book/

***

Comment:

By Don McCanne, M.D.

This book is a particularly valuable resource during this political season. As one of the nation’s most astute authorities on taxing and spending, Edward Kleinbard provides us with a solid basis for understanding what we intuitively find to be lacking in the tax and spending rhetoric being thrown around by the politicians.

By obtaining a good grasp on the complexities of taxing and spending we can better advocate for what is really a simple concept: we can have broad agreement on where the government should be spending our money, such as on public infrastructure and social insurance programs, and then decide on the most equitable methods of taxation to fund the programs.

A prime example of logically applying the complexities of tax and spending policies is the way that we should be paying for health care. As Kleinbard states, “a national single-payer system is so obvious, and so powerful in its logic, that it beggars belief that the Obama administration abandoned it in the debate leading up to the Affordable Care Act.”

Wyden-Grassley Sovaldi Investigation Finds Revenue-Driven Pricing Strategy Behind $84,000 Hepatitis Drug

18-Month Investigation Reveals a Pricing and Marketing Strategy Designed to Maximize Revenue with Little Concern for Access or Affordability

Senator Ron Wyden, Press Release, December 1, 2015

Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and senior committee member Chuck Grassley, R-Iowa, today released the results of an 18-month investigation into the pricing and marketing of Gilead Sciences’ Hepatitis C drug Sovaldi and its second-wave successor, Harvoni. Drawing from 20,000 pages of internal company documents, dozens of interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia, the investigation found that the company pursued a marketing strategy and final wholesale price of Sovaldi – $1,000 per pill, or $84,000 for a single course of treatment – that it believed would maximize revenue. Building on that price, Harvoni was later introduced at $94,500. Fostering broad, affordable access was not a key consideration in the process of setting the wholesale prices.

“Gilead pursued a calculated scheme for pricing and marketing its Hepatitis C drug based on one primary goal, maximizing revenue, regardless of the human consequences. There was no concrete evidence in emails, meeting minutes or presentations that basic financial matters such as R&D costs or the multi-billion dollar acquisition of Pharmasset, the drug’s first developer, factored into how Gilead set the price. Gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for Medicare and Medicaid, but still the company went ahead. If Gilead’s approach to pricing is the future of how blockbuster drugs are launched, it will cost billions and billions of dollars to treat just a fraction of patients,” Senator Wyden said.

“The Finance Committee has tremendous responsibility in overseeing the federal programs paying for prescription drug coverage,” Senator Grassley said.  “With that responsibility, the committee should know how the costs to the public programs and private insurance companies of a single innovative drug entering the market without competition can have major effects on which patients get the new drug and when.  This report sheds light on one example of the pricing decisions made by one company with a new prescription medicine that entered the market without competition in high demand.”

Additional major findings from the investigation include:

*  Gilead justified Sovaldi’s high price point based on price-per-cure

*  Gilead set a high price for Sovaldi with an eye toward ensuring a future high price for Harvoni

*  Gilead underestimated the degree of access restrictions that it expected would result from its pricing decision

*  Despite significant access restrictions, Gilead refused to significantly lower the net price

*  The burdens on Medicare, Medicaid, and the Bureau of Prisons were significant

The press release includes links to the Executive Summary and 144 page report:
https://www.wyden.senate.gov/news/press-releases/wyden-grassley-sovaldi-investigation-finds-revenue-driven-pricing-strategy-behind-84000-hepatitis-drug

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It Pays to Shop: Variation in Out-of-Pocket Costs for Medicare Part D Enrollees in 2016

By Jack Hoadley, Juliette Cubanski, and Tricia Neuman
Kaiser Family Foundation, December 2, 2015

Medicare Part D drug plans differ considerably in the drugs they list on their formularies, their use of formulary tiers, and the level and structure of cost sharing applied to those tiers. Plan premiums and the use of deductibles also vary widely. Plan decisions affect different beneficiaries in different ways, depending on the drugs they use. The financial consequences for Part D plan enrollees can be substantial. In this brief, we focus on out-of-pocket drug costs for Part D enrollees in 2016 for specialty, brand, and generic drugs.

Part D enrollees can expect to pay thousands of dollars out of pocket for a single specialty drug in 2016, even after their drug costs exceed the catastrophic coverage threshold

From Figure 1:

Median on-formulary out-of-pocket costs in 2016:

Sovaldi  $6,608

Harvoni  $7,153

Part D enrollees’ out-of-pocket costs for many specialty drugs are substantial at the start of the year, and continue even after spending exceeds the catastrophic coverage threshold

Out-of-pocket costs are substantially higher—often ten times higher or more—for specialty drugs when they are not listed on formulary by a Part D plan

http://kff.org/medicare/issue-brief/it-pays-to-shop-variation-in-out-of-pocket-costs-for-medicare-part-d-enrollees-in-2016/

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Comment:

By Don McCanne, M.D.

Gilead’s heartless strategy in deciding to price their hepatitis C drugs well above what any reasonable market would tolerate demonstrates yet another detrimental consequence of our health care financing model, perpetuated and expanded by the Affordable Care Act. Gilead assumed that they could get away with it since they figured that most of the costs would be covered by the drug plans in the various public and private insurance programs. Well, they pushed too hard.

The extensive investigation by the staffs of the Senator Ron Wyden and Senator Charles Grassley confirmed that the pricing of Sovaldi and Harvoni was based on pure greed, ignoring completely the human consequences.

The other report released today by the Kaiser Family Foundation demonstrates the consequences that these egregious pricing behaviors have on Medicare beneficiaries enrolled in the Part D drug program — a program supposedly designed to improve value by leveraging market forces. Even when the preferred drug — Harvoni — is included in the Part D formulary, the median out-of-pocket cost for the Medicare beneficiary is $7,153! There goes the food and the rent and a whole lot more.

The Kaiser Foundation report is particularly helpful in demonstrating how deficient the Medicare Part D program is. They suggest shopping, but who knows what outrageously priced drugs will be prescribed next year? How can you shop drug formularies for drugs you have not yet been prescribed?

Single payer advocates understand that none of this would be tolerated in a well designed national health program. You would simply receive the drugs you need, when you needed them. Gilead would be compensated fairly for their products. It’s just too bad that their current executives will not end up in jail, where they belong.

STAT-Harvard poll: Dismayed by drug prices, public supports Democrats’ ideas

By David Nather
STAT, December 1, 2015

Most Americans believe that the prices of brand-name prescription drugs have become unreasonable, and their dismay is leading to wide support for government action to keep costs down, including letting Medicare negotiate prices with drug companies, according to a new poll by STAT and the Harvard T.H. Chan School of Public Health.

About 7 out of 10 Americans, including two-thirds of Republicans, said Medicare, the federal health insurance program for older and disabled Americans, should be able to negotiate lower prices for all prescription drugs.

The poll found that the pharmaceutical industry’s reputation has suffered substantial damage. Barely half of all Americans now say drug companies are doing a good job for their customers, compared with the nearly 8 out of 10 who expressed that kind of confidence in a 1997 Harris Poll.

And they soundly rejected the industry’s argument that government action against rising drug costs would slow the development of new drugs. Sixty-four percent said they did not believe that would happen if Medicare negotiated lower prices, while 26 percent said they believed it could.

It also matters how potential government action on drug costs is framed. When it’s described as “price controls” under Medicare rather than “negotiating prices,” there’s a sharp drop-off in support among Republicans and senior citizens.

When given a choice of different options for dealing with extreme price hikes and the most expensive new drugs, Americans were divided between letting the government negotiate lower prices and approaches intended to promote competition.

Government negotiations was the most popular option and importing drugs came in second. Reducing regulations was the least preferred option, with the support of 1 out of 5 Americans.

In follow-up interviews, people who participated in the poll expressed a common theme: They’re not sure what the best solution is — they just want the government to do something.

The fact that the support for Medicare negotiations is so high, even though few people are personally experiencing high drug costs, suggests that their reactions are being driven by the perception that drug prices have become “just unreasonable” for others, according to Robert Blendon, a professor of health policy and political analysis at Harvard who directed the poll.

“It’s not people’s experience. It’s people’s outrage,” said Blendon.

http://www.statnews.com/2015/12/01/stat-harvard-drug-prices-poll/

Poll results:
https://cdn1.sph.harvard.edu/wp-content/uploads/sites/94/2015/11/STAT-Harvard-Poll-Nov-2015-Controversy-Over-Rising-Drug-Prices.pdf

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Comment:

By Don McCanne, M.D.

There is an important lesson here for single payer advocates. The public now wants the government to do something about the large increases in drug prices. It is not because of personal experience with these high prices but rather it is due to the OUTRAGE over the injustice of patients in need unnecessarily facing egregiously high drug pricing.

Much worse than the drug pricing crisis is the financial hardship, outrageous physical suffering and even loss of life that is due to our highly dysfunctional method of financing health care, even though we are spending about twice as much per capita as the average of other wealthy nations.

Our nation needs to understand that merely switching to a single payer system would correct the injustices of the financing system that the Affordable Care Act failed to rectify. With a well designed single payer system we would not only get the pricing of pharmaceuticals right, we would price correctly the rest of the system as well while improving access and free choice of health care – all without spending any more than we do already, yet spending it more equitably so as to eliminate for everyone the prospect of financial hardship due to health care.

If it takes outrage to create a demand for government action, then let’s work on our framing so that people understand that they should be outraged by the profound but remediable injustices that characterize our health care financing system. Start with intensified efforts to educate the media, since it has been the media that aroused the nation on outrageous drug pricing.

Instability in Marketplaces Draws Concern on Both Sides of Health Law

By Robert Pear and Abby Goodnough
The New York Times, November 27, 2015

The latest turmoil in health insurance marketplaces created by the Affordable Care Act has emboldened advocates on both sides of the political spectrum, providing ammunition to conservatives who want to shrink the federal role and liberals who want to expand it.

UnitedHealth Group rattled federal officials when it announced last week that it was losing money in the insurance exchanges, saw no reason to expect improvements in 2016 and might pull out in 2017. Those concerns followed the collapse of 12 of the 23 nonprofit insurance cooperatives created with federal loans under the health law.

In addition, insurance markets in many states are unstable. Premiums are volatile. Insurers say their new customers have been sicker than expected. And the law is as divisive as ever.

Whether the problems in the marketplaces are just temporary setbacks for the law, as the White House contends, or signs of fundamental problems, as Republicans say, is not clear.

Arguments once made by Republicans as polemical debating points are now echoed by consumers who say they cannot afford to use insurance because of high out-of-pocket costs.

In applying for rate increases in 2016, many insurers filed data showing that they had lost money on their exchange business in 2014. To stop the losses and control costs, many have increased premiums and deductibles and other out-of-pocket costs, while reducing the number of doctors and hospitals available to consumers through their provider networks.

Conservatives want to let consumers buy policies with fewer mandated benefits, on the theory that such coverage would be more affordable. Some lawmakers say that insurers should be allowed to sell cheaper “copper” plans alongside the bronze, silver, gold and platinum plans available in the marketplaces.

Harvey J. Rosenfield, the founder of Consumer Watchdog, an advocacy group based in California, suggested that “maybe the government should step in and run the system as Medicare for all.”

“People are sticking their heads in the sand if they say there are not serious problems with the Affordable Care Act,” Mr. Rosenfield said, adding: “People who were previously uninsured are indisputably better off, but many people in the middle class are struggling. They are entitled to buy health insurance, but that is an empty promise if the number of doctors and hospitals in your network has shrunk and deductibles have soared.”

http://www.nytimes.com/2015/11/28/us/politics/instability-in-marketplaces-draws-concern-on-both-sides-of-health-law.html

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Comment:

By Don McCanne, M.D.

Instability. Shrinking networks. Soaring deductibles. These are characteristics of plans offered in the Obamacare insurance exchanges – features that are now contaminating employer-sponsored health benefit programs. What can be done?

We can stabilize choice in physicians and hospitals by eliminating the networks, providing patients with free choice of their health care professionals and institutions. We can eliminate instability in access caused by financial barriers to care by eliminating deductibles, copays and coinsurance. We can stabilize insurance coverage by mandating it while making premiums truly affordable for everyone.

The problem is that under the current model of financing care, the insurers cannot offer plans with affordable premiums without reducing patient access to care – precisely what networks and deductibles are designed to do.

As it turns out, even with these perverse measures most insurers are still losing money. Mounting losses only perpetuate and intensify instability since the insurers must make additional changes to ensure the success of their business model. Quite clearly, additional changes based on business decisions will benefit only the insurers while serving to the further detriment of patients.

Suppose we did reverse course and eliminated networks, excessive cost sharing, tiering of benefits, and other detrimental features of today’s health plans. The variable that would have to give is affordability of the insurance premiums. They would skyrocket. If we really want people to have affordable access to decent health care by correcting these problems, that means that the government subsidies would have to be greatly expanded  – both in the amount and in the size of the population that would be eligible. Basically, the government would be covering much of our care, except for the wealthy.

If we were to spend that much in taxes to support such a system, why would we perpetuate this very wasteful and dysfunctional model that we have? If we had any sense, we would demand an efficient, effective system that would ensure access for everyone – a single payer national health program (an improved Medicare for all). Until we do, learn to enjoy the torment of increasing instability in our health care.