The 10Plan is a self-pay plan for individuals currently uninsured or covered by a private nongroup health insurance plan. Individuals would pay no premiums up front, face Medicare rates, pay a copayment for each encounter, and have the option to pay cash for services or borrow from the government at a low interest rate to pay for care. The authors built a microsimulation model to estimate health care spending under the status quo and the 10Plan.

Cover: Analysis of the 10Plan
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Analysis of the 10Plan

A Self-Pay System Designed to Minimize the Burden of Health Care Costs

by Kandice A. Kapinos, Carter C. Price, Drew M. Anderson, Adrienne M. Propp, Raffaele Vardavas, Christopher M. Whaley

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Research Questions

  1. How would health care spending change for individuals and families under the 10Plan relative to the status quo?
  2. How would these changes vary for different participants, based on insurance status, health status, and income level?
  3. How much would the 10Plan cost the federal government compared with the status quo?

The authors of this report investigate an alternative health care financing approach, the 10Plan, for the nearly 28 million individuals who are not covered by health insurance and the approximately 20 million individuals who purchase private coverage in the nongroup health insurance market, including on the Affordable Care Act exchanges.

The 10Plan, designed by Mark Cuban, would eliminate the need for traditional health insurance for these individuals and allow them to pay only for the healthcare services that they use, and then at Medicare prices. The 10Plan is called the "10" Plan because most participants will not pay more than 10 percent of their family's income on repayment premiums.

To protect participants from financial uncertainty stemming from healthcare events that are high-cost or beyond participants' abilities to afford, participants in the 10Plan would be able to defer payments after a $25 copay for each encounter. In the case of deferred payments, participants would be borrowing from the federal government at a 3-percent interest rate.

In this analysis, the authors built a microsimulation model to estimate how much the 10Plan would cost participating individuals and families and what portion of the cost would be shouldered by the federal government. The authors also examine cases in which individuals could be negatively affected by the 10Plan's implementation.

Key Findings

In baseline estimates, the 10Plan would reduce total healthcare spending by $33 billion over 15 years, covering an estimated 46 million individuals

  • In this model, the federal government would reduce spending by $17 billion over the 15-year period.

In this model, predicted average out-of-pocket costs would decline by about $1,300 per participant per year

  • Those who are currently uninsured would pay $487 more per year in out-of-pocket costs, on average, under the 10Plan than they pay under the status quo but would also be able to consume more healthcare.
  • Those who are currently covered by a private nongroup plan would pay about $4,230 less per year in out-of-pocket costs, on average, primarily because of the elimination of private health insurance premiums.
  • Families with incomes at less than 400 percent of the federal poverty level would pay between 3 and 4 percent of their income on healthcare costs.

Allowing for higher prices, authors predicted that the 10Plan would increase total healthcare spending by $1,263 billion over 15 years

  • Average out-of-pocket costs are predicted to decline under most of the different modeling assumptions, largely because individuals would not be paying private health insurance premiums.
  • In this model, the federal government would increase spending by $566 billion over the 15-year period.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    How the 10Plan Works

  • Chapter Three

    Approach

  • Chapter Four

    Results

  • Chapter Five

    Conclusion

  • Appendix A

    Health Care Demand and Supply

  • Appendix B

    Methodology

  • Appendix C

    Additional Results

Research conducted by

This research was funded by Mark Cuban and conducted by the Payment, Cost, and Coverage Program within RAND Health Care.

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