Universal Healthcare: The American Way

We can actually cover everyone while embracing free markets

In America, health insurance isn’t actually insurance.

Real insurance protects people from rare, high-cost events, like if your house burns down, your car gets totaled, or you’re diagnosed with cancer. Yet American health “insurance” is designed to cover routine, predictable, low-cost events: primary care visits, basic labs, x-rays, generic medications. If car insurance paid for oil changes and wiper fluid, GEICO would require prior authorization for an oil change and send you to a narrow network of approved Jiffy Lubes.

That’s exactly what has happened in U.S. healthcare. We’ve medicalized the equivalent of wiper fluid, and then wondered why the system collapsed under its own administrative weight.

Meanwhile, the more government intervenes, the worse it gets. Medicaid traps poor people, giving them “coverage” without access. Medicare rewards coding over care and enriches hospital/insurance conglomerates instead of patients and physicians. The ACA added subsidies on top of a structurally broken model, which accelerated consolidation, drove out competition, and inflated prices for everyone.

Healthcare Isn’t Actually Expensive.

The median healthcare spend for an individual is about $500 in a year.

The median, not the mean, is what most people actually consume. 80% of people never reach their deductible each year. Most transactions are predictable. It doesn’t need “insurance” in the traditional sense of the word.

Meanwhile, the 5% catastrophic tail, such as major trauma, organ failure, cancer, NICU stays, accounts for nearly half of all spending. That’s the real financial threat. And instead of designing a system that handles catastrophic risk cleanly, we jam everything through third-party payment systems that distort prices, reward intermediaries, and create political pressure for more central control.

A Better Architecture: Three Clean Layers

This proposal keeps core first principles, centered about individual liberty with a robust safety net, with features of successful market-first systems like Singapore & Switzerland, to create a better healthcare system for all Americans. It centers around three key pillars:

1. Routine & predicable care is paid for with tax-advantaged money in an account earmarked for healthcare and retirement.

2. True catastrophic risk is covered by privately underwritten insurance with guaranteed issue and modified community rating.

3. Ultra-high cost tails and the safety net are covered by federally funded reinsurance and targeted subsidies.

The Core Building Block: The Freedom Fund

The median American worker has over $10,000 removed from their paycheck every year for healthcare, including employer sponsored insurance and Medicare.

So here’s my radical plan: give Americans their own money.

Every American gets a Freedom Fund, a portable account earmarked for healthcare and retirement. This is funded by redirecting the employer healthcare tax exclusion, Medicare payroll tax, and ACA subsidy dollars.

People can use their Fund for purchasing insurance, joining direct primary care, paying for routine care, or saving for the future. It’s more than an HSA. It’s a full replacement for employer coverage, ACA subsidies, Medicare, and Medicaid.

Participation in the Fund is contingent on maintaining insurance coverage. This solves the risk pool problem. If continuous coverage lapses, you’re automatically enrolled in the default catastrophic plan and the premiums are deducted from the Freedom Fund. Coverage stays universal without micromanagement. Employers can still offer insurance as a benefit, reducing their Fund contribution by the value of the benefit.

Importantly, with a Freedom Fund, patients are using a cash equivalent for routine care. This will revolutionize primary care, routine labs, outpatient imaging, and generic medications. This will make transparent pricing routine and administrative bloat will collapse. This returns control to patients over large corporations.

The Freedom Fund will grow year-over-year. The Freedom Fund receives an annual flat deposit of roughly $9,000 per adult and $4,000 per child (2025 dollars, wage-indexed), funded by mandatory employee and employer contributions, along with fully taxing employer-sponsored insurance premiums above that amount and redirecting the existing Medicare payroll tax and ACA subsidy dollars. For low-income individuals, the government deposits money directly into the Fund. Deposits are the same for every citizen regardless of income so high earners have no incentive to exit the system.

If a person stays healthy, they could have $1.5-3 million in the account by retirement age (real dollars, inflation adjusted).

That’s enough money to cover the lifetime healthcare costs for 95%-99% of Americans.

And because the Freedom Fund is transferable upon death, families have incentives to have serious end-of-life conversations instead of defaulting to wasteful care.

Once Medicare disappears, so do Medicare’s distortions, like site-neutrality battles, RUC manipulation, and facility-fee games.

To make it work, insurance reforms are needed. The mandates on essential covered benefits must go. There’s no need if everyone has a Freedom Fund to pay for those services. It just creates distortions. The medical loss ratio, a huge driver of vertical consolidation in insurance companies, must also be eliminated. Let the free market truly reign and see what innovative insurance products emerge.

The government also needs a transition plan to spread the cost over decades. Younger Americans get switched to this model immediately. Older Americans, based on the age of the beneficiary, the government could offer voluntary opt-ins with actuarially fair buy-in credits based on future Medicare benefits, or just stay in traditional Medicare.

Lastly, some supply side regulation reforms are still needed, even if Medicare’s hospital consolidating policies are gone. Certificate of need laws and 340B would still need reform under this model, along with a hard look at large hospital tax exemptions, DSH payments, and GME. A competitive marketplace for care is needed for this to work.

Government’s New Role

Even with cash-based routine care and private catastrophic plans, insurers still worry about the rare, ruinious claims. This is where government can actually help stabilize the markets: provide reinsurance.

Insurers pay claims normally up to a threshold. Above that level, the federal government reimburses the insurance company. The patient is taken out of the equation. There’s no coding games or risk scores. Reinsurance reimburses insurers for the claims they actually pay, not for diagnoses or predicted risk. With transparent pricing, there’s less potential for artificial markups and fraud. Still, aggressive federal anti-fraud units and whistleblower bounties need to keep providers from gaming the threshold.

This keeps the markets with low premiums, eliminates insurer dumping, and prevents risk pool “death spirals” as healthy people exit the market. Crucially, patients still face their deductible and cost-sharing from their Freedom Fund, and insurers still negotiate prices up to the threshold. You preserve incentives while protecting the system from tail risk. The government finally does what it’s good at: insuring the statistically predictable catastrophic edge and nothing more.

Government will also be needed to keep the safety net functioning, as this is what makes this system work for ALL Americans.

The working poor, those who need not a safety “net” but rather a safety “trampoline” to get out of hard times, their Freedom Fund is subsidized, so they’re building the same nest egg that everyone else is.

For the truly destitute, the homeless, the mentally ill, those with substance abuse disorders, otherwise high utilizers of healthcare, even a government sponsored Freedom Fund will be quickly depleted. This should have a special carve-out for federally funded wrap-around coverage. An ER bed becomes a de facto hotel if a Freedom Fund covers it. For these individuals, who have depleted their Freedom Fund for a set amount of time, their subsidy is instead shifted to a program which provides flat safety-net bundled payments for ER stabilization and short stays, with catastrophic plans for the rest. Safety-net bundles are intentionally low, fixed payments to prevent hospitals from gaming admissions to reach the reinsurance threshold. Regardless of the carve-out method, the US needs to re-evaluate ways to treat mental illness, including compulsory institutionalization.

For those with lifelong disability, they still get recurring Freedom Fund deposits and the same catastrophic plan for medical expenses. This population is overwhelmingly supported by Medicaid today, so we shift that program into a separate non-medical long-term care fund that supports the disabled and their caregivers. This would need a new, separately funded program (replacing Medicaid LTSS) with its own dedicated revenue stream.

Why This Works

This is a universal healthcare plan that provides high access to routine care, protection against catastrophic costs, disability support, and a robust safety-net. It does this without centralized price setting, coding games, rationing, and administrative complexity. While there is still some central planning, it reduces the direct government expense by at least 15% by replacing Medicare/Medicaid acute spending with predictable, capped reinsurance costs and eliminating most administrative overhead.

For patients, they wake up with a Freedom Fund debit card they can use for qualified expenses. They choose their own doctor and see transparent prices. They see their fund grow as they stay healthy, with the knowledge that they’re covered in the case of a catastrophic event. Their catastrophic coverage is affordable because the government is providing a reinsurance plan. If they are poor or disabled, the system supports you without segregating you. Just like food stamps can be used at grocery stores that cater to the upper class, a poor person could use their Freedom Fund to enroll in a direct primary care provider used by anyone else.

This should appeal across the political spectrum. It guarantees universal coverage while embracing free markets. It’s similar, structurally, to Singapore, so there’s a real model for success. Physicians would welcome the reduction in administrative bloat. Hospitals should like the predictable catastrophic coverage. Insurance companies should like the government backstop without needing to play coding games. States should like the Medicaid relief.

America shouldn’t be turning to outdated models of universal healthcare. European countries rely on Bismarkian structures used to calm the proletariat in the age of revolutions. America is better. We can embrace a system that rewards innovation, fosters competition, and empowers individuals, instead of one that grows government control and expands sclerotic bureaucracy.

It’s universal healthcare, the American Way.