1. Towards Non-Employer-Based Plans
Is there anything that currently exists that might provide a basis for non-employment-based group plans?
Yes. Under the Employee Retirement Income Security Act of 1974 ("ERISA")) (which also covers "welfare benefits," like health insurance), there exist a few things that might be a basis for these plans:
1) Multi-employer Plans: these are Union Plans which cover employees within an industry, who may move around between employers within that industry while keeping benefits.
2) Multi-employer Welfare Arrangements ("MEWAS"): these are Non-union Plans ("Typically, a MEWA will involve employers who are members of a professional, trade or business association that offers as a member service medical coverage to association members.") that cover employees of various employers not subject to a collective bargaining agreement, One particular type of a MEWA is a Professional Employer Association ("PEO") (one example is Insperity, whose slogan offered "big company benefits').
MEWAs that are fully insured can preempt state insurance law like other ERISA plans, where ones that are not fully-insured may not, due to 1983 amendments to ERISA which put heavy record keeping and reporting requirements on MEWAs (such as maintaining and filing form 5500).
It may be somewhat surprising, but there are unions that represent Independent Contractors, such unions generally being referred to as "Guilds" (see, e.g., The Screen Actor's Guild-AFTRA and the Writer's Guild of America). These unions are heavily regulated due to anti-trust concerns.
2. The Advantages of Self-Insured ERISA Plans
There are a number of advantages to self-insured ERISA Plans:
1) ERISA Preemption and Plan Design: since they preempt state insurance law, they do not have to offer the "bells and whistles" required by the various state insurance laws (and raise the cost of coverage), they cover things of interest and utility to that population (For example, the WGA might not cover elective plastic surgery, SAG [terrible pun!] might.) This might be a more consumer friendly (and workable)approach to the GOP trope of "buying insurance across state lines."
2) Portability: Plans of these kinds are designed for participants who move between employers or, in the case of Guilds, who are Independent Contractors. They are intended to be portable.
3) Stated Rights: Participants and Beneficiaries have stated rights under the Plan and the Summary Plan Description ("SPD").
4) Less Divided Loyalties: As opposed to single-employer plans, the fiduciaries of the Plan do not have a divided loyalty between the participants and beneficiaries of the Plan and the owners of the business. (A business may terminate its ERISA Welfare Benefit Plan, since these benefits do not "vest" in the same way that pension benefits do, with proper notice, in the course of business.)
Given this, and given the fact that group insurance gives individuals acting collectively more market power, it would seem to make sense to modify existing law (notably by relaxing the somewhat draconian record keeping and reporting requirements for MEWAs) to allow more people to be covered by these types of Plans.
3. The Problems with Implementing Such a System and Some Alternatives
This would not be a panacea (there is, in my opinion, no "THE solution" to healthcare reform, there are, instead, "THESE solutions").
People would have to comply with their Plans, not always an easy task with Guild Plans. For example, Angela Lansbury was famous for employing older or ill members of the Screen Actors' Guild on Murder She Wrote, so they could keep their health benefits by working enough hours in the profession.
The problem of accruing enough money to self-insure the Plans is a difficult one. Ronald Reagan, when he was the President of the Screen Actors' Guild used a settlement with the studios over residuals on films sold to TV to initially fund the health plan in 1959-'60.
Co-ops under the exchanges mostly all failed, Although they were more like mutualized insurance companies than self-insured ERISA Plans, that demonstrates the difficulty of figuring out how to fund new models in healthcare. The loan mechanism used to finance these ventures did not seem to work.
Finally, as one gentleman posted to Twitter in response to an earlier version of this essay:
"First, we're not going to be forming lots of new unions in the current political situation, and pipe dreams aren't useful policy proposals. Second, it's illegal to unionize independent contractors. The unions the article mentions were grandfathered in when the law was changed. But unless the law gets changed again, it's not merely a pointless proposal it's an outright impossible one. And if anyone thinks that federal labor law is going to get union-friendly any time soon, they're addled and not worth listening to."
Obviously, as recounted above, the poster's second point is completely off-point, because of the existence of non-union MEWAs. However his first point does have some (limited) merit. Federal Labor Law, at this point, is not terribly pro-union. But there are some notable weaknesses to this argument as well. The obvious one is that non-employment-based group plans already exist in the form of MEWAs. A less obvious issue is that part of what the GOP has proposed is to allow small businesses to band together in "Association Health Plans."
However, a couple of approaches come to mind.
Medicaid, expanded under PPACA, is a very expensive proposition for the states, even for those states with austere programs that cover little more than the Federally mandated services.
What if Medicaid were privatized into these Plans with a certain number of Medicaid clients assigned to these Plans and funded at, say, 2008 State and Federal levels for the given state? If the Plan can ensure patient compliance and can reduce costs, any savings could then be applied to the general operations of the Plans.
Participants and beneficiaries of the Plans should be able to pay for their coverage in pre-tax dollars as should employers who wished to do so.
While this would be a significant loss to the public fisc, it would be considerably less expensive (and based on experience with Bismarck Systems, more clinically effective) than moving to a single-payer system like Canadian Medicare.
Another (more philosophical) argument for this approach is that it is built around private, not-for-profit organizations (run in accordance with government law and regulation) instead of being government programs.
They have a legitimacy from consisting of your neighbors with whom you are trying to accomplish something valuable instead of being a program run by a far-away government bureaucracy. This goes back to the tradition noted in de Tocqueville's Democracy in America of using benevolent, eleemosynary or fraternal organizations to improve public life, something we are losing to our detriment in this day of "bowling alone".
This kind of program (and an expanded use of benevolent, fraternal and eleemosynary organizations generally) could form a bulwark and bastion to the Federal, state and local governments and to markets, as thinkers as diverse as Drucker, Bennett & Lotus and Williamson have discussed.