One federal payer buys an essential floor through four payment methods matched to cost structure rather than to who owns the building: a reference fee schedule, capacity payment for standby capability, capitation with reinsurance, and hospital global budgets. Delivery stays plural and regional — private practices, nonprofit systems, public hospitals, tribal systems, and a standing public arm of federally chartered Regional Health Authorities, aggregated from entities that already run multi-site operations. Every county is assigned to exactly one Authority, so deserts are attached rather than built. Inside the floor there is no prior authorization, no network denial and no balance billing. A regulated supplemental sits above it, separately priced.
Above the floor sits a regulated supplemental market: standardized tiers, guaranteed issue, community rating, no underwriting, AHQB supervision. It buys reduced cost sharing, comprehensive adult dental, vision correction, hearing devices, private rooms where available, and faster elective scheduling within the same wait-time ceiling.
It is Medigap-like, not second-tier care. Same clinicians, same standards, same clinical floor. Roughly 65 million American retirees already use and accept this architecture.
A floor that forbids preference invites the wealthy to build a parallel system outside it, which is how two-tier medicine actually arrives. Permitting a bounded layer above the floor keeps everyone inside the same clinical system and makes the floor politically durable.
The market does not multiply. Today's gap market is roughly $181B, about 0.61% of GDP. At maturity it is approximately 0.67% — universal eligibility roughly cancels against a more complete floor.
Employer funding of supplemental coverage is taxable compensation. There is no new exclusion, ever: the employer-insurance exclusion is the most regressive expenditure in the code and the distortion this architecture exists to end. Purchased with after-tax income, penetration falls and products thin.
Supplemental money may purchase additional capacity. It may not buy priority inside a clinic, operating room, hospital bed, imaging slot or clinician hour already financed by the floor. Providers report public and supplemental hours; selective contracts may not create a parallel queue within public capacity.
Cost-sharing insurance largely disappears, because the floor has a hard out-of-pocket cap and no ordinary deductible. That is roughly 80% of what Medigap does today.
The AHQB one-way ratchet reviews annually whether a supplemental benefit migrates into the floor as unit costs fall. Benefits move in, never out.
- Essential floor
- The ratchet is the mechanism by which the floor's composition widens over time.
- Coverage standard
- Off-formulary and AHQB-negative care is legitimately supplemental — and politically explosive, being insurance against the board's own determinations.
Permitting a supplemental market concedes visible inequality above the floor.
Accepted openly. The alternative is not equality; it is an unregulated parallel system that drains clinicians out of the floor entirely. Bounding it — additional capacity yes, priority within funded capacity no — is the trade.
Honesty about gaps. Distributed Healthcare has more unresolved specification than other Engines because operational complexity is higher; the items below are flagged for v10.2 specification or for outside expert review.
- Off-formulary supplemental should be settled before the question is forced; England's 2008–09 top-up dispute ended in permission with separation-of-care rules.