A ten-year full phase-in, with enrollment complete at Year 7. Every question in this category has a yes-or-no answer for a given person or institution on a given date: who is on the old plan and who is on the new one, who pays under which payment method, which institutions lose margin, which specialties take fee reductions, and whose jobs end. Price compression is the fiscal case, which means somebody's income falls — naming who is more honest than calling the same event efficiency. Access density is deliberately not on this clock.
For a household, the change is that premiums, deductibles and copays for the floor stop, and a single payroll deduction replaces them. For an employer, the benefits-package arms race ends and cost becomes predictable. For a state, the Medicaid match obligation ends.
The payroll obligation begins for every employer on day one, reduced by qualifying health spending until that employer's cohort converts. An employer providing generous coverage credits it and pays close to nothing at first. An employer providing nothing pays in full immediately. **No employer pays twice.**
Financing is a permanent mandatory General Fund appropriation plus redirected existing public health spending. There is no health rail, no payroll silo and no dedicated healthcare trust. Healthcare is not required to finance itself from its own savings.
The current structure hides its own cost. Employer premium contributions are compensation the worker never sees, deductibles are a second premium paid only by the sick, and the tax exclusion is the most regressive expenditure in the code.
Making the payment visible in one line is the point. A worker carrying only the floor sees a combined deduction of roughly 20–32% of gross against a current 25–35%. A worker who also buys supplemental sees roughly 24–37% — comparable to today, with more included.
The payroll instrument is unified and uncapped, applying the same rate to wages and to executive compensation. Receipts flow undifferentiated to the General Fund.
Three properties follow from crediting qualifying spend. Transition duplication — which peaks near $146B — is absorbed largely by the credit rather than by appropriation. Employers currently providing nothing pay from day one, which is the parity principle applied to healthcare. And revenue ramps with conversion automatically, because as each cohort converts the credit disappears and the full obligation appears, with no separate rate schedule to legislate.
The credit is defined against a qualifying coverage standard rather than against premium paid, so an employer cannot inflate it by buying an expensive plan.
The tax exclusion ends in two stages. Floor-duplicative employer coverage loses its exclusion automatically at each tranche's conversion — no separate fight, because the deduction has become a subsidy for buying something already provided. Supplemental coverage loses its exclusion on a single sharp date after the final tranche. That second stage must be a date rather than a phase-out, because a phased repeal creates arbitrage between years and between employers.
The federal floor replaces Medicaid. States capture a substantial windfall from removal of the match obligation, and a maintenance-of-effort clawback or payroll offset recovers it — absent which the reform silently subsidizes fifty state budgets and the fiscal engine does not reconcile.
FEHB terminates. TRICARE retirees and dependents receive the ordinary floor plus mission-specific benefits. Territories receive the same entitlement and the same federal financing.
Employer funding of supplemental coverage is taxable compensation. No new exclusion, ever.
Replacing premiums with a payroll levy is a tax increase however it is described.
It is a visible payment replacing an invisible one, and for most workers a smaller total. That is the honest claim and it should be made with the arithmetic attached rather than by insisting no one pays more. Some people do pay more — high earners on uncapped compensation, by design.
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.
- State clawback design is politically the hardest financing question and is not settled.