Pieces of the Puzzle
Following are some suggestions for remedying the current healthcare crisis. You may wish to make suggestions of your own or comments on these in the blog. As we determine better solutions offered, we will post them here.
Reinsurance - Carriers would be guaranteed that the most they would have to pay on any one individual in a lifetime would be some maximum amount, say $250,000. In return the carriers must offer policies that will pay up to that amount calculated using a minimum $2,000 individual deductible. The $250,000 cap would be a reinsurance provision that would involve the government doing what they do best, big stuff. It is impossible for the government to cost effectively fix the broken arm of an 85 year old grandmother. The government would handle big claims by offering contracts to centers of excellence for specific procedures.
Reporting - All providers will report total health care paid claims to a central organization that will track expenditures of an individual from birth to death. When an individual purchased a policy from an insurance carrier, they would initially buy a $250,000 lifetime bucket of healthcare. If they used it all, and most never would, then all of their future claims would be handled by the federal government program. This system would not interrupt specialty care but would place the decision process between the patient and his primary care doctor, not the patient and his specialty care physician.
Privatization - All the federal programs must be privatized. It is the only way to create true competition and a level playing field. The fix still involves the government, but in a way that is practical. The only exceptions would be federal employees who would remain in the existing government self-funded program, and the Veterans benefits. The ones not excluded would be congress and the administration.
Insurance Company Requirements - Insurers will require that primary care physicians coordinate all care. Insurance companies would be prohibited from offering co-pays that shield the patient from the actual cost of medical and drug care. The actual cost of medical care and drugs must be printed on every bill and disclosed to the patient. Failure to do so will be cause for non-payment of the claim and the patient cannot be balanced-billed for the providers refusal to participate. Insurance companies can use the following underwriting criteria; age, gender, region, Body Mass Index, smoking status. However rated, using four rate bands, the insurer must reduce rates whenever the insured demonstrates that they have taken proactive action regarding negative health issues using current documented results.
Wellness Programs - If employers install on-site clinics or wellness programs they will be given a credit on fully insured premiums. In addition, the federal government will give the employer significant credits against their federal tax liability. State and federal mandates must be kept to 10% of the total equivalent premium cost. Any mandates beyond that would be sold as additional riders paid for by the individual. These payments would qualify for Section 125 tax treatment for employees in a group and for individuals purchasing policies on their own.
Transparency - Total transparency must be mandated for any individual or organization involved with the delivery or financing of healthcare, healthcare services, and healthcare products or drugs.
Managed Care - Managed care must be scrapped and replaced by complete transparency within the provider community.
Tort Reform - Tort reform must be passed allowing for prudent settlements removing the need for unnecessary tests and procedures ordered by lawsuit scared doctors. Not only do malpractice lawsuits increase the cost of care, they also increase the move of doctors out of specific practice creating other risks that, in turn, create new cost. To overcome this there is an increase in defensive medicine to protect doctors when they are sued. There are two factors involved in defensive medicine, one the cost to perform it, and two the fact that some physicians may use the opportunity to increase their billable services for doing defensive medicine. Actually there is no incentive for doctors to not do defensive medicine because they get paid more for those services. And, if the doctor owns devices to do these additional tests, there is an additional source of income. Please see the linked article from Investors.com.
Anti-Trust - No one carrier should be able to write more than 25% of a state's risk.
Individuals - Any individual, regardless of covered status, who does not have a standard rate will be required to enroll in a program to manage their condition with the end goal of reducing or eliminating their high risk status. Failure to participate will increase their cost of coverage by 1% per year.
Purchasing Insurance Across State Lines - There is a theory that if individuals or groups can purchase insurance cheaper in another state, other than the one were they live, that it will create more Compitition and lower the cost of healthcare. The fundamental flaw in this theory is that those who propose it overlook the reason that insurance is cheaper in certain areas. One of the largest reasons is the regional variation in healthcare costs. The consequences of allowing the purchase of insurance across state lines will be that the price will not remain cheaper. The companies that sell the insurance base their rates on their claims cost. If that claims cost goes up they will have to raise those rates to remain profitable. Those cost will go up because they are basing their rates on claims cost in a region with lower costs and paying claims in a region with higher claims cost. To suggest that it will create competition implies that the carriers in the high rate states are taking advantage of their policy holders, when in fact all they are doing is covering the high cost of medical care in that region. It would make more sense to allow individuals to travel to regions where there is lower healthcare costs for significant care. In this model the carrier would be charging higher rates but incurring less claims cost which eventually would lower their rates and place competition where it belongs, in the provider community that is charging unusually high rates for care and services.