HEALTH CARE REFORM, MY PLAN.

Here is my suggestion for a cost effective health care system for America.

First what is the crisis? There are some who question the need for reform because they are ignorant of the developing crisis. Let me explain what I know so far. Premiums are rising faster than income, stripping away disposable income that is critical for a growing economy. Insurance companies are shifting more of the cost to the patient in higher out-of-pocket costs in deductibles and co-pays at the same time increasing premiums. The reimbursement or compensation paid to health care providers is declining relative to operating expenses posing greater risk of them going bankrupt or closing their practices. The average age of America’s physician population is reaching 50, with fewer new physicians and nurses being trained. For the past two years, there are more foreign trained physicians than American trained practicing in America. Because of the demanding work hours of physicians 60+/wk, the bombardment from insurance companies of forms and other unnecessary paperwork that does not add to the quality of care of the patient, plus the constant threat of malpractice suits, and the decline in personal income, fewer of our smartest and brightest students are selecting health care as a profession. We are also experiencing a greater demand for health care as the country's population grows and the baby boomers are at an age that demands more care. The confluence of these issues has put our health care system in life support mode. Every one of these issues needs to be addressed in any reform Congress passes. Otherwise, there will be a greater crisis in access to health care, the quality of care able to be delivered and the cost will escalate relative to high demand and limited supply. Isn’t that the capitalistic way of the free market?

There are several components that have to be addressed in order to reduce the cost to consumers for health care: Tort reforms, elimination of profit, provider compensation model, de-politicize the process, IT efficiencies, pharmaceutical price control and outcome data research.

Tort Reform:

For those who do not know what tort is, it the civil law suits for medical malpractice that create a need for defensive medical practices and high premium fees charged to medical providers to cover claims of injury. The current system adds nothing to improving health care and is more a lottery win for those who obtain compensation from a sympathetic jury. Lawyers will receive as much as 40% of the award plus expenses for expert testimony, office fees, filing fees, court fees, etc. What is left for the patient is very small and in many cases the patient spends the money on luxuries, rather than their future health care needs. Some receive it through an annuity insurance policy in monthly or annual payments, if the award is large enough. Punitive damages are more punitive to you the consumer, because these large awards are passed on to you in higher medical fees. The majority of claims are a result of several factors or events, not all under the control of the medical professional, which collides together causing an injury to a patient. So how can this be changed and be fair to those who are actually harmed by a medical professional? Here are my thoughts: Eliminate the current tort structure and develop a no-fault insurance pool. Every medical professional would pay a premium; much like they do now, into a claims pool, the pool is invested in conservative instruments to raise additional revenues for claims. When a person incurs an injury, they submit a claim to the claims pool organization, a mutual type of nonprofit foundation. A rotating board made up of medical professionals, claims analysis experts, economic loss evaluators, investigators, a lawyer as the patient advocate, and an equivalent to a judge to oversee the claim process to insure fairness. There is no defendant because there is no suit against the medical professional or facility. This board would review the medical record, any supporting evidence the patient might submit, including professional testimony, and medical risk data that is obtained over time regarding the probability of this type of injury occurring for the condition being treated. Under my plan, the person would have their health care needs provided through the single payer model, so awards for medical expenses would not be necessary unless they are extreme, and then the funds are given to the single payer system to cover the extra cost. If there is economic loss, then the board would determine the amount to be paid over time to the patient; much the same as the VA system and most workmen’s compensation models. No punitive damages would be awarded. If the board determines that the medical professional is incompetent to provide the treatment that caused the injury, then they have the option to suspend the professional’s license to practice, revoke the license, or require the professional to attend training and pass an exam of competence before they can provide that treatment again, with review of competence in designated intervals post exam passage. In this way you are not eliminating good doctors that found themselves in a bad situation and not requiring their removal from the profession. However, if they are just a bad doctor, then they can have their license revoked and prohibited from medical practice again. Under this model you eliminate the profit from medical malpractice insurance that eats so much of the premiums paid by the medical professionals and allows more money for correcting the injury to the patient fairly. This would reduce direct and indirect cost to consumers for their health care, as these insurance costs are factored into the methodology used to compensate medical providers for their services. It would also eliminate the need for defensive medicine, thereby also reducing costs paid by you.

Elimination of profit:

Prior to Reagan in the 80’s insurance companies were a mutual, that being the policy holder was also the share holder of the company. Any profits would be passed onto the policy holders through reduced premiums or dividends. Deregulation allowed them to become for-profit and traded on the open market. This changed who these insurance companies answered to, from the policy holder to the market share holder, many being large corporate holding companies, that are not interested in you the policy holder in being made hole after a loss, but stock value, profit and dividends relative to their investment. This created a system were the insurance company had to start to deny and delay payment for loss to the policy holder in order to meet Wall Street analysis’s earnings targets and stock value. It also required them to use more of the premium dollar to market their products to the consumer, thereby reducing available funds to pay claims. Since 1945 insurance companies have been exempt from anti-trust regulations and allowed to collaborate to fix premium prices. Initially since the insurance companies were non-profit mutuals, this established premium stability in the insurance industry that kept the cost down for all consumers, regardless of the socioeconomic rating of the community you lived. However, deregulation did not remove this exemption and they have been able to collaborate regarding coverage, operating procedures and premiums without any oversight, thus raising premiums collectively at will regardless of the economic consequences to the consumer. The more they can shift the out of pocket cost to you the consumer and raise your premium, the higher their profits, dividend yield, thus an increase in stock value. The CEOs can make up to $57,000 PER HOUR under this model.

How do we eliminate profit? First establish a single payer expanded Medicare program for every citizen. A professional board of providers, hospitals, expert medical economists, and actuaries would establish the amount of money paid to providers, using the DRG style system used to pay most hospitals. DRG stands for Diagnosis Related Group that is a fixed fee paid for a specific diagnosis, regardless if it takes one trip to the doctor or many to treat the condition. There are modifications to this when more than one diagnosis is present and other circumstances require additional treatment methodologies to cure the condition. By use of best outcome data across large populations and demographics, providers can have guidelines that can help them provide the best treatment and the least cost, but knowing that every individual is different and variability is acceptable. This variability can be tracked to see if there are common trends that can be used to help providers with future patients or does the physician over utilize or treat without better outcome data. If so, then the appropriate medical board can address this issue through either education to bring the provider up to speed on appropriate treatment protocols or recommendation to Medicare for compensation reduction for unsubstantiated over utilization or treatment. If this is done through the health care professional’s currently established boards that conduct their board examination and certification, there would be negligible cost to manage these outliers. This would require all providers to be board certified to receive compensation from the Medicare plan. I know many say that any professional can not discipline their own, this is not true and I have seen that physicians are very critical of their own for poor care and are not shy about demanding a physician to become competent in their field. This is also a self interest of the physician who may have to be involved with a patient referred from the incompetent physician. No one wants a miss treated patient, and thus oversight is a normal process in today’s medical community. In fact most hospitals require a physician applying for admitting privileges must be proctored by another physician in their specialty to insure competence. If they fail, which happens, then they are denied privileges to admit patients to that hospital. Similar proctoring can occur in the office based practices as well through the management of the medical boards. This process will increase the quality of care being delivered.

Any direct patient care facility or entity must be a non-profit foundation, government owned, a mutual insurance company owned, community owned, or charitable organization. By this I mean it should not be publicly traded or closely held for the purpose of profit distribution. This will return the interest of the facility back to the patient in their charge instead of the share holder and Wall Street. I consider reasonable individual compensation of the physician or provider as payroll, not profit as defined. Equity in compensation between specialties can be accomplished by the board that establishes the DRG payments. There will be some conflicts between some specialties, such as primary care and surgeons, but that has always been the case, but mathematical matrix can reduce or eliminate this conflict.

Private health insurance companies would be required to return to a mutual model and no longer traded on the market. The policy holders would receive any economic benefit of profit and would vote on management compensation packages. This will drive the premium rate down and improve customer service, less denials and delays and the policy holders can vote to change management if the plan is under performing. It worked well in the first half of the 20^th century, there is no reason it can’t work well now.

De-politicize the process:

By establishing a professional board that determines what treatments are covered under the single payer model, it would reduce or eliminate any conflicts with political will and ideology. Politics can not be part of the process in determining what care a person receives, whether abortion, family planning, medication, procedures, or by race, religion, party affiliation, etc. Care will be determined by science and outcome data obtained from all providers through a comprehensive IT network system of aggregated data collection and analysis. The professional board will meet every six months to review any new data; covered services can be modified to meet the changing dynamics of medical science. No legislative body or political administration would be permitted to micro manage what is covered under the plan. They can only vote up or down on any premium subsidy funding. Medicare would become a semi-independent entity, but under the oversight of the Secretary of Health & Human Services, who is responsible to the president and thus the people for its proper management. The Secretary may not interfere with any of the boards that are determining covered benefits or the premium to be charged. The Secretary would be the senior manager of the plan and responsible to manage the professional, non-politically appointed federal workers of Medicare, as they do now. The Secretary would present to Congress and the President his/her budget for the indigent subscriber’s premium subsidies.

IT efficiency:

All health care providers would be required to have a certified electronic medical treatment management system that maintains the patient’s medical record, aggregates their treatment plans, collects outcome data, and allows other medical providers access to the appropriate medical information to effectively treat a patient that has presented to them or referred to them. This would reduce redundancy in laboratory tests when a patient is referred to another provider and should the patient present to an emergency facility, their history and current treatments would be available to reduce redundancy in tests and improve the speed of treatment. In many cases the physician would not be waiting on the lab to run test that might have been done a few days prior or can be used as a comparative to evaluate the change in the patient’s condition. This is invaluable information that is not available now that then requires additional time and test to evaluate a patient’s condition.

The IT system can also keep the provider current on recommended treatment protocols for a diagnosis as established by scientific data. This would be a great help to the provider in prescribing medications, treatment therapies, tests required, and other medical advice. The provider still has the option as to how he/she treats you, because everyone is an individual and some react differently to recommended protocols. Additionally the system should not discourage some clinic experimentation to further enhance treatment outcomes. The system would in fact assist in this experimentation and validate if the modified treatment plan worked and can it be replicated in other similar patients. All of this greatly improves the quality of patient care.

Pharmaceutical Price Negotiation:

Medicare and private mutual insurance companies would be allowed to negotiate price with pharmaceutical manufacturers and suppliers. The patient would be liable for a maximum of say $50.00 for a single drug for a 30 day supply or a maximum monthly out-of-pocket co-pay for all pharmaceuticals prescribed to a particular patient, or a maximum monthly out-of-pocket co-pay for an entire family. For some meds, the $50.00 or less would cover the entire cost, for others Medicare and the private mutual insurance companies pay the difference from their plan coverage. With this said, it is important that the companies receive adequate revenue to continue product research, development and testing. Without this revenue miracle drugs would cease being developed.

Provider Reimbursement:

I have covered much of this subject earlier. All providers would be paid on a DRG model, similar to how most hospitals are paid now. Exceptions for additional payment can be submitted for outliers that are not responding to the recommended treatment protocols as established in the DRG model. The patient would have a co-payment to reduce over utilization of the system for trivial medical needs. For indigent patients, a waiver can be obtained. Preventative health screens would be incentivized by increasing co-pays levels for those who fail to have preventative health screening test and counseling at appropriate times for age and gender. If we can encourage more patients to get screened at certain stages of their life, many diseases can be found early and treated at a lesser cost and better long term outcome than our current sever disease management model. Of course not everyone will live a health lifestyle, but with education and screenings, some behavior can be modified and early detection can be accomplished.

Patients should be encouraged to seek treatment from a primary care provider before self referring to certain specialists or presenting to an emergency department with non-emergent conditions. It has been well acknowledged that primary care providers can deliver most common health care needs at a much lower cost than most specialists with better continuity of care and including the family or other support system to improve the outcome of the patient’s treatment. In this regard, patients who self refer to certain specialists or an emergency department with a non-emergent condition would pay a higher co-pay to that specialist or ER; however if referred by a primary care provider, the patient would pay a lower or no co-pay. This still give patients the option to self refer or save money by seeking care from a primary care provider who then determines the appropriate specialists to refer to or can be treated by the primary care because it is within their level of skill. Referrals would not require pre-authorization as most providers know when to refer and when to treat themselves. I know some patients will demand a referral, and if they are willing to pay the extra co-pay and a referral processing fee to the primary care provider to cover the processing costs, then let them see the specialist they desire. Eventually this behavior for many will change and seeking care directly from their primary care provider would be acceptable. The problems with mandatory primary care visits in the 1990’s is that the whole idea of managed care was new and most behaviors were conditioned to self referral to every medical provider, especially those who never used a primary care provider, thinking primary care was inferior to their specialists. Some of that still exists today, but much less than then. Most have been conditioned to some form of managed care and seeing a primary care provider, if it saved them money, would not be objectionable.

Data collection and analysis:

I also covered part of this earlier. A network similar to the Internet is needed to connect all providers of health care so crucial data can be exchanged between providers and also for claims submission and payment. The less paper created and managed, the lower the administrative costs. Quality of care can be increased by exchanging information between providers, collaborative care can be performed among a group of providers, and outcome data can be collected to determine best practice protocols for treatment and management. As long as the data is secure and an effective oversight system is established to prevent, as best as possible, any abuse of the data. Patients should be in control of their personal data, but not to the limitation of effective medical treatment between providers. If you have health insurance or have Medicare, you already share your personal data with the payer of your claims; they need the data to determine what they will pay, so most of us have very little privacy in this regard already. Obviously employers, life insurance companies, non-authorized family members or anyone not a medical provider involved directly in your care would be prohibited to access the data. This is already covered under the HIPPA laws.

Private Insurance Model:

For those who want to purchase a private mutual health insurance plan can opt out of the Medicare plan. The person would pay the Medicare premium rate as though they were in the plan, but the sum they paid into the Medicare plan in premiums would be sent to the insurance company of their choice. Any additional premium would be paid by the patient directly to the insurance company. The reason for this is that should the private insurance plan be canceled for any reason, the person would automatically default into the Medicare system for care. No laps in coverage. Law would be established that private insurance patients will not receive preferential treatment in obtaining access to providers or services. There should be no additional incentive or benefit to private insurance, other than a broader range of covered treatments for illness or elective procedures outside that which is covered by the Medicare plan. The mutual would be restricted to pay the providers the same DRG rates as the Medicare plan, to reduce manipulation of providers with compensation incentives. Thus if a mutual can be competitive in premium or lower as Medicare, and pay the same for the provider network, then let them try. That would also keep Medicare on its toes to maintain quality, customer service and keep costs in check.

A person using the Medicare plan can also purchase additional insurance for treatments that are not covered under the Medicare plan or for experimental treatments. These would be supplemental plans, much like what is offered today to Medicare subscribers.

This new Medicare plan would be for those under 65 years of age and have a new PART designation, such as Part E. Current Medicare recipients would not have their coverage changed, they would continue to receive Part A & B coverage and a modified part D for medications, to eliminate the doughnut hole and eliminate the private model now used. By implementing some of the cost savings through IT systems and best practice protocols and negotiated prices for medications, covered benefits for this group could be enhanced without additional cost in premium to the subscriber or to any government funds.

The premium would be a payroll deduction for those who are W-2 employed and the self employed would pay the premium with their other income taxes liabilities. An employer may elect to participate in covering all or part of the premium of their employees, but could not mandate which plan the employee chooses; the Medicare Part E plan or a private insurance plan. The employee retains all rights of choice of plan they desire to be covered under. This takes the employer out of the decision process of how your health is covered. If the employer elects to participate, they can use a simple accounting credit to an employee’s premium deduction to reduce the employee’s premium deduction within their payroll records, but the employer would pay the total amount on behalf of the employee with the monthly premium payment to Medicare. The premium paid by the employee and/or the employer would be pre-tax deducted. Unions could act as the facilitator for this accounting process as well and manage the payment for the employer and employee or simply negotiate any employer participation level.

Indigent Citizens:

The premium charged by Medicare Part E would be based on a sliding scale relative to the families or individual’s income from all sources. Government subsidy would be required to cover the shortfall in premium paid by indigent citizens. Obviously this is a big issue regarding increase federal budget demands. There is several taxing option that would have minimal impact on the poor and middle classes and would cover this shortfall. As proposed, a tax on sweet sugary beverages with less than say 70% natural fruit or vegetable juice and any beverage with carbonation, 1 cent on one liter or less and another penny for each additional half liter. These beverages are not nutritionally helpful, so they do not have an impact on a family’s nutritional diet. These beverages are a luxury. A small tax on fast food such as pre-prepared – ready to eat - foods for immediate consumption, with a few exceptions such as a whole roasted chicken from a grocery store. A few cents added to these items would not be enough to stop people from purchasing them, but would generate significant tax revenue. An increase in the income tax of the top 1% of the wealthiest; who should give some back to the community from whom they gained their wealth. With a combination of small taxes on luxury items and the other taxes I proposed here, the total sum would easily cover this premium subsidy needed. In the long term treating this population up front would reduce total cost by treating their health care needs early and avoiding the high cost to government, now incurred by those who don’t seek care until they are in sever distress.

Here are some of the numbers:

Private insurance consumes 15% to 25% of the premium dollar for operating overhead, marketing/advertising, sales commissions, CEO compensation, share holder dividends, corporate taxes, and corporate equity accumulation to raise stock value. Medicare consumes 4% to 5% of the premium dollar. The recovery of this 15 or 25% on say a two hundred billion dollars in premiums would equal approximately 40 billion dollars, but with health care near one trillion dollars, the savings would be more like 300 billion dollars each year. The reduction in redundancy in tests and treatment through information technologies would save another 75 billion dollars or more a year. Negotiation with pharmaceutical manufacturers could produce 150 billion dollars in savings. The change in tort compensation to the model I proposed would produce another 75 to 100 billion dollars in savings. The total sum would easily cover the indigent of our society and reduce your premium to an affordable level relative to income. Most of these figures are guesstimates based on what little information I can gather as a lay person. It would require the CBO to flesh the numbers out.

Personal income for health care providers needs to be realistic to the level of professional services provided and comparable to other professions. This is the only way new providers can be recruited into the system. Congress also needs to provide funding to medical and nursing schools to increase the number being trained. Physicians who must barrow money for their education and during residency training and will end up with several hundreds of thousands of dollars in debt by the time they enter practice. Many have a hard time paying off this debt and still have a family and save money for their kids to go to college without borrowing like they did. When you compare most physicians’ incomes to other professions that require less education, it has horribly declined. Why would someone choose medicine over say law or engineering or business? It has to be economically attractive, as well as self rewarding to help others in need.

To me this is a no-brainer. Why would someone want to support an out of control private insurance industry whose motivation is profit and dividend at the expense of the subscribers? The current model is not sustainable and more and more providers will go bankrupt or leave medicine and fewer of the smartest and brightest entering health care as a profession will only lead to a greater shortage of medical providers, higher costs as demand exceed suppliers of health care and insurance companies controlling access to the dwindling supply of providers. Just like the current oil industry, there will be no end in how high premiums will rise.

NOW IS THE TIME, WE CAN NOT WAIT, REFORM NOW!