How to fix Medicare, Medicaid and Veterans Health System.

Our current health care delivery model is in total chaos. It is horribly fragmented. A recent study by Prof. Zimmerman at UCLA validated my argument for the huge saving in our total health care costs by eliminating private for-profit insurance and patient care delivery entities. Simply put, if we consolidate all of our government and private health care systems into a single delivery model with a single payer, Prof. Zimmerman calculated America could save $750 Billion dollars a year in our total health care expenditures. How? You ask.

There are many factors that create waste and loss of health care dollars used for direct patient care. I will address the major factors:

A.      Take all the government covered health care systems: The Veterans health system, the military Tricare and on-post health care delivery for retirees, Medicaid and all their variations in the states and any other public programs and combine them into a single program we would call a national health plan of MEDICARE for all. This would reduce redundancies in these systems, especially since many patient receive care through several of these programs at the same time.

B.       Profit is one of the largest factors to the high cost of health care. If it was removed, there would be an immediate huge savings in the cost of your health care.

1.        Private insurance is not insurance. The business model for any insurance company is to take in premium revenue and invest that revenue into a portfolio that gives the company a nice return on that investment.  They also calculate that at any given time, they will only have to pay out a small percentage of their total asset holding to claims against the policies issued. They also know that there is a portion of policies issued that will never have a claim against it because the policy has been lost and forgotten. These become pure profit to the company.

In health care that model does not work. A health insurance company today only manages the funds and patients access to health care resources. It is money in, money out. So how do they make a profit? The only way is to select only the healthier population to insure to reduce the amount and size of claims. They must increase premium charged to guarantee a profit.  And one of the most egregious acts, to delay and deny claims and terminate policies when a claim is going to cost too much. They are the much talked about death panels. It’s not the government, but private insurance that gives the thumbs up or down on your life.

2.       More and more hospitals and now more and more outpatient clinics, doctor offices, are owned by for-profit publicly traded companies. This shifts their focus from patient care to the shareholders and meeting projected profit and dividends so that Wall Street analyst’s keep their stock value a buy recommendation.  If they have to short change patient care to meet these targets, so be it.

C.      Currently we don’t have a coordinated delivery model. A coordinated system creates treatment teams with family physicians being the entry point for care. If needed, the patient is referred to a specialist for further workup and treatment. Under a team approach, the primary care physician is constantly being pushed through an electronic medical records system the information from the encounters with all care givers during the course of treatment. The specialist and other care givers have direct access to the primary care physician’s notes and any diagnostic labs that were performed. This reduces the duplication of diagnostic test being performed. This would again have a significant cost savings.  It would also greatly improve the quality of care delivered.

D.      Today, those who are unable to purchase health insurance typically delays seeking treatment when a problem is in an early stage and when treatment is most effective. So they show up at an ER with a more advanced stage of illness. This increases the cost in treating the person and many times after spending a lot of money in an attempt to save the individual; they succumb to the illness and die. This cost is then passed onto others mainly through increased taxes to fund Medicaid, which is the typical way hospitals and doctors get paid for people who are not insured and have little assets to attach.

E.       When people can’t pay their medical bills, they typically end up filing bankruptcy. Now most people think this has no impact on their health care costs, but they would be wrong. There is a huge cost to the public every time a person files bankruptcy. First the person will eventually lose all their assets, but a few that are exempted. This in turn typically requires them to seek public assistance to continue to exist. The money that the health care providers must right-off must be recovered by charging others a higher fee for services. This means that everyone who has insurance and pays taxes will end up paying this loss to the providers.

F.       The amount of administrative costs is overwhelming the system. When a provider is contracted with many private insurance companies, as well as Medicare and Medicaid, and Tricare (military personnel and retirees). They all require piles of forms to be completed just to start treatment. Private insurance is constantly delaying and denying payment to providers. It is a game played by them to see how many will spend the time and cost to fight them for payment or how many providers will just give up and right off the charges.  For almost two decades they have made billions of dollars from private physician offices that don’t have adequate staff or properly trained in how to play the game with insurance companies to get what is owed to them. This adds more cost to mainly uninsured but able to pay their medical bills to cover this right off. Before managed care and the contracts that state that if they give care away to anyone, they must also give it for free to the insurance company also. These companies will visit a doctor’s office and audit their claims to see if they discounted service below what they pay or have given away care. If they find such, they will demand repayment of what they paid the doctor from the date the doctor discounted or gave away the care. This has bankrupted several doctors over the years.

G.     There is a need for a national highly secure VPN that ties all providers computers and medical information systems together so that if a patient presents to a medical provider outside their regular network, the provider can have access to critical information to improve the speed of treatment, reduce redundancy in diagnostic tests and communicate to your regular provider that you have been seen and treated by another provider. These system also need to use analysis of the massive amount of data to perform computer generated logic to assist the provider with diagnosing a problem and possible recommended treatment protocols. This could save a lot of time and money as well. It would also help deliver higher quality of care by using current outcome data and analyzing the various treatments and which had the higher success rates.

H.     To determine how providers are paid, there would be geographic and economic zones. Within these zones the providers will collectively work with health care economists and professionals in calculating what the actual value of the service should be. This most likely will be a fixed sum given to the zone and thus given to smaller provider teams for the actual care given. There would be a quarterly panel of professionals who will determine what care should be covered under the national health plan as core services. Individuals can purchase private gap insurance to cover elective or other services not covered by the national health plan core coverage. But most needed care will be included in the core coverage. Costing is considered on a geographic and economic zone because the cost of rent and other variable cost factors relative to these two factors make a big difference it actual cost of delivery. But the bottom line for providers is they have a balanced personal income level to make rural medicine economically equal value to urban medicine. Of course rural provider would receive additional compensation because their level of care is greater by the primary care providers in such areas.

a.       After the costs have been negotiated, the budget would be presented to the Department of Health and Human Services and then it will present the collective budget and what the premium paid by everyone will be to Congress to give an up or down vote. If not vote is given within a defined period of time after presented to Congress, the budget is automatically adopted as approved. If it is voted no, then everyone goes back to work to make a new budget that will pass a yes vote. If there is a no vote by Congress on three consecutive presentations for a vote. The fourth budget will automatically adopt without Congressional approval. This will protect to some degree politicizing of the program.

b.      If a citizen is unable to pay the premium, assistance will be provided through a trust fund setup by Congress that is paid into by a variety of fees charged. One of these is a small fee on every investment transaction made, unless in a qualified retirement savings plan. This could easily cover the premium assistance to the indigent.  

I.        Pharmaceuticals are another major cost factor. Negotiated prices for covered medications are required to reduce the cost of medications. Then a restructuring how these companies operated is required. They need to be treated like a monopoly, since most will hold a patent on a medication that is critically required for life.  Caps on profit and oversight of risk should be required, like any monopoly. Of course these companies should have an economic incentive to research new medications. But many new medications are started with taxpayer money through the National Health Institute (NIH). After it reaches a certain level of research, they auction it off or assign it to a pharmaceutical company to finish the research and development of the medication, this includes the clinic trials to test the medication on humans.  That information is now submitted to the FDA for approval. But the FDA has become corrupted with the revolving door of people from the pharmaceutical companies going into the FDA then back out to the companies. To keep this from happening is a difficult matter. In order to properly function the FDA need highly trained and qualified personnel to do its mandate. But they are only found in the pharmaceutical companies and not coming out of some advanced specialized degreed education system. The FDA requires Ph.D. level pharmacologists, chemists, physicians, surgeons, and other health care skilled personnel. These are the same skill needed by pharmaceutical companies, so it is a difficult issue to resolve and I don’t have an answer to this one.  With that said, the national health program must negotiate with these companies for the price of the medications covered under the program. This could save a lot of money in our health care costs.

J.        Medical liability is another factor, both in direct premium cost for their liability insurance and indirectly by practicing defensive medicine. Physicians read in their period journals and other communications how a jury or judge ruled that a provider didn’t do something that may have had some relative causation to an injury, even when whatever it is the jury or judge says they should have done is not medically necessary, covered by the patient’s policy, thus the patient decided to not have the diagnostic test done for reason of inability or desire to pay for it out of pocket. So physician will keep that in the back of their mind and if a similar situation presents itself, they will make sure the patient get the diagnostic test, even though they know it will not reveal the underlying problem. If the test does not reveal the problem and the patient is referred to a specialist, that specialists will also run the same test just to cover his/her butt. This drive up the cost of care. Additionally the large number of suits filed and the malpractice insurance companies wanting to make claims go away, even if they know they are frivolous, they will offer a settlement if the settlement is less costly than defending the provider. This drives up the premium the provider pays for their insurance. Trial attorney’s knows this and use this to their advantage. Most malpractice claims are settled and never make it to trial.

1        1.  The way to overcome this lottery is to establish a NO FAULT injury system.  This system does not require assigning blame on some individual or provider organization. The injured patient need only present to the NO FAULT program evidence that they were in fact injured through a medical encounter by submitting a claim. The program will obtain all the medical records and interview the providers who are involved. They will then determine the validity of the claim. Since this is not threatening to providers, they will not be so defensive in protecting their honor and livelihood and will work with the program to determine what, if any injury occurred.

2       2.  Combined with the national health deliver model, any injury will be automatically taken care of. So medical bill compensation is not an issue to consider. So the economic loss by an injured patient will be for loss of income in the short-term or maybe the long-term. It may require home health services or skilled nursing home care. When these are present, the NO FAULT program will review the case and through computer modeling will determine how much the patient and or family will be paid for their loss or cost. This will be given out in an annuity model so that it is not a win-fall gain that can be misused and abused leaving the patient in need for public services to replace the lost compensation from the No Fault program.

3       3. If the program panel determines that the provider was negligent due to poor skill or training, that finding will be forwarded to the agency that regulates provider licenses. They will create policies that will determine what will happen to the provider. Some of these might be termination of their license to practice, suspension for a period of time, or require additional training and testing to certify that they are now proficient in the procedure. Since currently, it is the insurance company that pays the penalty award to patients; it has little effect on the behavior of the provider. In my plan, it requires a change of behavior or skill or they lose their license. With a national database of those who have had their licenses revoked, suspended or required additional training, if the provider moves to a new location, their history follows them.

After fully implemented, the total cost of health care would be greatly reduced, access would be readily available, and the quality would improve.