LIBERTARIANplace

A Ten Point Health Care Reform Plan

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So Easy a Caveman Should Have Thought of It

Introduction:  Let’s not just blame the insurance companies. Ultimately it is the health care consumers who are at fault. We are the ones who have demanded unlimited coverage for everything from minor care on up, and have not wanted to pay large deductibles or copays. We are the ones who have demanded expensive diagnostic procedures at the very hint of a problem, rather than taking a more cautious approach. We are the ones who want the best doctors, the newest hospitals, the state of the art equipment with the most luxurious waiting rooms, and we have demanded all of this for less than we spend on a car payment. The insurance companies and our health care providers have given us what we want. Because we never see the bills, or at least have to pay very much of them, and because we don’t have to deal directly with the insurance companies to get our claims processed, we have no sense of how much our demands actually cost or how much is involved in getting them paid for.

There are several common sense ways we can change our health care delivery system and the methods used to bill and pay for care that would dramatically reduce the cost of health care immediately. But, incredibly, none of the plans or ideas discussed in the media or seriously considered by our elected leaders addresses this issue with anything more than a side comment. All the current bills and proposals will do is attempt to pay for a little more of the inefficient system we have, and require everyone to pay more for it, either by taxation or by mandatory coverage.

Our proposed program addresses many of the key root causes of the problem, and offers practical solutions that should be able to get bipartisan support.

Our plan eliminates the pre-existing condition clause, and the lifetime maximum. It offers a public option as a last resort but only for the purpose of covering the cost-overruns related to indigent care and the cost of major care for those who are exceptionally costly to care for. We propose changes in the ways providers charge and bill for service, the way insurers cover these costs, and the way patients pay for it. We also propose changes in the delivery of minor and routine care, and restrictions on emergency room use. All of the above can be done by legislation with no cost to government, and will protect the consumer from burdensome medical costs, either for insurance or care. Finally, our plan provides a narrowly focused program for compensating providers for care that exceeds their ability to hedge against risk.  

1. Pass a Patient’s Bill of Rights. Right off the bat, let’s fix the problems most often cited from the patient’s point of view.  Patients should be guaranteed the ability to purchase health insurance at a reasonable cost regardless of their medical history, should not be penalized for their gender, and should not be subject to lifetime limits on coverage for essential care. Rationale: These issues, more than anything else on the patient’s side of the system, are what is driving the cause for health care reform, and for good reason. However, it is not fair or even workable to expect insurance companies or providers to bear the cost of the higher risk that comes with such guarantees. The final protection included in the patient’s bill of rights is the right to decide not to purchase health insurance (rather than compulsory coverage), although such a privilege comes with significant risks and responsibilities that must be born by the patient (see below).

2. Pass a Patient’s Reponsibility Act. As stated above, we do not agree that it is appropriate or even (arguably) Constitutional to require individuals to purchase health insurance. However, it is proper and reasonable to pass legislation that holds patients responsible for unpaid health care costs that would have been covered by insurance had they purchased it. This would be enforced by creating exclusions to bankruptcy protection, similar to those for certain types of student loans,  that would not allow people to discharge their liability for health care expenses in bankruptcy. This protects one’s freedom to choose whether or not to purchase insurance but also provides natural and reasonable consequences for the decision not to purchase coverage.

3. Make basic health insurance for catastrophic care only. Catastrophic care would include any hospital inpatient admission for a non-elective purpose, any major outpatient diagnostic test or procedure for non-elective purposes.  As a trade off for excluding minor and routine care, these costs could be covered at 100%.  Rationale: We don’t use our auto insurance to pay for an oil change or our homeowner’s insurance to pay for a minor repair, so why should our health insurance pay for minor and routine care? By limiting insurance to what is the true nature of insurance (pooling resources to cover risk that cannot be anticipated or prevented) it will be less expensive to cover everyone, and will make coverage of pre-existing conditions less risky and less costly. There is nothing to prevent insurance companies or health care systems from offering programs  that would cover  the costs of minor and routine care, but this should not be included in a basic health insurance policy because this type of coverage is not actually insurance.  Those who desire such coverage and can afford it should be free to purchase it separately if it is available.
4. Make emergency rooms emergency-only facilities and establish a new system of minor care.  Rationale: Currently the law requires emergency rooms to treat any patient who presents, regardless of the nature, severity, or urgency of the complaint being treated. Emergency room care at a discounted network rate costs a minimum of $700. By allowing emergency rooms to turn away non-emergent cases, diverting such cases to minor care centers or to a primary care physician practice, that $700 minimum can be reduced to $25-50. Multiply the $650-675 minimum savings per treatment event, you literally save billions! This would require legislation that changes the requirement to see everyone to a requirement to see only emergency cases. Too harsh? Consider this. Would anyone be taken seriously if s/he showed up at the intensive care unit and demanded to be admitted for a minor illness? Allowing a patient to demand emergency room treatment is just as ludicrous when you separate it from what we think of as “normal” and consider it from a pragmatic and functional perspective.
5. Make minor care fees payable prior to receiving service.  Rationale:  In order to make these services available for as low as $25 per event, it is necessary to eliminate the costs of billing and collection. Therefore, patients would be required to pay the fee at the point of reception, prior to being taken into the examination room. Rationale:  Since minor care is not a matter of life and death, patients who cannot pay can be turned away without immediate harm. However, if patients are re-trained to the practice of paying up front, they will find a way to pay for care in the same way that any other service or product must be paid for up front before acquiring it. The $25 fee for this type of service is less than the cost of a carton of cigarettes or a large pizza and should not be an undue burden on consumers. Providers would have the prerogative to treat hardship cases at no cost if they choose, or  they can opt to participate in the Indigent Care Plan (see below) 
6. Put the responsibility for processing insurance claims back on the patient.  Rationale: Providers (especially physician practices) can save up to half of their total operational costs if they are not involved in processing insurance claims.  Also, if the patient is not involved in the claims process, they have no direct relationship with their insurance company. If patients were treated the way providers are treated by lugubrious insurance claims practices, they would not tolerate it. There would be consumer backlash. The best way to reduce or eliminate insurance company stalling and obstruction is to make them directly accountable to the patients who pay for their coverage.
7. Simplify Insurance Coverage.  What is covered and not covered by an insurance plan should be clear, simple and uniform, and it should be determined by a doctor’s  certification that a given type of care is medically necessary and is the best practice for the patient. If there are not hundreds of exclusions and prerequisites it is simple for patients, providers, and insurers to determine what is covered and the amount of coverage. Rather than allowing insurance companies to create a boondoggle of coverage criteria, the doctor’s statement that the specified treatment is best for the patient, if it fits medical protocols, should be sufficient to obtain insurance payment for care. Physicians who are found to abuse the system, can be decertified by any insurance plan. Rationale: This is the other half of putting the responsibility for processing claims back on the patient.  If the patient is to be responsible for filing insurance claims, the process must be “so easy a caveman can do it.”
8. Replace Fee for Service and Itemized Billing with Flat Rate Billing.   Rationale: Not only does fee for service and itemized billing encourage unnecessary treatment, but it costs significantly more to track and manage. If providers billed patients for their fair share of overall operating expenses rather than for each individual procedure, supply item, and medication administered, costs would be much less, and there would be a built in incentive for efficient management of staff, resources and inventory.  
9. Go paperless and digital. There’s no controversy over this one. Making medical and financial documentation digital, eliminating the cost, labor-intensity and eco-unfriendly use of paper documents is good for the bottom line and good for the environment. It also cuts down on redundant medical treatment if records are accessible through a global digital network. 
10. Create an Indigent Care Fund (could be private, or as a last resort, a public option):  An indigent care fund would be created for private or public management, depending on the availability of private vendors willing to engage) that would reimburse providers for all or a significant percentage of their otherwise uncollectable care costs. These costs would include indigent care as well as the cost of extraordinary care that exceeds margins to be established. Patients with pre-existing conditions would be tracked and when costs become extraordinary, insurance companies that choose to participate would be reimbursed for overruns.  The plan would be funded by charging participants a premium equal to a percentage of fees billed to their total population, and fees would be payable at the time of billing, not at the time of collection. Insurers and providers can opt to participate in this program or opt out, but if they opt out, they must write off their uncollectable fees (providers) or cost over-runs (insurers). If they opt in, the upfront assessment of premiums based on total billing provides an incentive to keep fees down.  Rationale: It is unfair and unworkable to expect insurance companies or medical providers to absorb all the increased costs relative to enforcing the patient’s bill of rights. We are confident that the efficiencies we have created by changes in the delivery and payment system in items 1-10 will balance out many of the additional costs involved with expanding coverage, however there is the problem of extraordinary care costs, and of paying for indigent care. Therefore we have created this solution which is, best-case scenario, privately run, but if necessary we are also recommending the creation of a public option as a last resort, that would operate the fund as described above. This makes sense because ultimately the government pays for much of the uncollectible medical costs in our current system, except it is by default rather than by design. This proposal actually creates a system for getting providers paid for indigent and extraordinary care and managing the government’s exposure to cover these costs when necessary.   

Conclusion: This plan does everything. It expands care and coverage to everyone, ostensibly within a fully private system, but with a public option as a payor of last resort. It makes care more efficient, insurance more straightforward, and spreads the cost between consumers, insurers and providers in a fair, equitable and manageable way. It does not require an expanded bureaucracy or an extra penny of taxation. It’s so easy a caveman should have thought of it.   

Detailed Discussion of these ideas

This plan was written and conceived by John W. Howell, who retains any and all intellectual property rights to this program design, as of 02/01/2009 and henceforth. Permission is granted for use by political advocates and officials for the purpose of advocating or drafting legislation only.  Contact: john@johnwingspreadhowell.com