HEALTHCARE
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Part Four: New Ideas, Private Solutions-- Back to Basics on Health Insurance
Editor's Note: In part one we discussed the nature of insurance as risk management, as a defense against major expense that is rare and unpredictable versus using health "insurance" as a maintenance plan. In part four we will describe a true health insurance plan that would be much less expensive than "traditional" health insurance plans.
It's definitely not rocket science. Again, think of your auto insurance or your homeowner's insurance. They protect you from major accidents, acts of God, catastrophes. Now imagine a health care incident that would be comparable to the kind of even that would be eligible for a claim with other types of insurance. It would fit the description of what used to be called "Major Medical" insurance. It would not include routine or preventive care. It would be an event that would cost hundreds of dollars at the least, and to which a new deductible would apply for each new reimbursable event. The consumer could choose a deductible amount that fits their situation. Higher deductibles would correspond to lower premiums, and vice versa, just as with your homeowners or auto insurance.
Obviously there are hundreds of different combinations of benefits and features that could fit this description and we would encourage maximum flexibility for customization. However, the following sample plan would fit this description.
Major Medical Indemnity Insurance Plan
Deductible: $1,000 per event
Covered Expense: All charges related to...
- an inpatient hospital admission
- an emergency room visit (per new emergency only policy, see part 3)
- non-elective surgery
- major diagnostic procedures
- rehabilitative care related to major illness, major accident/injury, major surgery
Systemic Features:
- Paperless
- Limited claim review (Instead of employing an army to find technical loopholes to delay or deny claims, operate with the assumption that if claims are signed by the physician providing care, the claims are legitimate and the care was appropriate. Any review would be random and rare for quality control purposes, or in response to an allegation of fraud or abuse related to a specific case.)
Obviously terms such as "major" and "rehabilitative" would have to be defined but such definitions are not necessary for purposes of this article. The point is that this type of true insurance coverage looks much different, much less comprehensive than what we call health insurance today, but it is a good example of reverting to the idea of true medical insurance. This plan would not include outpatient services except those that are related to diagnosis of major illnesses.
There are several advantages of reverting to this type of coverage.
- Premiums will cost significantly less and are likely to stay in line with overall inflation because there are limits and deductibles that work to prevent over-utilization of health services and abuse of "insurance" to pay for elective services.
- Because of the high threshold applied to a reimbursable event, fewer pre-existing conditions and/or chronic health problems would disqualify someone from being underwritten by this type of insurance. Only those with a certainty or likelihood of requiring extensive and frequent inpaitient care due to chronic illness would be considered "uninsurable."
- Cost savings associated with this change would make it easier for employers to offer medical insurance and for those who do not receive insurance as a benefit of employment to purchase it on their own.
Optional Ancillary Coverage
Those who wish to have medical coverage that resembles the current PPO or HMO model more closely would have the option of purchasing additonal coverage for routine and minor care, however this would not be considered "insurance." It would be identified for what it truly is: a group, bulk-purchase, shared expense medical maintenance plan. For people who have difficulty budgeting for routine medical care, this might be attractive. Rather than worrying about paying high deductibles for major care and the full fare for incidental medical care as it is needed, consumers could pay a monthly membership fee (preferred over the term "premium" since this plan is not and should not be confused with "insurance") for a one from a choice of variety of plan designs that would cover what the major medical plans do not, and would also cover all or a portion of deductibles.
It is not rocket science! The combination of
- removing the health care provider from the role of insurance claims processor,
- restructuring the accounting and billing systems used for medical care away from itemized fee for service accounting to holistic, comprehensive budgeting, accounting and billing using simple units & levels of care rather than tracking every individual supply or service provided,
- restructuring the healthcare delivery system to create and maximize efficiencies,
- re-designing medical insurance to conform to the concept of true insurance while offering additional options for health maintenance plans based on shared group purchasing power and expense averaging (but not insurance) for those who desire and can pay for it,
will reduce the cost of medical care now, if implemented, and will hold the rate of medical care inflation more in line with overall inflation.
It doesn't take socialized medicine or some increased level of government involvement in, regulation of, or partnership in health insurance. It doesn't require that everyone be mandated to purchase coverage, a single payor system, or goverment involvement in allocation of services. The approach we have illustrated, and others based on similar principles, would create a dynamic, efficient free market healthcare system that would be more affordable, accessible, and efficient than the current system, or any plan any politician is proposing.
To your health!
-jwh-
Next: Conclusion-- What to do about the "Uninsurable?"