I can envision a comprehensive design for health care in the United States that will expand access and control costs while conforming to our shared national values of personal responsibility, care for thy neighbor and free enterprise.
After dozens of attempts to repeal, defund, delay or restrict Obamacare, the Republicans now have the opportunity to do all of the above. The problem is that it is not clear what should be done from operational, economic or political points of view. The various proposals include: tax credits, health savings accounts (HSA), restricted plans, catastrophic plans and “insurance market enhancements.”
Most of the people without insurance from employment or existing government programs are working poor and those between jobs. They want insurance but cannot afford it, so tax credits and health savings accounts will not help them. Catastrophic insurance will protect family assets, if any exist but will not pay for the therapy of ongoing conditions such as hypertension, diabetes, hypercholesterolemia and asthma, which are common and require sometimes moderately expensive treatment to prevent the catastrophes.
There is a gradual failure of the private insurance market. Premium costs have risen significantly faster than the rate of inflation for decades. These increases are even greater when benefit reduction is considered in the form of: denials of service, reduction in access to providers, deductibles, and copays. The entire concept of using insurance to pay for medical care is increasingly invalid. Compare medical insurance to homeowners’ insurance. Only a small portion of homes are destroyed so the risk can be easily spread among many and premiums remain affordable. With medical care, almost everyone will eventually need some amount of care, health maintenance, and prevention. In addition, there are new expensive services, diagnostics, procedures, and medications every year. Sophisticated medical care is applied to problems with marginal clinical benefit because the provider receives reimbursement and the patient, insurer and government are not able to evaluate the benefit to the single individual prospectively.
More than 50 percent of bankruptcies are precipitated by medical events and medical debt. The health insurance business is really just a huge cost-shifting scheme with no demonstrable value attributed to the 20 percent of revenue skimmed off the top by the increasingly monopolistic cartel of private insurers and pharmacy benefit managers. The cost of health insurance to employers is severely compromising productivity making U.S. products less competitive in the world market. This is a prominent issue for the new administration. Only a Republican Administration and Congress can pass a comprehensive health care plan, otherwise, the Republicans would block it.
Here is the plan: The federal government should pay $4,500 per year for each legal resident as per-capita block grants to private investor-owned public utilities for a basket of care (total cost: 1.51 trillion/year, the current total federal, state and local government expenditure including insurance for government workers). Mergers and acquisitions of insurance companies with providers, a process that has already begun in many parts of the country, will establish these utilities. Structure and governance requirements will certify corporate participation with stringent quality and performance controls. Only essential services will be provided. Payment increases will be limited to 2.5 percent per year. These regional utilities will provide services across state lines improving performance through competition, an idea with strong Republican support.
Examine the savings: Current total expenditures are approximately $10,000 per person per year. 20 percent is insurance overhead, 7 percent billing and collections, 15 to 20 percent unnecessary care, 2 percent advertising, 2 percent pharmaceutical savings and 2 percent graft and illegal payments. This 48 to 53 percent of existing expenses can be eliminated. An additional $1,500 personally funded HSA with tax deductions or credits for every citizen further reduces costs. Financial incentives for efficient use of services are built into the HSA. Patient, provider, and government incentives are aligned as never before.
A primary care provider (PCP) will develop an evidenced-based plan to optimize health for each person. The individual is responsible for implementing the plan with the assistance of the PCP. Palliative and comfort care will be used extensively for the advanced elderly, demented and those with fatal diseases. Further savings will come from intensive socio-medical case management for the top 5 percent utilizers with severe chronic disease who account for 40 percent of costs providing increased care in the home to avoid hospitalization and inpatient rehabilitation. Hospice patients live longer with better quality of life than comparables with standard care. The market clout of large provider/insurers will hold down the cost of drugs, diagnostics, and devices.
Those who desire a broader range of services or more amenities can overlay this basic coverage with private insurance or out of pocket payment. Providers interested in offering care in this secondary market will be free to participate in both markets as determined by the demand.
If block grants are an acceptable Republican proposal to control costs for Medicaid, why not control all health care costs by the same method? This proposal would place total U.S. health care expenses in the middle range of developed nations. It would improve health statistics because everyone would have basic coverage.
This plan is consistent with our primary values emphasizing prosperity and innovation through private enterprise coupled with universal coverage that the private insurance market cannot generate without government leadership. It also includes real cost controls (spending no more than current government expense) and recognizes the fundamental responsibility for quality life and health lies with the individual.
Some health insurers will not accept such radical changes though Kaiser Permanente, Intermountain Healthcare, Geisinger Health System and others show that this approach can succeed. President Trump is not beholden to health insurance interests, rather to the public and American business interests. He can drive such change. Throughout history, dominant industrial corporations fail unless they are able to redefine themselves and their markets according to changing need. The current health insurance trusts will be no exception. The leaders who solve this dilemma will have a treasured place in the history of our nation.
Thomas Birch is an infectious disease physician.
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