The political realities have changed and our industry has formally taken a new position on health care reform.
America's Health Insurance Plans and the Blue Cross Blue Shield Association both have agreed that they could support the elimination of medical underwriting and accept a no pre-existing condition requirement if insurance was mandatory with real penalties for noncompliance.
The national goal has been set to cover all the uninsured (or as many as possible). The uninsured include the chronically jobless, the working poor, those working without access to group insurance, those between jobs, and those over 50 forced out of the job market.
Covering the elderly presents its own issues. Washington and many of our state legislatures are busy presenting government-oriented solutions. The goal of this article is to present an alternative solution using the more efficient private sector.
Controlling cost is the key. Health insurance premiums are directly proportional to the cost of the health care. Until we address the underlying cost of care issues, there is little we can do to really control the cost of premiums.
Problem: Medicare and Medicaid underpay health care providers. This underpayment represents a hidden tax on commercial plans to subsidize public sector plans. For example, in my region, Medicare pays the provider about 70 percent of the providers cost to deliver the service. Medicaid pays 90 percent of Medicare's already low reimbursement rate. To make up for the shortfall, the provider simply shifts the unpaid cost to the commercial carrier increasing the premium (hidden tax) significantly.
More baby boomers are scheduled to retire and will leave commercial insurance. Politicians plan to add more people to the government plans, removing some from the commercial rolls. There will be fewer people covered by commercial insurance. The resulting cost shift will increase the health insurance premium exponentially.
Regions that do not attract enough commercial money to offset government underpayments find they must severely curtail health care services or close the doors. Either way, the communities are no longer served.
Underpaying our family doctors has forced many health providers to question their practice. Fewer college graduates are opting into a family practice career path. America is in danger of losing its first line of defense in health care.
Remedy: Change the role of Medicare and Medicaid to oversee and regulate. They should retain the responsibility to qualify participants and continue to provide tax-payer subsidies. Use commercial carriers for Medicare and Medicaid insurance utilizing commercial pricing contracts. Reimbursing providers fairly will help reverse the trend of closing hospitals, clinics and doctor offices.
With more stable reimbursements, the current pricing disparity of up to 400 percent is eliminated because there is a more efficient free market driven compensation schedule.
The commercial carriers have shown the ability to respond more quickly than the government to new opportunities, increase efficiency and develop new products and methodologies. Medicare and Medicaid would oversee the carriers to insure they are in line with the national goal to cover the uninsured, unhealthy and elderly.
Problem: It is alleged that many insurance carriers cherry pick and only want to cover the young and healthy.
Remedy: Implement "Mandatory Health Care Insurance Coverage" with severe penalties for those that do not comply. Proof of insurance must be required with a mandatory income tax return; even for those without income.
In the carrot-and-stick approach, subsidies would be offered to the poor to buy insurance. Anyone with access to subsidies would lose their welfare benefits if they did not enroll in a health insurance program; no excuses.
Others who choose to go uninsured would be responsible for the cost for treatment plus interest, and the debt would post on their credit report. Personal property and assets would be attached. The current Medicaid recovery rules might serve as a base model for the individual mandate.
With mandatory insurance, there is no adverse selection. The numbers are large enough to predict a cost and premium. Young or old, healthy or unhealthy, everyone in a region pays the same rate (adjusted for the group discount) for the same plan design. Over time, the healthier risks will gravitate toward higher out-of-pocket cost plans and the less healthy toward the richer plans. Let the market determine a price differential.
Opting out of the health insurance system is pure cost shifting to the rest of us. It is a myth that one can opt out of the health system because they can go to the emergency room to receive care and pass their payment responsibility onto us.
Problem: Access to health insurance might be limited to those with limited incomes.
Remedy: The carriers must offer the same plans on an individual basis as they offer on a group basis. These products would be state-specific and would respect the authority of each state's insurance department. States may award health insurance subsidies for purchase of individual plans. Expanded access to employer-based health plans through direct subsidies would also be included. One successful state model is The Health Insurance Premium Payment Plan. This program subsidizes eligible employees' share of premium and keeps them in the group model.
The employer remains the primary distribution system. This works best because the decision making process of investigating, evaluating and selecting remains centralized. If employers offer insurance; they should be required to offer high, medium and base levels of benefits and out-of-pocket expenses from which the employee may choose.
In this remedy, the group discount may not exceed 10 percent over the individual rate. The discount is intended to reflect the carriers' economies of scale savings. It also may be used as incentives for timely payment, wellness programs, etc.
A premium assessment should be made to fund an expanded role for the guarantee fund. If a carrier receives more than their fair share of bad risk (both high claims and bad debt), the fund would act as a stop loss for the carrier. This will eliminate the need for cherry picking and create more competition.
Carriers would be required to insure a proportional share of individual, Medicare and Medicaid risks to their group business in a region. Because these individual plans are available with no medical underwriting, COBRA would no longer be necessary.
Since there would no longer be a need for an insurer of last resort, it would establish a level playing field for all the carriers from a tax assessment or provider reimbursement perspective.
Problem: Government mandates of specific benefits drives up health insurance premiums. For example, Pennsylvania recently decided the need was worth the additional estimated 4 percent increase in premium and passed an autism mandate.
Remedy: Require mandatory review with veto power of any proposed mandated benefit. An expanded model of the Pennsylvania Health Cost Containment Council would be an excellent vehicle.
Problem: The demand for services will increase dramatically. How can we control cost without implementing a full rationing system like many countries in Europe and Canada?
Remedy: Implement an expanded Diagnosis Related Group type of protocol system. Give the carriers the authority to not pay for treatments not approved for a DRG. Because of the rapid change in medical technology, the DRG protocol needs to be reviewed continually and posted live on the Internet for review by providers, carriers and patients.
With Internet price transparency, consumers will have another tool to reduce over-utilization of health care.
Problem: Providers continue to order tests to protect them from law suits.
Remedy: Until we really limit tort, this behavior will not change and our cost of care will remain high. We should establish a recommended panel of treatments by DRG. If the established protocol is followed, lawsuits would not be allowed. Also, any higher risk cases (defined by definition) would be precluded from being able to sue.
Problem: Newer pharmaceutical technologies are very expensive.
Remedy: Do not allow the pharmaceutical companies to charge Americans more than they charge their foreign clients. Reverse congressional permission that allowed the pharmaceutical companies to market directly to the consumer.
Problem: We spend 80 percent of our lifetime health care dollars in the last two years of our life, driving up the shared cost (premium) for everyone else.
Remedy: Require a person age 65 or older enrolling in Medicare to file a living will that specifies limits of treatment for end-of-life care. The carriers would be able to sell supplemental insurance for those that choose extended levels of treatment.
It may make sense to make this an option in group health insurance contracts. Employers could save premium by offering plans with limited coverage for extraordinary measures. Individuals who wanted extended coverage could purchase supplemental policies.
Problem: We cannot lower our health care cost unless we can change behavior. We already have universal health care; simply go to the emergency room for your care. The public ends up footing the bill in cost shifts and taxes.
Remedy: Encourage plan designs that reward responsible behavior and penalize irresponsible behavior. By changing behaviors; learning to access the system through more cost responsible access points, and obtaining preventive care to prevent catastrophic care, overall costs to the system will be substantially reduced.
Re-Solving the problems that beset the health care industry today, demands that we abandon our preconceptions and self imposed limitations. We have a unique opportunity to re-solve and resolve America's health care crisis.
