reconstructhealthcare

Welcome to the Reconstruct Healthcare Blog!

The premise of this Reconstruct Healthcare Blog is that the power to find a healthcare solution, one that works for all Americans, resides exclusively in the hands of you, the American people.  The first purpose of this blog is to educate you about why our healthcare system fails to meet the needs of all Americans. 

The second purpose is to solicit your commitment to become part of that solution.  (See the April 7th post of 2008 for a detailed list of specific things you can do to make a real difference.) We believe, in fact, that it cannot happen without your participation.

         The third purpose is to introduce you to my book, Radical Surgery: Reconstructing the American Health Care System (see www.reconstructhealthcare.com).  Radical Surgery shows how our current healthcare system has evolved, over the last one hundred and fifty years; explains why it fails to meet the needs of so man Americans and why reforms have been so unsuccessful; shows why it costs so much and why those costs outpace the rate of inflation; shows how we can reconstruct the system in such a way that we can meet our needs and still preserve the great strengths of the current system, all at a price we can afford; and, finally, shows what you can do to help make it happen. 

    You are, also, invited to share your experiences with our health care system or to pass the invitation on to someone else who has a story to tell.

 

Health Care Expenditures to reach $2.8 Trillion in 2011!

           

            In 2011 when my book, Radical Surgery: Reconstructing the American Health Care System was published, I predicted that healthcare costs would rise to over $2.6 Trillion by 2011. It is now 2011 and forecasters predict that healthcare expenditures (HCE) will surpass $2.8 Trillion dollars. Prophetic but hardly cause for celebration.

            According the U.S. Department of Commerce’s Bureau of Economic Analysis, aggregate Personal Income (PI) for the United States at the end of the third quarter of 2011 was $12.975 Trillion. This means that HCE will represent a staggering 21.7 percent of Personal Income. Scariest of all is the fact that there is no end in sight in the rise of health care expenditures and if the next decade experiences the same rate of increase, by the end of the year 2020 HCE will hit $5 Trillion dollars.

            If you are wondering what, if anything, can be done about this runaway train, the answer is not a blessed thing until we make radical changes in the way we pay for the delivery of health care services in the U.S. To paraphrase the famous quote of the late Senator Everett Dirkson, Republican from Illinois, “a trillion here and a trillion there and pretty soon you’re talking about big money.”

            Most frightening of all estimates of the number of Americans who lack health care coverage range as high as 50 million people. Given the exorbitant cost of health care services, lack of health care coverage is virtually the same as lack of access to medical care. Whatever our opinion about President Obama’s health plan, we do not yet know whether or not the plan will appreciably reduce the number of Americans without health coverage. What we do know is that the Obama plan increases our nation’s dependence on the health insurance industry. As a result, we can rest assured it will have little or no impact on the aggregate cost of care. 

            Fee-For-Service is the engine that drives the American health care system and its burgeoning cost. It is very much like the way automobiles contribute to the greenhouse effect. As long automobiles are powered by gasoline combustion engines, they will continue to pump carbon emissions into the atmosphere. As long as we continue to practice FFS medicine, the cost of health care will inevitably rise. The fact that we rely on the health insurance industry to manage the overwhelming bulk of health care services is comparable to adding a high powered fuel-injection system with dual-barrel carburetors to the engine of your car. The health insurance industry siphons off hundreds of billions of dollars that would otherwise go to providers and thus, give no direct benefit to patients.

            We need a new solution and we are not talking about socialized medicine. We do need radical changes but, unfortunately, Americans have become so obsessed with their fear of socialized medicine that they slap that brand on any solution they do not take the time to understand. If only we are willing to open our minds to a new idea, we can find a way to provide comprehensive healthcare and prescription drugs to all Americans, at a cost that we can afford to pay. We can do it in such a way that:

 

• Limits the role of government to the very few things government does well;
• Allows us to bring rising health care costs under control;
• Everyone pays, proportionate to their income, irrespective of source; 
• Gives patients the freedom to not only choose their own doctor but also change doctors;
• Returns the control of the practice of medicine to the physician and his or her patients;
• Relies on free-market forces to drive both quality and accountability; and,
• That eliminates health insurance, managed-care, Medicare, and Medicaid.

 

In the posts to follow, we will reprint, in small sections at a time, Radical Surgery: Reconstructing the American Health Care System, taking opportunities to update the text with current data relative to healthcare expenditures and with other things that the author has learned in the decade since the book was published. The reader is encouraged to read with an open mind, seeking to understand before they choose whether or not to condemn. We also ask the reader to comment and to pass the post on to their family, friends, and colleagues.

Until we open up a fresh dialogue about healthcare, an issue that affects the lives of every single American, we will not only continue to make the same mistakes we have made for more than a half-century, we will continue to pay dearly for them.

 

Is the Most Recent Healthcare Reform Initiative Dead Already?

Over the next week or two Congress will be debating whether to repeal the recent healthcare reform legislation that is still in its infancy.  Whatever Congress decides, the reform initiative is doomed to fail because it is not really healthcare reform, it is healthcare insurance reform.  In recent weeks major health insurance players have begun announcing massive rate increases.  How many 30, 40, or 50 percent health insurance rate increases do the American people need to see before they accept the fact that health insurance is the problem with healthcare in the U.S., not the solution?

Anthem demonstrates that health insurance is the problem not the solution!

Anthem’s recent announcement of a 39 percent increase in health insurance premiums provides proof-positive that health insurance and other middlemen are the problem with healthcare in America and not the solution.

 

American policy makers are locked in a paradigm from which they are unable to envision a world of healthcare delivery without health insurance and managed care.

 

If the reader will pardon the cliché, it is a perfect example of being unable to “think outside the box.”

 

Once again we ask the question:  If we truly wish to provide universal healthcare (access to comprehensive healthcare for all Americans) what value do health insurance and managed care provide?  What value do Medicare and Medicaid provide?

 

Don’t these entities exist to limit access to care to only those people who are covered by a given health plan?  Don’t these entities exist to restrict delivery of healthcare to only those services and procedures that are covered by a patient’s health plan?

 

If we decide, as a nation, to provide healthcare to all, keeping health insurance and other third-parties in place is nothing more than a grand case of featherbedding.

 

Like all parasites, all these entities would do would be to siphon off healthcare dollars.  We simply cannot afford to spend a single healthcare dollar on activity that has nothing to do with the direct provision of healthcare to patients.

 

The challenge, of course, is to accomplish this without resorting to socialized medicine.  Here at The Reconstructhealthcare Blog and in the author’s book, Radical Surgery: Reconstructing the American Health Care System, we introduce a uniquely American solution to the problem of healthcare in American; one that rejects socialized medicine.

 

Unfortunately, many Americans confuse the terms “socialized medicine” and “universal healthcare.”

 

Universal healthcare simply means providing healthcare to all people.

 

Socialized medicine, which is a government-run healthcare program (like Medicare or like the Canadian system), is just one way to provide universal healthcare.

 

Our message is that: if we are able to apply a little American ingenuity and “think outside the box” (apply a systems-thinking approach) we can rebuild the system in a way that it can provide universal healthcare while avoiding socialized medicine and, simultaneously, while preserving the great strengths of the American healthcare.

 

The reader is challenged to open his or her mind to the possibility that there is a solution outside the boundaries of conventional wisdom.

The Business of Medicine in a Relationship-Driven System

The primary care physician (PCP), regardless of the legal structure in which she works, will function as an independent businessperson and will be accountable to her patient/customers.  Within reasonable limits and guidelines, a patient/customer who is unhappy with the care provided will be free to take his or her business elsewhere.  As we have discussed, this is a component that is delicate but critical to the success of our uniquely American healthcare solution and to true healthcare reform and universal healthcare.  The freedom to exercise a consumer’s right to purchase is a powerful force that will reward physicians who provide high quality healthcare and penalize those who do not. 

PCPs who are already affiliated with a group or hospital-based practice will continue as a part of that business entity.  The manner in which the medical practice is structured and the way its physicians are compensated within that structure will alter neither the flow of capitation revenue nor the scope of responsibility the PCP bears for her patients.  The market is driven by the perceived attractiveness of the PCP’s practice to the consumer/patient who must select a specific PCP.

There will be no restrictions on the freedom of physicians to link with other physicians, with hospitals, or other business entities.  These affiliations and joint ventures are expected to enhance the provider’s ability to deliver comprehensive healthcare to her patients in the most cost-effective manner.  Physician entrepreneurship is viewed as a good thing.  As long as effective incentives are in place, we can rely on market forces to drive quality, cost, and accountability.  We want a system in which all physicians must compete for their share of the patient market.

The world in which the PCP will practice will be irrevocably altered.  No longer will the PCP need to be concerned with the idiosyncrasies of a large number of health insurance carriers and managed-care companies.  No longer will the financial success of a practice be determined by the density of its appointment calendar or by the effectiveness of its billing and collections system.

The PCP will be free to practice the kind of medicine she wants, utilizing the resources for which she is willing to pay, but with this freedom comes responsibility and accountability for the quality of healthcare she provides.  The absence of the health insurance and managed-care industries does not minimize this accountability.  The efforts of these parasite entities to control or influence the quantity or quality of care were ineffectual and, more often than not, functioned as an impediment to quality.  Physicians will continue, however, to be accountable to their patients as well as to their peers.  The customer/supplier relationship between the PCP and the specialist community and other ancillary providers, hospitals and other institutional providers will elevate the importance of peer review. 

The business relationship between the PCP and his specialist subcontractors will require that the PCP assess the value and quality of the subcontractor’s work.  When the PCP is not happy with that quality of medical care and is unable to resolve her concerns through interaction and negotiation with the specialist, she will have the option of deleting that specialist from her list of subcontractors.  We would anticipate that, as is the case in the current healthcare system, only in extreme situations would a physician bring a colleague’s perceived poor quality to the attention of the medical society or hospital staff committee.  The PCP will not hesitate, however, to drop a specialist from her subcontractor panel if she loses confidence in that colleague’s ability.

Given the working relationship between the PCP and the specialist, the latter will also be in position to observe the quality of medical care practiced by the PCP.  Here, again, we anticipate little change in a specialist’s reluctance to report a primary care colleague’s questionable practices unless they are extraordinary.  The specialist may be quick, however, to disassociate himself from a colleague, although one would hope that an effort to resolve the concern through discussion and/or education would be the first step.  In any event, this ability or power to choose with whom one does business can and will have a powerful influence on the quality of medical care provide under this uniquely American healthcare reform.

The PCP’s accountability to her patients is paramount to the success of our solution.  If a patient is dissatisfied to the point that his concerns cannot be resolved through discussions with his doctor or the physician’s staff, the patient is free to leave and when they do so they will be taking their portion of the PCP’s revenue stream with them.  While the loss of an isolated patient, here and there, may seem insignificant to the PCP, should patient discontent grow the resulting exodus could easily deplete a PCP’s patient list.  Besides the fact that developing a reputation as a PCP that cannot retain patients would be devastating, the PCP’s business is in jeopardy whenever revenues are routinely inadequate to cover operating expenses, not to mention the cost of purchasing care for their patients.  In this respect, a medical practice is no different than any other business.

In light of this issue of the PCP’s accountability to the patient, the prudent physician will want to place development of patient relationships near the top of her priority list.  She will take a little more time to get to know her patients and will find it advantageous to discuss her clinical decisions with the patient.  In an ever-increasing percentage of cases, the patient may well participate in the decision-making process.  One of the keys to the success of this uniquely American solution is a patient’s willingness to accept responsibility for his or her own health and, effectively, become a partner with the physician in the health optimization process.  This is what we mean when we talk about transforming healthcare from a transaction-driven system to one that is relationship driven.  Think about the impact a patient’s buy-in to a treatment protocol will have on medical malpractice liability.

In our next article we will discuss the primacy of primary care.

The Fee-For-Service / Prepaid Care Dichotomy

In this fourth article about our uniquely American healthcare solution we will take a look at how the Fee-For-Service healthcare delivery model in place today and the prepaid healthcare model that we propose drive our healthcare system in dramatically different directions.

Health care is no different than any other business marketplace in the sense that it is a competition for revenue, played by a specific set of rules.  The successful players, the winners, will be those who develop the most effective strategies or game plans within the context of the rules.

In healthcare, the rules are driven by the Fee-For-Service (FFS) model in which healthcare providers bill for services rendered to patients.  Although many of the fees are paid by individuals, it is the institutional payers that govern; i.e., health insurance and managed care companies, and the federal government via Medicare.  As the dominant players in the game, the private institutional payers invest huge sums to influence, via lobbying, healthcare policy.  These entities have also created complicated procedures to determine which services will be reimbursed to whom, how much that reimbursement will be, and how claims will be processed?  Providers must, then, develop strategies that attempt to maximize the reimbursement opportunities within the rules. 

The FFS model rewards providers for providing medical, institutional, diagnostic and ancillary services to patients and the more services the provider can deliver the more revenue they can generate.  Whether or not the patient is healthy or is getting the services they actually need may be important from a professional, ethical perspective but is irrelevant within the context of a zero sum, billing game in which payers and providers compete for a finite sum of revenue.

The health of a patient obviates the need for services, creating no billing opportunity for providers.  In fact, healthy patients are worst thing that can happen to providers.  Imagine what would happen to our healthcare system if, for just one month, not a single American became ill or injured, or required any kind of health-related service.  It would be a cause of celebration for patients, who would be healthy, and for payers, who would enjoy uninterrupted revenue inflow with minimal outflow.  For providers, the healthcare system would come crashing down on their heads and shoulders.

It is the FFS model that drives the cost of healthcare relentlessly upward, at a rate that out-paces inflation by a two- or three-to-one ration.  The model also generates countless unnecessary medical procedures and services while discouraging preventive care (other than routine exams and diagnostics) or patient education.  Of course, the system doesn’t dictate that providers ignore prevention and patient education it just doesn’t pay for such activity.  As a result, every minute a provider allocates to unreimbursed preventive care or patient education is a minute for which no services will be billed or revenue generated.

One of the unique characteristics of the FFS model is that patient, the end recipient of care, is the decision-maker in neither the “what” nor the “how much” choices that are made.  This unique arrangement has enormous ramifications on the system as a whole.  Throughout the rest of the American economy, we rely on the forces of supply and demand to regulate the system with respect to cost, quality, and accountability.  Under the FFS model, free-market forces are unable to exert influence over these essential components of our healthcare system. 

Unlike any other part of our capitalist economy, the decision-maker in healthcare, within the context of the rules of the FFS game, are the providers and intermediate payers.  Imagine a scenario in which the retail stores with which you do business, rather than you, determine what you will purchase in their store and how much you will pay.  Without the checks and balances of free market forces in healthcare, we rely almost entirely on the ethics of the parties to insure that the best possible healthcare decisions are being made.

If we want to change the way the game is played we need to change the rules of the game.  Think, for a moment, about what would happen in the game of basketball if points were awarded for passes rather than baskets.  Everything would change.  Until we change the FFS model we will not solve the problems of healthcare in America and will not have universal healthcare.  Any healthcare reform initiative, whether the Obama Plan or a single-payer solution, will fall far short of meeting our expectation, even if they do succeed in improving access to healthcare.

What we advocate is a prepaid system in which primary care providers (PCPs) receive an actuarially determined monthly payment for each patient who selects that PCP as their doctor.  The revenue must then be used, in the most effective and efficient way possible, to optimize the health of the patient.  In this solution, the interests of patients and providers are parallel in that the interests of each are best served when the patients are healthy. 

    Health optimization means treating illness and injury when it occurs but it also means doing everything that can be done to prevent illness and injury.  Such an approach changes the rules of the game. 

First of all, the absence of middle men frees up anywhere from 25 to 40 percent of the $2.5 trillion per year that we spend on healthcare, depending on whose estimates we use.  That is roughly $625 billion to $1 trillion more money flowing to actual providers of care than is the case today.  Think about how this revenue could be used to extend care to every American, to enhancing preventive medicine and healthy lifestyles education, and in improving the quality of care provided.

    Primary care providers will be free to allocate their time and resources to meeting the real needs of their patients, without pressure to bill for payment.  This means totally restructuring the way they practice medicine.  PCPs will be incented to provide many services themselves but will also need to develop a network of specialty, institutional, diagnostic, ancillary, and pharmaceutical providers to assist them in meeting the comprehensive health needs of their patient population.

    This creates a number of advantages for both patients and providers:

• The overwhelming majority of the revenue will be used to serve patients,
• Medical care will be coordinated with all providers functioning as a team on the patient’s behalf, with the PCP in charge, 
• PCPs can develop relationships with those providers in whom they have the most confidence and with whom they can negotiate the best deal,
• Free market forces will play a role in cost, quality, and accountability because specialty, institutional, diagnostic, ancillary, and pharmaceutical providers will have to earn the trust and confidence of the PCPs in their community.
• The only billing that will take place will be local, between the PCP and the providers with which they choose to do business.  This will allow them to simplify the process as well as develop innovative business relationships,
• The creativity of a PCP in implementing preventive care and patient education will be rewarded as a result of a healthier patient population,
• Patients will be free to change primary care providers if they are dissatisfied with the quality of care they receive and, finally,
• Patients will be expected not only to participate in healthcare decision but, most importantly, will be required to accept responsibility for their own health.

One of the major concerns with the “great HMO experiment” of the seventies and eighties was that some HMOs and some providers, under the pressure of “full risk capitation,” chose to underutilize to avoid incurring the cost of extraordinary care.  As with all human endeavors, there will, inevitably, be PCPs who will choose to sacrifice the best interests of their patients for short term financial gain like there are some who will perform unnecessary procedures to create billing opportunities.

Under our uniquely American healthcare plan, however, such choices are not just unethical or illegal rather they represent bad business decisions that serve the long-term best interests of neither patients nor providers.  It is much like a restaurant owner who elects to cook with cheaper and lower quality ingredients in order to reduce costs.  The payoff of such decisions is relatively small when compared with the risk of losing one’s customers.

In addition to simply being bad business, there are several things that are different within the context of our uniquely American healthcare solution, when compared with what so many of us remember from the seventies and eighties.  The first is that there is more than enough money for PCPs to enjoy financial success even when confronted with expensive treatments for a portion of their patient populations.  Second, the PCP cannot claim that such decisions are made in a distant corporate office, literally or figuratively with respect to their examination room.  They must make the decision in full sight of their patients.  The prudent PCP will involve the patient in the decision-making process.   The final difference is that the patient is no longer powerless. 

Imagine the consequences for a primary care physician who gains a reputation of sacrificing the well-being of his or her patients for short-term financial gain.

In our next article we will delve more deeply into this new paradigm with respect to the business of medicine.

Healthcare Legislation a Boon to the Health Insurance Industry!

Someone pointed out to me that the healthcare legislation before congress will create a windfall for the health insurance industry.  The individual went on to say that this legislation, which is health insurance reform and not healthcare reform legislation, will guarantee the health insurance industry 30 million new customers.

 

As I thought about this, it occurred to me that this legislation also gives the insurance industry an unofficial carte blanche to reduce reimbursement to providers for healthcare services.

 

The biggest boon to the insurance industry, however, is that this new legislation further obscures the truth that the insurance industry is the problem with the American healthcare system and not the solution. 

 

While true healthcare reform advocates will continue to advocate, the response they will get from legislators is that “we have done our job, we have fixed the problem!”

 

Unfortunately, nothing could be further from the truth.  We can hope, of course, that this new legislation will, indeed, increase access to healthcare, thus reducing the number of Americans who are unable to get access to healthcare.

 

What is significant, however, is what the legislation does not do.  It does not change the fundamental rules of the game which are driven by the fee-for-service (FFS) process.  It is this fee-for-service process that drives the cost of healthcare ever higher, precluding the influence of free market forces on healthcare prices.  It is the FFS model that creates disincentives for preventive care and patient education about healthy lifestyles.  It is the FFS model that creates an environment, unlike what we find in private industry, in which new technology increases rather than reduces costs and thus does not increase overall value.

 

It may well turn out, for reasons that have nothing to do with the fears of American conservatives, that this legislation will set the American healthcare reform movement back for at least another quarter of a century.

 

The fourth article in our series about our uniquely American healthcare solution will be posted on or about January 11th.  It will discuss the fee-for-service/prepaid care dichotomy.

Uniquely American Healthcare Solution: How You Enroll & How Providers are Paid!

This is the 3^rd article in our series that explains how this uniquely American healthcare solution will provide universal access to care without relying on government and in a way in which everyone pays their fair share.

   

In our uniquely American healthcare plan, all Americans have an opportunity to choose a primary care physician and it is this choice that drives the entire healthcare system.  At the outset, those physicians who intend to practice primary care medicine will be asked to formally register as a Primary Care Physician (PCP).  In making this decision to be a primary care provider, the physician is declaring a willingness to accept responsibility for managing the overall health of each of his or her patients.

    Physicians who are most likely to accept that responsibility and the designation of PCP will be family practitioners, general practitioners, pediatricians, general internists, and OBGyns.  Some pediatricians, general internists, and OBGyns will opt to practice as a specialist rather than as a PCP.  That decision has enormous consequences for the physician.

    Once on the PCP panel, the physician will need to declare whether or not his or her practice is open for new patients, in which case they must, for a designated period of time, be willing to accept any and all patients.  As having access to comprehensive medical care and prescription drugs is a powerful incentive, as well as the only game in town, it is expected that virtually all will enroll; citizens and legal aliens.  To be eligible, only a Social Security number is necessary, and we would ask enrollees to provide the same documentation required by employers to establish eligibility for work.

Once this enrollment is completed, all healthcare decisions are made by the primary care physician and the patient, in consultation with any specialists, ancillary and institutional providers the PCP may choose to involve.  The government has absolutely no input into the process.

We recommend that the U.S. Census Bureau be asked to maintain the data base of Americans and the primary care physicians whom they individually choose, as collection process will dovetail very nicely with that Bureau’s mission and responsibilities.  Parents of dependent children will choose for and register their sons and daughters with a PCP.  In some cases, it may be an OBGyn for Mom, a Pediatrician for the kids, and maybe a general practitioner for Dad.  Another family may choose a family practitioner to care for them all.

    Primary care physicians (PCPs) will be paid directly from the Health Services Fund (HSF) on the basis of the number of patients who have enrolled as that PCP’s patient.  The PCP will receive payment at the beginning of each month and will use that revenue to cover the cost of:

 

• Primary care, that his or her own office will provide;
• Prescription drugs;
• Diagnostic services;
• Specialty care;
• Ancillary care (physical therapy, home healthcare, hospice care, chiropractic care, etc.);
• Hospital care; and,
• Long term care.

 The need for which the PCP will, herself, determine.

    The amount of revenue the PCP receives will be actuarially determined on the basis of each patient’s age, gender, and general health condition.  The actuarial science is pretty-well developed.  We will recommend that a bi-partisan Health Services Commission be created.  The appointments will be unpaid and the appointees will be selected from among healthcare professionals and managers, actuaries, and representatives from the re-insurance industry.  This commission will oversee the application of actuarial science and provide guidelines to the Census Bureau for the purpose of special designations for individuals.  End-stage renal disease would be one example where a patient’s designation would demand a higher capitation payment to the PCP. 

The average revenue per patient will be approximately $570 per month, or $6,840 per year ($2.1 Trillion divided by 307 million Americans.  Assuming a PCP’s patient population is proportionate to the U.S. population as a whole, and that she will care for 2,000 patients, her revenue will be approximately $1.14 million per month or $13.7 million per year.  The younger and healthier a PCP’s patient population is, the less total revenue they will receive and the converse is also true.

    It is with this sole source of revenue that the PCP must manage her practice and pay for all services provided to her patients.  We will discuss the business ramifications of this new way of doing business in a later article but keep in mind that, it is the flow of revenue that creates the rules by which the game is played.  In addition to a transformation from a transaction- driven and receivables-managed business to one that is relationship-driven, patient-centered, and cash- and future liabilities-managed; everything changes and almost always for the better.

    The PCP will contract with pharmacy, specialty, diagnostic, institutional, and ancillary providers; selecting those with whom he is able to negotiate the best price and with whom he feels he can work most comfortably and confidently.  For the first time, the interests of patients and providers are perfectly aligned; the healthier the patients, the better it is for all parties.

    Financially, under this plan, a primary care practice is more attractive than it is today, and choosing primary care places a young physician at the very center of the business and practice of medicine.  That PCPs are paid upfront also provides real incentives for new physicians to select a location for his or her practice in a geographical area that is currently under-represented with respect to physicians, both PCPs and specialists.  For example, a new PCP who chooses to practice in an area where there are insufficient numbers of doctors will almost immediately fill his practice with patients.  Because capitation revenue is the same, whether the patient is rich or poor, this new PCP will immediately have a revenue stream comparable to a long-standing doctor practicing in a wealthy suburban community.  These real incentives are expected to decrease the percentage of young doctors who choose sub-specialty practices while improving the geographical distribution of practicing physicians.

    There will, of course, be some MDs, both young and old, who will wish to avoid the responsibility of case management as a primary care physician and such choices do, undoubtedly, serve the best interests of all.

    To understand just how different things will be, we need to take the time to understand the difference between fee-for-service (FFS) and prepaid care.  We also need to have a full understanding of the case-management role primary care physicians will be asked to play.  The next article (our fourth) will be devoted to an analysis of the FFS/Prepaid care dichotomy.  The fifth article will explore the dynamics of case management in a prepaid environment.

    Because of some of the issues that developed in a prepaid care environment during the heyday of the HMO movement, it is vital that the reader be willing to keep an open mind.  Yes there were problems with the HMO environment that must not be repeated but just because an idea did not work the first time, doesn’t mean it was a bad idea.  We will show, clearly, how the problems of the past can and will be avoided in this new model.

 

 

How Do We Pay for This Uniquely American Healthcare Plan?

Before we can discuss how we will pay for this uniquely American healthcare solution, we must take time to understand how we pay for healthcare, today.  In 2009, it is estimated that Americans will spend $2.5 Trillion on healthcare and this money is paid in a number of ways. 

Individuals pay:

• Direct fees to providers for medical, hospital, ancillary medical services, and prescriptions not covered by health insurance,

• Deductibles, co-pays, and co-insurance for drugs and services covered by health insurance,

• Health insurance premiums, individual or employee portion,

• Medicare tax at the rate of 1.45 percent of earned income, for those who work

• Federal, state, and local taxes, the portion allocated by units of government for various healthcare programs, including military, public health, and coverage for government employees and legislators. 

Employers pay:

• The employer portion of health insurance premiums for company-sponsored health plans,

• An equal portion of the Medicare Tax at the rate of 1.45 percent of payroll,

• Workers comp premiums,

• Some healthcare fees and charges for that are not covered by workers comp or other insurance,

• Costs that are indirectly related to health care, in the form of administrative costs for interfacing with health insurance, managed care, and third-party administrators, not to mention COBRA,

• Corporate income and property taxes, the portion allocated by units of government for various healthcare programs, including military, public health, and coverage for government employees and legislators. 

Together, these various payments add up to an estimated $2.5 Trillion in 2009, which amounts to 17.6 percent of our Gross Domestic Product (GDP) and approximately 20.7 percent of Personal Income.

There are four other pertinent facts about this $2.5 Trillion. 

1. Depending on who we talk to, the estimated portion of those $2.5 Trillon that goes to pay for administrative activity not connect to direct care to patients ranges from twenty to forty percent;

2. an estimated fifty million American men, women, and children do not get all of the medical care that they require;

3. Healthcare costs over the last ten years have grown at the rate of 10.8 percent, compared to CPI growth at the rate of 2.9 percent over the same time period; and,

4. Healthcare costs are expected to grow at the rate of 6.2 percent over the next ten years.

Our objectives, then, are:

• To reduce the growth of healthcare costs to equal the rate of inflation (CPI);

• Simplify the way we pay,

• Eliminate the middlemen so that all healthcare expenditures flow to actual providers of medical and hospital services,

• Insure that individuals and employers pay their proportionate share of health care costs.

    One of the features of this uniquely American healthcare solution is that it provides universal healthcare while limiting the role of government to the very few things that government does well.  Most of us agree that we do not want socialized medicine and, in this proposal, the government will have no role to play in the delivery of healthcare services to people. 

    One of the very few things government does well, however, is the collection and distribution of our money.  In fact, the government does this with brutal efficiency.

    We propose the establishment of a Healthcare Services Fund (HSF) in such a way that neither the executive nor the legislative branches can gain access.  Money collected into the HSF will be dispersed directly to primary care physicians, passing through no middlemen, in a manner that will be discussed in detail in subsequent articles.  The money paid into this fund is not a tax, rather it is a health services fee that all American’s pay into, proportionately, on the basis of their income, and from which all American derive equal benefit.

    We recommend that we utilize the existing Medicare Tax mechanism for collection of HSF, because the mechanism already exists and it has proven itself to be both efficient and effective. (Concerns about Medicare’s imminent collapse have to do with the demographic realities of population and not with the efficacy of the system).  We will not, however, require any of Medicare's claims processing or other administrative capabilities; we are interested only in its revenue collection and distribution process.

    We propose to increase the current 1.45 percent, now paid into Medicare, by both employees and employers, to a 10.45 percent Healthcare Services Fee.  This fee will be charged proportionately to all personal income of American citizens and to all wages and salaries paid by companies that employ American workers.

    For individual Americans, this means that we will be replacing the 1.45 percent Medicare tax with a 10.45 percent Healthcare Services Fee, which amounts to an effective increase of nine percent.  This nine percent will fully and completely replace all out-of-pocket payments to healthcare providers and sellers of prescription drugs, as well as all payments of health insurance premiums.  For the overwhelming majority of American men and women, this will result in a savings, while assuring access to comprehensive medical care and prescription drugs for each and every member of his or her family.

    For employers we are saying that, by replacing the 1.45 percent Medicare Tax with a 10.45 Healthcare Services Fee, for the cost of an additional nine percent, we can provide universal access to healthcare.  For employers who currently provide health coverage to their employees all of the costs, both direct and indirect, that are currently associated with that health coverage will disappear. 

For employers, whether large or small, that do not currently offer health coverage to their employees, this becomes an added cost of doing business that, like every other cost of doing business, will be passed on to the consumer.  We encourage these employers to ask themselves a simple question.  If they could be assured of access to comprehensive healthcare and prescription drugs for themselves and their families, as well as to their employees and their families, would they be willing to offer a 9.0 percent across-the-board pay increase to each and every employee?

Everyone with personal income, irrespective of source, will be expected to pay their own way (10.45 percent).  This includes retired persons with pension and investment income and also social security.  It includes families on welfare.  Everyone pays their own way.  Is this an unfair burden on those with fixed incomes, whether the poor or the elderly?  Given the value for which this relatively small amount of money is exchanged, and the peace of mind that comes with it, it seems like a pretty good deal.

Yes, once again, the wealthy will be asked to pick up a large portion of the tab.  The significant difference, however, is that this is a proportional fee and not a progressive tax, as is the case with income taxes.  Most importantly, unlike in so many instances in which the wealthy pay to support programs from which they derive no benefit, these prosperous Americans will benefit equally with respect to healthcare services.

We want it to be as simple as it can be: Everyone pays their fair share, proportionate to income, irrespective of source.

The obvious question is: does this plan provide sufficient revenue to provide healthcare to all Americans?  Based on Personal Income data for 2009, we can expect to generate approximately $2.1 Trillion in the first year for the HSF.  This is slightly less than the $2.5 Trillion that we currently pay as a nation but because 100 percent of the funds flow to providers, it will result in a net increase in the amount of money paid to providers.  So, right away, this program results in a $400 billion aggregate savings for the American people.

In the next article we will show how all individuals will enroll for coverage and how the funds are allocated and paid to providers.

   

Overview of a Uniquely American Healthcare Solution!

          Today’s post is the first in a series of articles that will introduce a uniquely American solution to our nation's healthcare dilemma; a solution that guards against the things about which the opponents of healthcare reform are most concerned.  This first article provides an overview of the proposed system and subsequent articles will show how it will look, how it will work, and how much it will cost. 

     

Overview of a Uniquely American Healthcare Solution.  While the debate over healthcare legislation rages on, let us understand what the fuss is all about.  One would think we could all agree with the simple idea that everyone deserves access to quality medical care but opposition to this, and every other idea to provide universal healthcare, is rampant.  It would be helpful if we could identify the concerns that provide the foundation for that opposition.

 

Socialized Medicine – a huge portion of the American people are adamantly opposed to even the idea of a government-run healthcare system.  They do not trust their government to do a decent job of providing healthcare and they do not want the government running their lives.

Higher Taxes – many people are convinced that any plan for universal healthcare will result in huge increases in the taxes hard working Americans will be asked to pay and will also result in massive growth in our national debt.

Higher Cost – there is fear that healthcare, which already costs the American people $2.5 Trillion, will cost even more.

Free Ride – many Americans seem to be concerned that people who don’t want to work will get a free ride at the expense of the rest of us.

Rationed Care – There is wide belief that national healthcare plans in other countries results in the rationing of care and that ours would do the same.

Low Quality Care – many believe that a nationalized health plan can only serve to diminish the quality of the care we receive.

Restricted Choice – Finally, many believe that our freedom of choice regarding the providers of our care will be severely restricted if not altogether lost.

 

The other significant factor in both the problems of the American health care system, and in our quest for a solution, is the health insurance industry, which spends enormous sums of money to influence the legislative process.  As the reader will discover, as he or she learns more about the uniquely American solution that serves as the subject of this series of articles, is that the health insurance industry is a significant component of the problems of the current system and is not part of the solution.  The interests of the American people are the only ones deserving of our attention and concern.

  The trillion dollar question is, would the American people support a health plan that could categorically assure that none of the above would happen?  The one thing upon which we can agree is that there is no way to predict, with any degree of certainty, how the American people will respond.

    That being said, what follows is a brief overview of a uniquely American solution to the problems of health care, that:

• Provides comprehensive medical care and prescription drugs to all Americans;

• Keeps the government, both state and federal, out of the healthcare delivery business,

• Requires that all Americans pay their own way, proportionate to income, irrespective of source;

• Enables all businesses, both large and small, to afford health coverage for their employees and families;

• Returns control of the practice of medicine to the primary care physician;

• Gives patients the freedom to choose their primary care physician and also the freedom to change that choice whenever they think it necessary;

• Eliminates the middle men (health insurance, managed care, Medicare, and Medicaid) so that all healthcare dollars flow to actual providers of care;

• Reduces the out-of-pocket costs for the vast majority of Americans;

• Slows the growth of aggregate healthcare costs to less than or equal to the rate of inflation as measured by the Consumer Price Index (CPI), saving the American people as much as $6 Trillion over the next decade;

• Relies on free market forces to drive price, quality, and accountability;

• Aligns the interests of patients and providers, changing healthcare from a transaction-driven system to one that is relationship-driven;

• Provides real incentives for doctors to practice preventive medicine and to educate patients about healthy lifestyles;

• Provides incentives for young physicians to choose primary care rather than a subspecialty practice;

• Rewards physicians who choose to locate their practices in communities that currently have limited access to healthcare services;

• Requires providers to practice a team approach to healthcare delivery in which all services to patients are coordinated by the primary care physician; and,

• Does all of the above in a simple way that even your 90-year old grandmother can understand.

    In the series of articles to follow, we will show exactly how each of these objectives will be accomplished, we will show how much it will cost and how we will pay for it; we will show how the system will look, how it will function from day to day, and we will show how it will effect both patients and providers. 

   

    Because everything hinges on cost, the next article will begin with the cost of care and how we will pay for it.  Why not read along?

Universal Healthcare Without Socialized Medicine? Yes, it is Possible!!!!

What if we could show a way to provide comprehensive healthcare and prescription drugs to all Americans, for less than we spend today?

• Without relying on socialized medicine and keeping government out of the healthcare delivery business,
• In a way that all Americans would pay their own way, proportionate to income, irrespective of source,
• In a way that all businesses, both large and small, could afford to provide healthcare coverage to their employees and their families,
• that would return control of the practice of medicine to the primary care physician
• That would give patients the freedom to choose their primary care physician and the freedom to change that choice whenever they think it necessary.
• That would eliminate the middle men (health insurance, managed care, Medicare, and Medicaid) so that all health care dollars flow to actual providers of care,
• Where most Americans would see a reduction in their out-of-pocket costs,
• Where the growth of aggregate healthcare costs can be reduced to equal the CPI,
• And which, therefore, would save the American people as much as $6 Trillion over the next ten years,
• That would provide real incentives for doctors to practice preventive medicine and to educate patients about healthy lifestyles,
• That would incent young physicians to choose primary care rather than a subspecialty practice,
• That would rely on free market forces to drive price, quality, and accountabili,
• That will provide real incentives for young physicians to choose to practice medicine in communities that currently have limited access to healthcare providers,
• That changes healthcare from a transaction-driven system (Fee-for-service) to one that is relationship driven,
• That incents providers to practice a team approach to healthcare delivery in which all services to patients are coordinated by the primary care physician, and
• In a way that your 90-year old grandmother can understand.

   Believe it or not, we can do all of this.  We simply have to forget about health insurance reform and focus on reconstructing the current American healthcare system in such a way that it will give us what we truly need, without sacrificing the great strengths of the system.

   Take a look at my book, Radical Surgery: Reconstructing the American Health Care System, to see just how easy it can be!