reconstructhealthcare

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.

   

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.

 

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?