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Health Care Reform: Common Sense Solutions

Health Care Reform is topical.  But it need not cost an arm and a leg to do.  Because I sit on the Board of Directors of NAV portfolio company Qliance, an innovative “Direct Practice” primary care solution that operates completely outside of the insurance system, I am often asked to comment on things that we might do to improve health care delivery in America.

The debate in Washington DC is heated and confusing.  We all wish that the proposed legislation was simpler and clearer, regardless of whether or not you support it.  So the purpose of this post is not to comment on the legislation before Congress – but rather to dissect the health care “issues” into their component parts and offer some low-cost, creative, perhaps controversial – yet high-impact solutions to what is being termed our country’s “Health Care Crisis.”

I see three major problem areas in the US health care system today:  High costs (with no spending accountability from patients), insurance company practices, and reach of coverage.  May of these are of course interconnected.  Fixing one can help fix others.  For example, lowering the cost of health care services should lower the price of insurance which should enable more people to afford insurance coverage.  But I want to look at each of these areas independently.

First, what are ways we might reduce the systemic cost of health care?

I suggest that this is the most important thing to get right.  Without fixing this we are only pretending to reform health care.  Unfortunately, all of the bills before Congress do nothing to reduce costs.  Sure, they reduce payments under Medicare to doctors (anyone want to bet how long it is before this part is overturned?).  They also raise implicit taxes on pharmaceutical companies, insurance companies and medical device manufacturers.  But these higher taxes are not cost controls.  Rather they are higher costs which will quickly translate into higher costs for medical care itself.

Here are a few ideas – without an attempt to quantify any specific savings for each item.  All of these are tough to disagree with (unless you have a dog in the hunt) and they each pass the common sense test

1.  Put in place a whistleblower bounty system for Medicare/Medicaid fraud.  Let the whistleblower keep 20% of the fraud dollars from the last 12 months.  This program works successfully today with the IRS and government contracts.  Why not use it here?

2.  Reduce the number and cost of nuisance lawsuits.  This will reduce the cost of malpractice insurance and will also eliminate needless tests that doctors and hospitals perform to cover their rear.  Lots of good idea in this area.  Mandatory arbitration.  Loser pays if you appeal the arbitration ruling to a court.  Standard of care insulation for doctors.  Doctors should be afforded the same level of protection as Board Directors do under Delaware law.  If they are following good practices, they shouldn’t be prosecuted.  Sick people die.  And doctors treat sick people.

3.  Let groups of people, employers, and associations band together to create buyer cartels.  I was once Chairman of the Northern Virginia Technology Council.  We had 1200 member companies.  With probably 500,000+ employees.  Every insurance company out there would love to bid on our member employee pool.  Let them do so!

4.  Let companies and individuals buy health insurance across State lines.  Some states are more restrictive than others on their regulations.  Some have a better or worse litigation climate.  Some states are just cheaper to do business in.  Lets make health insurance available through a national marketplace, and not in 50 separate State marketplaces.

5.  Encourage “treatment tourism.”  While the USA has some of the best medical care available in the world, we do not own a monopoly on high quality medical care.  Lower cost countries like India have state of the art facilities and top doctors (many trained in the USA.)  Why not let people choose to travel to a place like India for high-cost, long recuperation time surgeries like hip replacement?  Insurers would save money after factoring in travel and hotel costs for the patient and their family.

6. Give end-of-life patients  an option (once they are diagnosed with certainty of a life-ending condition) to choose current Cadillac coverage where every heroic treatment is offered no matter the cost, or, let them be treated for pain and suffering, without the heroic measures, and share the savings with their estate.  I know.  Go ahead.  Hurl the Sarah Palin death panels charge at me.  But this is a choice.  Let the doctors try to be heroes – and you could be the one in a thousand who survives systemic metastatic cancer.  Or you could be a hero to your family and leave them a large estate.  Did you know that 1/3 of all Medicare dollars ($528B total in 2010 and $1 trillion in 2020) go to the last 60 days of life?  Imagine if you had the option to pass along $100,000 tax free to your estate simply by choosing to die with dignity.

7.  Let Insurance companies offer “mandate light” insurance policies.  One of the main drivers of cost in health insurance today is the mandated drugs and treatments by our States and the Federal Government.  Does every policy need to cover Viagra?  A great analysis shows that the exact same family of four could buy the same coverage for $364/mo in Oregon vs  $3400/mo in New York (http://moneywatch.bnet.com/saving-money/blog/devil-details/health-reform-rates-are-all-about-mandates/816/)  Why?  The State mandates on what must go in to the base insurance policy.

8.  Make health insurance deductible for all, to a limit, say $7500 per person or $15,000 per family and index this to health care cost inflation.  Anything else is taxable income.  Why make it more expensive for individuals to buy health insurance than for corporations to do so?

9.  Make individuals more accountable for their health care spending by expanding Health Care Savings accounts (like Flex accounts but where the money can build up tax free over time and does not have to be spent each year.)  Speaking of which, why shouldn’t we be allowed to  roll over our flex dollars?

10.  Encourage Direct practices for primary care.  A direct practice (like at www.qliance.com) is a back to the future idea.  Marcus Welby all over again.  In a direct practice, the patient pays a monthly fee of around $60/mo for unlimited, no co-pay access (AND treatment) with their primary care physician.  Anything the doctor can do with their hands or their mind is covered.  In this model, the doctor is not rewarded for the number of procedures they do.  Rather, they are rewarded (with fewer visits) by treating the patient and making them well.

Finally, my favorite idea – with no cost whatsoever.

11.  Make all health care providers post cash prices online and in their offices on the wall.  Let patients compare based on price.  Let patients know how much something costs.  Even if their insurance is “paying for it.”

How might we reform insurance practices?  No doubt, everyone loves to hate the health insurance industry.  They are (often justifiably) perceived as heartless, bureaucrats with nary a customer service vein in their bodies.  Yet they perform an important function in the industry, of underwriting risk, and do not make outsized profits – though the sheer dollar profits are very big in good years.

So what are some simple and doable things?

1.  make health insurance portable if you lose your job.   Once with a group, always with a group, so long as you maintain coverage.  I think the best fix here is for insurance companies to create a new pool for insureds who leave their companies, and maintain individual insurance but at group rates.  Here the pool can consist of similarly situated people, and they would pay the average group rate of other groups in their State for similar policies.

2.  Cover kids on their parent’s policies to age 25 regardless of where they live.

3.  Cover all lineal family members living in the same household on a family policy.  This could include 3-4 generations in certain households.  Plus it encourages families to take care of their parents instead of tossing them out and making them nursing home wards of the State.

4. Guaranteed renewal once you have coverage.  Encourage people to buy insurance and keep it.  Provide an opt in period between ages 25-30 with no rating for pre-existing conditions.  After 30, if you have refused to buy insurance, you can be individually rated.  But once you buy in, your rating cannot get worse over time.  This encourages people to stay in the insurance pool.

5.  Mandate coverage for individual people with pre-existing conditions in a high-risk pool.  They would pay at the group rate, and the other insureds (individual or corporate) would cover the overage cost.  It would not be much spread across millions of other insureds.

What about expanding Health Care Coverage?  I suggest we do this in five years.  Lets implement the changes above.  See how the markets respond.  Employers.  Employees.  Doctors.  I will be willing to bet that in five years we have many more people covered than we do today.

As to the rest of the people?  Lets have a debate about this.  If there are poor uninsured people left, probably an expansion of Medicaid is the most viable solution.  No need to create another Government program.  45M people are already covered today.  And another 45M in Medicare.