I have been asked by a couple of friends when I was going to post my proposal for healthcare. Okay, here it is.

I have a concept for healthcare coverage which to date no one has proposed but which I have had in mind for quite awhile. As you know, there has been a lot written about the health insurance situation in the United States. Many of our elected and non-elected leaders have proposed numerous ideas as what they hope will be the solution. However, no plan proposed to this date, including yours, substantively deals with how to make health insurance more directly affordable for our citizens while at the same time provide comprehensive coverage which would encourage people to practice preventive care through regular checkups, etc.

HSA’s don’t really work because while they lower the premium through higher deductibles, most people don’t have the discretionary income to put money aside. Hence, people wait until a problem for them or their children becomes acute and then of course the cost to rectify their situation becomes much higher. The concept of pooling industry groups and non-related businesses doesn’t hold much hope because that won’t change the scope of coverage and premiums have consistently shown they will increase as the cost of medical technology advances.

The plan I have in mind requires an open mind as it will necessitate the cooperation of the government, the health insurance companies, employers, consumers, doctors and the property & casualty insurance companies. One thing to keep in mind is that it is not pragmatic to eliminate the health insurance companies for two reasons; 1) they have too much money and too much political power to make them go away; and 2) more importantly, we want them there to use their money to balance out the heavy end of our medical costs.

The first facet of the plan begins with every person under 65 in the United States (we will leave Medicare alone under the plan) being covered by a universal government plan at 100% from the first dollar to a maximum of $10,000.00. That includes office visits to their doctors, pharmaceutical costs, emergency room costs, surgeries, etc. Think of a funnel with all costs being tossed in at the top and the government paying for the first $10,000.00. What happens now?

Well, because the government is covering the first $10,000.00, it is superfluous for any private insurance company to offer a deductible on any of their plans for less than $10,000.00. As a result, every private plan starts off with a $10,000.00 deductible and from that point on the private insurance company pays all costs at 100%. That’s where their partnership in this comes in. They MUST pay 100% from that point on for this to work. What does the $10,000.00 deductible accomplish? It lowers the premiums drastically. It will lower premiums to roughly 50% of their previous level. By lowering the premiums that much, the premiums on their face will become much more affordable. What else happens now?

Well, if the coverage from the government and the private insurance companies is now 100% from first dollar to whatever the final cost is, there is now no need for businesses to carry workman’s compensation medical coverage. (Notice I did not include disability coverage. That remains as is.) Any medical coverage under workman’s compensation is now superfluous because of the coverage now in force. What does that mean? It means that businesses no longer have to PAY PREMIUMS for that coverage. What does that mean? It means that businesses can now better afford to pay for their employees’ medical coverage by using premiums they previously were paying for workman’s compensation and because the premiums they will be paying for medical care would be far less than it had been before.

There are some ancillary requirements which must be instituted for this to work. First, employers must be required under this new system to cover their employees and families. An employee’s spouse may opt out if they are working elsewhere. Second, property & casualty companies must agree to give up the medical portion of the workman’s compensation business. Third, health insurance companies must agree to standardize their plans so that everyone is basically in the same boat. This boat would include no pre-existing condition limitations. Fourth, those same health insurance companies cannot have hidden deductibles in their plans by limiting the parameters of coverages. The phrase “usual, customary and reasonable” must be standardized across the board so that for every geographical region, the insurance companies are on the same page. Fifth, the government must allow all premiums for health insurance coverage to be deductible for individuals on the same basis as employers or companies. Sixth, doctors and hospitals must agree to more formalized standardization of their charges across the board. Seventh, pharmaceutical companies must do the same thing with their products.

Why is this good from a government/single payer perspective? The answer is that one of the reasons a lot of people fear universal coverage by the government is the potential cost of everyone being covered for an unlimited amount. This plan takes care of that because it limits the government’s exposure to $10,000.00 per person per year and any actuary can tell you that a majority of people do not come close to that figure. Under this plan, there would be a run on services for the first couple of years as people started to take care of their minor ailments and checkups which they have ignored for years but it would then settle down to a ‘normal” routine.

What would a typical occurrence of medical coverage look like under this plan? You could have an individual starting off by going to their doctor for a checkup. The visit would be covered from first dollar on. The doctor might discover something which he would like to check out so he orders some tests without having to call an insurance clerk to see if his recommendations are covered. The doctor also prescribes some medication for the patient in case something occurs before he is able to get back with the patient. The patient presents their “medical card” to the clerk in the doctors office to pay for the visit. The patient presents the same card to the pharmacy to get their medication. The patient presents the same card to the lab where the tests are run. All charges are attributed to the patient’s general “account”. The patient goes back to the doctor a week later to discuss the results. The visit is paid for by the card. The doctor is very concerned with the results and recommends surgery. The patient decides to seek a second opinion which they do and that visit is paid for by the card. The second doctor concurs and the patient agrees to the surgery. The patient checks into the hospital two days later and presents their card to the hospital administration office. The office looks at the patient’s general account and can see the surgery and expected hospital stay will take the patient over the $10,000.00 government pay schedule and notifies the insurance company listed on the patient’s account information. The patient has the surgery and is in the hospital for a week. Halfway during the week, the account goes over the $10,000.00 and from that point on, the hospital simply bills the insurance company. The patient goes home with more prescriptions and when they go to the pharmacy to fill them, the pharmacist swipes the medical card through the card machine and the pharmacist can see the insurance company is now paying the charge so they bill the insurance company. This continues for a month until the patient, after two more visits to the doctor for checkups billed to the insurance company, is then pronounced well. Later that year, the patient has a couple of minor doctor office visits which are billed to the insurance company. When the next calendar year rolls around, the process starts over.

What are the benefits of this overall health plan? We could have people possibly returning to the old fashioned doctor/patient relationship without an insurance clerk or government clerk automatically telling the doctor how to practice medicine. We have every employed person and their families covered by 100% coverage with no hidden deductibles. We have employers being better able to pay for said coverage because the premium being charged by the insurance company for a $10,000.00 deductible plan is discounted heavily and since they longer have to pay for workman’s compensation medical coverage, they are able to use that money to allocate to the medical coverage. We have doctor’s offices not having to designate more than one person to administrate insurance coverages and thus their office costs will come down to help them lower fees. We have health insurance now being much more available and affordable to a vastly larger number of Americans than we have now. We have the prospect of parents being able to more fully concentrate on their work and to more fully enjoy their lives without worrying themselves to death about possibility of a major medical occurrence wiping out their families economically. We have people being able to take themselves and their children to take care of little things which pop up or for just checkups without worrying about the costs and thus perhaps catching something early instead of waiting until that something becoming a much larger medical concern. We will have over 50% less bankruptcies in our country because that many are caused by medical costs and thus our economy will be healthier. We have a government sponsored medical system which has a cap on it and which can be actuarially figured to see what it will cost. This is what the insurance companies do all the time to calculate their premiums.

What are the cons? Well, we will have to raise taxes to do this probably via some type of sales tax. However that tax payment for most people will be mitigated to a large degree because our medical premiums will have gone down quite a bit and thus could very well come out being a wash. After all, what else is a medical premium but another type of tax? We will substitute one for another but I daresay the tax will be less than the difference so people could very well come out ahead. Additionally, with a sales tax, everyone helps pay for the governmental coverage. We might not have complete universal coverage as some might fall in the gaps if they are not employed but they will have for sure the $10,000.00 the government pays out. We keep Medicaid for the people whose assets and income are below the criteria. We keep Medicare for the people over 65 but for those who choose to keep working past that age, they will be covered under Medicare supplements which can be paid for by the employers under the same philosophy.

Insurance companies will still make money because the majority of their costs come from first dollar costs. If the government takes that off their hands, they will still be in the black. Workman’s compensation companies may lose some money but workman’s compensation coverage is not a desired plum anyway for them. They make their money elsewhere.

This plan would combine the facets of all previous proposals with the addition of a couple more and would go a long way to solve the problem of being affordable to the American public. I would be happy to discuss the plan’s full ramifications if anyone should care to do so.

Stay Tuned