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Request critique of universal health insurance plan

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coaster
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Request critique of universal health insurance plan  Reply with quote  

There’s plenty of discussion elsewhere in this forum about the problems of health care in the U.S. This is my plan for a solution. I’d like constructive criticism. What are the weak points and how should I fix them? What are my omissions? What do you object to? Where is my rationale weak? It’s rather lengthy, but please take the time to read all the points and understand it, then give me your thoughts. Thanks for your input!!


The Problem

The rapidly escalating cost of healthcare and health insurance; the growing lack of coverage and reduction of benefits; the growing numbers of uninsured; the detrimental effects on the nation’s overall health.


The Solution: Universal Health Insurance

A public-private partnership to provide health care to everyone regardless of income or employment. The principal features of the plan:

1. Every person in the country covered by health insurance consisting of two programs: Basic coverage and Catastrophic coverage.

2. The private sector providing health care much the same as currently.

3. The government as sole payer for catastrophic health care expenses, and for basic health screening and pre-natal screening.

4. Insurance companies providing Basic health insurance to cover the risk up to the catastrophic limit.

5. Subsidized Basic coverage for those unable to pay.

6. Everyone is required to be insured.

7. Everyone is required to have annual health screening.

8. Regional claims processing subcontractors to coordinate claims and payments.

9. Federal government as the malpractice insurer.

10. Reduce duration of patent protection on new pharmaceuticals.


About this Plan for Universal Insurance

Catastrophic Coverage

The Federal government will be sole payer for catastrophic health care expenses. For example, expenses over a per person per year cap will be paid in full by the government.

Basic Coverage

Private insurance will be the payer for health care expenses less than the catastrophic cap. Insurance companies will bid for a contract to be single payer for a given region. They’ll compete on the basis of best service and best payments to providers, and least expense to the insured. They’ll contract for a schedule of fees paid to providers and for premiums, copays, and deductibles to the insured. They may or may not offer dental and/or vision insurance as part of the Basic program, or as add-ons. Contracts will run on a yearly basis. Since the insurance companies won’t do their own claims processing, substituting one company for another will be fairly easy. The need to compete annually will keep this a competitive market.

Health Screening

The Federal government will pay for one basic health screening exam per person per year, and one pre-natal health screening for a pregnant woman. Perhaps basic vision and dental exams could be included, since they can escalate into significant health problems.

Fees for Services

A Regional Medical Board will set a fee range for every medical service. The actual payment to the provider will be somewhere in that range depending on their contract with private insurance. Those same fees as contracted for will apply to claims over the catastrophic limit. The fee schedules will be posted on the internet for public access.

Mandated Coverage

Every person is required to participate. A person who isn’t participating will be denied medical service. Any provider providing service to a non-participant will do so either at their own expense or on the basis of a cash arrangement with the patient.

Subsidies

Those who are unable to pay for the Basic health insurance may be subsidized by the public sector through a means-test program and direct payments of insurance premiums to the insurance company, and copays and deductibles to the providers.

Federal Malpractice Insurance

Providers will be insured against malpractice by Federal malpractice for a modest no-profit premium. Perhaps there could be a provision to assess physicians a penalty for multiple malpractice judgments. Tracking malpractice claims centrally should also deter doctors with high numbers of claims from picking up and beginning a new practice in another state. Since the risk is shared over a wider base and since it’s expected judgments will be limited in size and reduced in number, the premiums will be much less.

Patent Protection

Reducing the time a drug company can patent their new products will lower the cost of prescriptions and new medical devices. They will also not be allowed to renew patents on minor or superficial improvements.

Adverse Selection & Pre-existing Conditions

Adverse selection is an insurance term which refers to people who are sick buy insurance but those who are healthy don’t. Insurers contend with this by refusing insurance to those with “pre-existing conditions.” Since the risk will be borne by the entire population, as well as the cost, these two terms may be stricken from the health insurance lexicon.

Sliding Catastrophic Cap

Obviously people require more health care as they grow older. The flip side is young people who are healthy don’t use much health care. But to go along with this, young people starting out in life usually can’t afford to spend a lot on health care, either, and a major medical issue could burden them for a very long time. This situation would typically be addressed by graduated insurance premiums; greater for the higher risk. But since the risk is set by the cap, perhaps another way to address this would be a sliding catastrophic cap: lower for young people, higher for older people. The thinking here is that the sliding cap would compensate for the age-related cost of care; the Basic plan premiums for older people will be higher because of the higher cap, but the catastrophic costs will still be shared equally by the entire risk pool.

Health-Care Consumer

By paying for their own insurance, by publishing the costs of their care, by being offered Health Savings Accounts, it’s expected the patients will behave more like consumers: seeking the best service at the lowest cost, and not using more service than they need.

Shared Risk

Universal insurance will accomplish what insurance is supposed to accomplish: reducing the risk for any one particular party by spreading that risk over all parties. Pre-existing conditions, adverse selection, denied benefits, exhorbitant premiums, and cost-shifting will all disappear.


The Players

Federal Government

Primary and only payor for Catastrophic Plan claims. Subsidize insurance premiums, deductibles and copays for those unable to pay.

State & Local Governments

Relieved of current obligations to Medicare and Medicaid states and localities will be able to reduce state income taxes and local property taxes to the extent they’re now required to pay the states’ shares of these programs.

Insurance Companies

Primary payor for the Basic Plan. Contract with providers for service fee schedule and with insured for premiums.

Claims Processors

Regional claims process services receive claims from providers and are responsible for verifying the claim and services rendered, forwarding claim to insurance company, receiving payment from insurance company, and remitting payment to providers. The insurance company with the regional contract may NOT also be the claims processor for the same region (but may for a different region with a different insurer).

Providers

No change. Except: back-office and malpractice expenses will be greatly reduced. And physicians will actually be able to practice medicine instead of jumping through hoops to satisfy insurance company requirements or government Medicare requirements. They’ll be paid rapidly and a rate they agreed to be paid.

Employers

Employers will no longer offer insurance as a standard employee benefit, but may offer Health Savings Accounts with which employees can accrue funds to pay for their basic health insurance and copayments and deductibles, also other medical services not offered or paid for under the local Basic plan contract.

Patients

Responsible for purchasing Basic Plan insurance, getting annual screening, and paying copayments and deductibles (if able to pay).


Advantages of this Plan

1. Providing health care for everyone will improve the overall health of the nation.

2. The private sector continues to provide health care service, as that’s something they’re already doing well.

3. Competition for the Basic plan should foster good service and low cost.

4. Limited risk will dramatically reduce insurance company costs and thus premiums.

5. No uninsured will dramatically reduce provider costs and they won’t have to pass on these costs.

6. Federal malpractice insurance will dramatically reduce provider costs. Doctors who get too many judgments will lose their license to practice in all states.

7. Required health screening should catch health issues before they become expensive.

8. The Medicare, Medicaid, and Veterans Administration health care systems will be terminated since they have no purpose under universal coverage. The payroll withholding tax current assessed for these purposes may be eliminated.

9. Reduced patent protection retains a profit motive for new drug development but without excessively long periods of being able to price the product at non-competitive levels. Perhaps patent protection can be on a sliding term such that the protection is in place until the company has recovered the cost of development plus a modest margin.

10. A single regional claims processor will dramatically reduce paperwork for all system participants and thus the cost of filing claims and speeding payment, and taking out all the middle-men takes out each entity’s profit margin. Also divorcing processing from insuring removes conflict of interest.

11. The Regional Medical Board, consisting of a mix of providers, will be familiar with health care costs in their area and be able to set fee schedules realistically.

12. Requiring patient participation through insurance premiums, copays and deductibles, and publishing fees will get the patient involved as a medical consumer, fostering an awareness of the cost and competing for the best service at the lowest cost.


How this Plan Will Be Paid For

Because payroll withholding for Medicare will be eliminated for both employees and employers, there should be more take-home pay for employees . Those who are able will pay for the full cost of the Basic insurance plus their copays and deductibles. Employers may provide Health Savings Accounts as an employee benefit. The subsidies plus the catastophic expenses plus malpractice awards plus claims processing will be paid through additional tax levies to be determined.

Basic Plan – insurance premiums assessed against the insured. Those who can pay will be required to pay the full amount, plus their deductibles and copays (except for the free annual screening). Those who aren’t able to pay, or are only able to pay a portion, will be subsidized by the Federal government.

Catastrophic Plan – will need to be paid for by taxes. Since there won’t be any more payroll withholding for Medicare there will be almost three percent more take-home pay in an employee’s paycheck, assuming the employer passes on their half of the tax. Since the government is only picking up the health-care expenses over the cap, plus subsidies, and is no longer in the business of providing Medicare funding, hopefully the net tax increase (as there probably will be) will be small.

Note: About Non-participants

There will always be some who refused to participate. Do we deny them access to the medical system? If we say no, then we destroy the whole concept of universal shared risk. My response is we do deny them because they have no insurance. If they want to work out some cash or barter arrangement, let’s look the other way when providers are willing to provide service under these arrangements. There will always be some willing to do that, so non-participants won’t be going without health care.

Final Note: Illegal Aliens

I know this question is going to come up: will illegal aliens be covered? My answer is yes, and my reasoning is this: they’re already here in the country and they’re already getting public assistance and health care. Under this plan they’ll at least be paying into the system through premiums for the Basic plan, and they won’t be taking services out of the system as uninsured patients. Perhaps we’ll need a provision that they don’t get any services until they’ve been working and paying their taxes for a certain number of months. The secondary option is the same as outlined under non-participants.

~Tim~
Post Wed Apr 01, 2009 6:54 pm
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Zector
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You have put a lot of thought into this coaster!

I have to ask, why not do away with health insurance company’s completely? Have every working person pay a set % on income for complete healthcare. This would include everything from teeth to boo-boo's and a fair price on drugs, or necessity drugs free, but not stuff like botox or face lift.

The government could then limit the mark up on drugs that are needed, and be able to create a lot of jobs in the new system. Insurance companies could exist for other things like being wrinkle free.

UK and France have excellent health care, and even Cuba has some top notch health care that is open even to tourists. Ever watch Sicko?

I do believe heath care should be a right, and the big companies stop making crazy amounts while injured people are turned away from hospitals. But your way would allow for a transition from private to public healthcare without rioting.

I do think that basic dental and eye care should be a basic coverage item. As well all of this should be a federally controlled item only with no local or state intervention. I have seen some drastic differences in provincial healthcare in Canada, and people from certain provinces have a totally different level of health care, and can be on the hook for fees if traveling out of province that would be *covered* by healthcare, but not paid completely by other provinces.

Are you a lawyer by any chance? All of your posts are very well done, and you know your stuff (hence the god-admin status i guess).
Post Wed Apr 01, 2009 8:23 pm
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coaster
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Zector, I'd like nothing less than getting for-profit insurance companies out of the loop altogether. Fact is, it'll NEVER happen in this country because they have too much money to buy clout on Capitol Hill. Look at Obama's plan: he's going to throw a ton of money at the system with very little real change and who do you suppose had major input into the crafting of his plan? Yup.

And I agree about dental and vision.

My purpose was to try to come up with something that achieved nearly the same results as single-payor but that had at least a ghost of a chance.

~Tim~
Post Wed Apr 01, 2009 10:05 pm
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coaster
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How the Basic Plan Works

I decided to add this because I can see from the responses on the various forums I posted this that there’s a lot of confusion here. I think it’s confusion stemming from our concepts of how health insurance works having been influenced by the way it’s done now. There’s no good reason why it can’t be done a totally different way. And I think it makes more sense when we just cast aside our knowledge of how health care is paid for now and entertain a whole new way of doing things. Surprisingly, I think it’ll be easier for the insurance companies themselves to understand, because they know underwriting risk, and this is just a matter of underwriting risk. Yes, it’ll take a few years for their actuarial tables to get enough data to be able to underwrite the plan properly, and during that time some premiums may be too high, some may be too low. But before I get too far ahead, let’s look at the new way of buying and selling and providing health insurance under the Basic plan:

1. The insurance company has nothing to do with insurability, because everybody gets insured.

2. The insurance company has nothing to do with deciding whether or not to pay a claim, because all claims get paid.

3. The insurance company has nothing to do with deciding how much to pay the doctor because they pay according to the schedule they’ve contracted to pay.

4. The insurance company has nothing to do with deciding how much of a copay the patient pays because the copay is the difference between what the doctor charges and what the insurance company pays the doctor.

5. The insurance company receives the premiums from the insured and pays out the claims as they’re told to by the claims processor. Nothing else. There’s no getting turned down for insurance, there’s no getting a claim denied, there’s no having to do this or do that before paying for this. That’s all between the patient and the doctor.

6. The insured pays the insurance company the premium agreed to in the regional contract for that year, and that’s basically all the contact he/she has with that company.

Let’s take an example:

Insurance companies bid on a contract to provide Basic plan insurance to a region. Company AAA says they’ll insure everyone for a premium schedule of from $500 a year to cover a 25-year-old with a cap of $5,000 to $2,500 a year to cover a 50-year-old with a cap of $50,000 a year. And they’re the low bidder, so they get the contract. For those premiums, they’ll pay 100% of the low end of the fee schedule that the Medical Board for that region has published, the copay will be the difference, and each patient will have a $250 deductible before they pay anything.

The Medical Board’s fee schedule for a standard office visit to a Rheumatologist allows a fee of from $95 to $125. The patient’s doctor has set his fee at $115. The patient pays the doctor $20 on the date of service, the doctor remits the claim to the processor, the processor verifies it’s a valid claim, coded correctly, fee charged correctly, patient has satisfied deductible and is under his cap, and all that, and remits the claim to the insurance company. The insurance company remits $95 to the processor, and the processor sends $95 to the doctor.

Let’s take the above example, but it’s the first office visit of the new year. Everything works the same except that in addition to sending $95 to the doctor, the processor also sends a bill to the patient for $95, since he hasn’t yet met his deductible.

Third example: patient is over his cap. The insurance company drops out of the loop. The processor sends the claim to the government (yes, there’ll have to be some kind of a new bureacracy to handle these over-the-cap claims, but we’re getting rid of Medicare.) Government pays $115 and the processor sends $115 to the doctor. Patient pays nothing.

There’s one thing I haven’t figured out yet and that’s how the processor gets paid. Any ideas? A per-claim fee from the government? A cut of the claim?

One other question: should the doctor be allowed to charge more if the patient is willing to pay the difference? What if the doctor wants to charge more but the patient isn’t willing?

~Tim~
Post Thu Apr 02, 2009 1:52 am
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coaster
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I'm amazed at the negativity I'm encountering in the various forums I've posted this proposal. I can't respond to people who only nitpick from an attitude of negativism and don't want to give me or don't have any ideas for alternatives, so for everyone else, I'm posting this:

How about approaching it from a whole different angle? How about this idea:

National Health Savings Accounts

This would work like employer-funded Health Savings Accounts but everybody in the country would have an HSA and they’d be funded by the government. Let’s say everyone in the country is credited with $1000 a year that could be used toward their share of their share of their health expenses. With a fixed amount to spend, health care consumers would want to seek the best service for the lowest price, so they could get the most health care for the money in their HSA. Whatever they don’t spend in a year gets carried over to the next year, so everybody who lives a healthy lifestyle and doesn’t use up their HSA dollars accumulates money they can spend on the health problems they’re more likely to have later in life.

Problems to resolve:

1. What is the role of health insurance companies? If we just give the people HSA’s then we don’t resolve the problem of insurance companies denying claims and dictating what doctors can and can’t do for their patients. And doesn’t address the unnecessary expenses in the system.

2. What happens when a person’s HSA funds run out? If we just have the government pay for it, then what’s the difference between the government crediting funds for an HSA and the government simply paying for everything?

Let's think outside the box, people, and come up with something that works, that's acceptable, and that's enough change to fix what's wrong. At least I'm trying. I want to hear constructive ideas; I don't want to hear negativity. Help me with some positive brainstorming!! Smile

PS - these comments aren't necessarily directed at any comments here; I have this posted on a number of forums.

~Tim~
Post Sun Apr 05, 2009 2:44 pm
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coaster
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Update  Reply with quote  

I had a lengthy and interesting conversation with a knowledgeable person inside the insurance industry yesterday, giving me some insight on how the insurance industry would view a two-tier hybrid risk-sharing system as I proposed. Mainly I wanted to get a sense of whether it would be easier to underwrite the bottom tier or the top tier. I didn't get any firm answer because that depends on the actual numbers. What I did get is that insurance companies don't want to underwrite risk when the maximum possible loss is unknown. So that gives me the sense that insurance companies would do a better job insuring the bottom tier, with the government insuring the top. Unless a three-tier system is used, with private insurance companies insuring the middle, and the government the top and the bottom. This adds another level of complexity, though. This would make the government the payor for the high claims frequency of routine care and minor ailments and also for the super-catastrophic but low-frequency claims of major illnesses. It's worth considering, I think, despite the extra level of complexity.

Actually this idea of insuring up to a cap is already used extensively in the insurance industry through re-insurance. Essentially an insurance company buys insurance from another insurance company (the re-insurer) to cover claims over a certain amount. So if we think of the government as the re-insurer, then this tiered system of risk is something they're already quite used to working with. And with the already extensive claims history, they should be able to competitively price insurance policies.

~Tim~
Post Sat Apr 11, 2009 4:25 pm
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danielcraigsuper
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I had a continued altercation with a person who was a health-insurance underwriter, and the sense I got is that in a two-tier system, private insurance companies would prefer to underwriter capped benefits, because they are uncomfortable with "unlimited risk." So they'd be better at pricing premiums competitively if the government takes the risk for the adverse claims.
Post Sat Jun 25, 2011 10:25 pm
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