Archive for September, 2009

A Health Care Reform That Might Work by Don McCormick

Saturday, September 26th, 2009

We in the United States are faced with a moral dilemma: to uphold the equal constitutional regard for each and every life in our country, or to slide further in the direction of survival of the fittest (the richest?). I have been in the business of setting up and operating health care delivery systems for the past forty years, and I feel I have some worthwhile recommendations to make to the many options being entertained.

1. Outsourcing: One of the best suggestions I’ve heard is to outsource the management of the programs through competitive bids to Canada, England, France, Germany, or Japan. Maybe some of the African countries currently working with Partners in Health should be allowed to get in on the bidding. Since outsourcing has such a poor chance of approval—in spite of the genius of it—I’ll make an alternative suggestion.

2. Pooling:

A. First, let the insurance companies compete with one another for administration and payment of claims—just as they have to do with large, self-insured employer groups. In the 70’s, 80’s, and 90’s, the companies bid as low as 2.5% to do all administration and claims–.5% lower than Medicare’s expenditures for the same services.

B. Second, allow no underwriting profits. Put all expected claims monies into a common pool and pay claims from that pool. As with self-insured employer groups, the cost for each person would not vary, and no big blowout claims would kill off the plan. Let us allow all Americans to pool losses rather than just suffer them. Real claims costs would be determined from current experience and certified by independent actuaries, who would then set a rate for each person. [Perhaps the population could be separated by age and sex, but that might be a waste of time if the pool is hundreds of millions of people. Medicare has not found it necessary to do such separation, and its customers are the sickest people in the country.] The competing insurers would then bill and collect the premiums for individuals and groups, keep their administrative loads, and pay the claims portions of the premiums immediately and electronically to the “Claims Fund Account” based on actuarially certified rates.

C. Third, let there be defined benefits for the health plan similar to the simple provisions in the Medicare Advantage HMO plans. For example, there could be several plans with different deductibles–$250, $1,000, or $5,000—with lower rates for the greater deductibles. People who choose a higher deductible, however, would have to show proof that they have sufficient capital or credit to pay the larger deductible.

D. Fourth, design a more controlled system for medical care billing and costs. The current system is based on an open-ended fee-for-service billing and, in the case of Medicare, involves DRG (Diagnosis Related Groups) based payment for some facilities and RBRVS (Resource Based Relative Values Scale) rates that are tied to diagnosis and CPT (Clinical Procedures Terminology) codes for generation of professional fees. That kind of system is subject to manipulation and much abuse by health care providers and contains the wrong incentives for delivery of quality health care services. The DRG system of payment — which Medicare invented to protect itself against hospital billing abuses — is somewhat effective if someone other than the hospital is keeping an eye on it. If there is no independent, interested party monitoring the number of admissions and discharges as they happen, then too many admissions continue to happen and people are often discharged too soon after a necessary admission.

What I suggest is that the physicians should be required to be members of a team of about thirty primary care physicians and twenty groups that represent the main areas of specialty. The team chooses which hospitals it plans to use and then elects a quality-assurance committee and/or hospitalists to “watch-dog” the use of the facilities. These physician teams would be paid, using the professional fees portion of the claims funds, (which are based on the numbers of patients in the practices of the primary care physicians). Some sub-specialties could service more than one team, if the patient population served by that team was less than necessary to fill the practice of that specialty. The members of the team could make their own policies in regard to payment of each member, but what works well is “division by capitation” if the patient numbers are at the 50,000 to 60,000 capacity of the thirty primary care practices. I can guarantee that no member in that small democracy of physicians will get more than his or her fair share of money or work. Physicians know very well the work required in caring for patients and billing will be among themselves, rather than to some “evil” third party or a uninformed patient.

E. Fifth, if the U.S. government is unable to cooperate in the development and approval of health care reform then the citizens ought to do as the government dreams it could do: form cooperatives of millions of people and accomplish the reforms collectively. This method is not complicated, sacred, nor forbidden. It has been done by many people at times in the past, usually after a government – and its owners – have failed its people, certainly as is happing now.

Health Insurance Reform or Health Care Reform?

Saturday, September 12th, 2009

The ideas of those who call themselves liberal or conservative do not reach to the base of the health care problems and their solutions. Health insurance could help if it were universal and comprehensive although it need not reach to the first dollar of expenses for every individual. The need for health care arises before the health care providers and patients ever make contact and before health insurance has any impact. The causes of accidents, diseases, and sickness are mostly unnatural and are best solved by correcting the environment, the production and distribution of food, unemployment, poverty, education, and training of more health care workers at every level. There is a direct connection between the reform of the health care delivery system and solving the problems that arise from the unnatural causes. There is almost no political will in our government to get at root causes and real solutions. It seems it is not a government of the people, by the people and for the people, but one managed by and for the short term interests of wealthy individuals and corporations.

Yesterday, I was surprised when a friend who is a marketing director for a large health insurance company told me he thought that “Medicare for Everyone” was the proper health insurance reform. He said this even though he was opposed to a government run health insurance system and he expressed the views of people who are politically conservative. He said such a solution seems very reasonable since the details of it were in place and there would be a need for supplemental insurance from the private companies based on prescribed benefits. He concluded that the benefit prescription, as in the Medicare Gap insurance, created a fair and competitive market. He assumed that the “Medicare for Everyone” would not cover from the first dollar and that given the current increases in medical costs the gaps in coverage would grow. A new system would take years to catch up to the operation and regulation that is already mature in the Medicare system such as; contracting with providers, determination of rates, claims administration and quality assurance measurements.

I suppose the political objection to “Medicare for Everyone” is that the big insurance companies would lose administrative income and underwriting profits and the beneficiaries of the current payment system would have to accept Medicare rates which are thought to be too low by the hospital corporations and some of the doctors. The big six: United Health Group, Wellpoint, Aetna, Humana, Cigna, and Health Net may not be willing to just sell Medicare Gap Insurance in competition with the thousands of other insurance companies that would be able to compete with them. Reporters for newspapers and TV stations keep telling us that the majority of the people support a single payer health plan. Is that not what Medicare is? Why is it that someone can say he would be in favor of “Medicare for Everyone” in one breath and then be against a “Single Payer Health Plan” in the next breath?

It could be that “Single Payer” sounds like the elimination of Medicare and Gap insurance and it would pose a threat to insurance jobs and current medical fees. Whereas, “Medicare for Everyone” is a known system, has established rates and defined benefits.

Insurance has never reached down to the level of payment for basic health care services. Yet, people will pay premiums for 1st dollar coverage in order to maintain a monthly budget even when such premiums are more than their routine expenses over a short term. I think like my friend, the marketing director, that “Medicare for Everyone” is the most practical choice for health insurance reform but I understand why the President and Congress may want a “new program.” They do not represent the people, conservative or liberal, but represent the money that put them office and keeps them in Washington. They love the way lipstick looks on pigs.

If you want to reform “Health Care” then you should ask Dr. Paul Farmer and the other physicians who work for Partners in Health for their recommended solutions. They stand head and shoulders above every health care expert in the country. Health insurance is simple compared with health care and health care is simple when compared to solving health problems that arise from the unnatural causes. If the government actually wants to fix the “health insurance crisis” they have a system in hand to do it and the majority of the representatives know it. If they lack the political will to oppose the lobbyists then perhaps the people can send new representatives. If they want to fix “Health Care” they had better get to the roots of the problems: environmental degradation, industrialized food, unemployment, poverty, education, and lack of training for a broader range of health care providers.

Don McCormick