How to Reduce the Cost of Health Care by 45%
The Solution is comprised of very simple two part process:
Part #1. Routine office visits
Narrow the range of covered medical services to eliminate the use of insurance on routine office visits, while expanding the use of health savings accounts (HSAs).
Insurance was originally established to guard against risk of financial devastation resulting from accidents and debilitating diseases such as cancer. Routine office visits are not a risk; they are a common event, a certainty. To fund office visits through insurance premiums is simply a more expensive way to pay for them. With so many Americans using high co-pays and HSAs to pay for routine care, it is not a big leap to simply exclude these services from insurance reimbursement. HSAs allow the individual to use tax exempt dollars to pay for medical services even if those services are not recognized as covered health insurance expenses. In fact, by excluding this level of service from being eligible for insurance reimbursement we eliminate a layer of administrative service and expense both for the insurance carrier and the physician’s office. A reduction in administration would have an immediate and dramatic impact on the cost of health care, as 25% of every dollar that currently flows through an insurance company is eaten up in administrative costs.
To use insurance to pay to see a doctor for a sore throat, sports physical, or annual routine exam does not shield the patient from the cost, but only the knowledge of the cost! It is absolutely necessary for individuals to have an awareness of the cost of medical services.
Eliminate the involvement of insurance carriers at the routine care level of service and you have not only removed the incentive to exploit the system, but you have also eliminated 25% of administrative costs on those services.
By implementing these two actions, Americans should see a reduction in the cost of health care of 35% to 45%.
Health insurance will only become less expensive when we place the individual in a position of bottom-line responsibility.
About: Insurability, Accessibility, Portability and Pre-existing Conditions.
We don’t need a Federal Government-run health care system. What we do need is a National Insurance Mandate to impose smart regulations concerning issues related to insurability, accessibility and pre-existing conditions clauses. These issues are addressed below:
- We need to eliminate the difference the difference between commercial coverage and individual coverage.
- Insurability & Portability:
- Commercial Coverage (“GI GR”): In most states health care through your employer is guaranteed issue, at guaranteed rate (“GI GR”). However many businesses do not offer health care and many people try to secure an individual policy. Individual policies are not guaranteed issue at guaranteed rate (“GI GR”). If a single health care company were to immediately open the door and provide “GI GR” to individuals, that company would be flooded with new business. The newly insured’s often consist of:
- Persons who were denied coverage due to existing health conditions.
- Persons who could not afford rated policies and forgo health services due to cost.
The result would be that the health care provider would experience tremendous health care cost and would go out of business. This is not speculation. This has already happened and on numerous occasions in numerous states to numerous commercial carriers. Kaiser Permanente completely withdrew from doing any business in the State of Connecticut in 1999 for exactly this reason. All of Kaiser’s Connecticut customers were required to find new health care providers; Kaiser Permanente did assist its’ insured’s in securing new coverage.
The solution is a national mandate that specifies all providers of individual policies in all States must provide a guaranteed issue at guaranteed rate (“GI GR”), to all applicants (as is the practice in NY). “GI GR” would not have a tremendous effect on the current cost of health care.
The uninsured are currently getting free health care and the cost of this health care is passed on to employers and employees who purchased fully insured plans. Employers with less than 50 employees are the purchasers of fully insured health care programs.
- Pre-existing condition clauses:
A pre-ex clause states that the insurance company will not pay for a health care concern that existed before you became insured. Pre-ex clauses are often permanent and need to vanish after a reasonable period of time. Pre-ex clauses are necessary.
- Waiving Pre-ex clauses:
Commercial Carriers offer a “takeover” provision, which simply states that if coverage is being replaced (a business is changing providers and replacing Aetna with Blue Cross) then the new carrier will recognize the exchange and accepts all risks, meaning that no individual will be subject to repeating a Pre-ex clause; the key being “continuity of Coverage.”
The exclusion would be for the individual who walks around without health care coverage and then one day discovers that he has a serious and expensive health condition. It would not make sense if we all paid for insurance and this person just purchases the policy after they have been diagnosed with an expensive medical condition? The solution is:
- One year Pre-ex clause for those young adults, ages 18 thru 21,
- Three year Pre-ex clause for adults
- No Pre-ex clause for children!
In summary, Regarding Portability, if a “takeover” provision is mandated on a “GI GR” basis, then portability is no longer an issue because everyone would now have the ability to buy a policy anywhere, anytime, without penalty due to medical conditions.
Part #2. Tort Reform
Apply it to eliminate malpractice premiums for all providers of outpatient services using a commission to better police the medical industry.
Definition: Tort Process Reform or Tort Reform,
A tort is a non-criminal wrong, (such as falling down the stairs at work), where an injury exists. The current process is to sue for dollars to offset the cost of injury (loss of income, UN-reimburse medical bills, plus pain & suffering). There are currently no limits.
The reform of this tort process would be the implementation of a fixed schedule of benefits as opposed to our present “the sky is the limit approach”.
We believe that it’s much simpler than everyone thinks. We point to the fact that workmen’s compensation is actually a process where the employee is protected by a schedule of fees and does not have the right to sue the employer. Therefore, since we have an excellent working model, why recreate the wheel – just copy it and retrofit it to our health care system.
In addition, with the elimination of malpractice premiums on outpatient services, physicians will be able to return to private practice, making accessibility to medical care easier. With more physicians returning to private practice and with the elimination of insurance company involvement in outpatient services, we will see physicians establishing office visit rates at a price consumers can afford.
Create a tort system for the medical industry, and you will not only remove the incentive to exploit every medical mishap for every dollar possible, but you will also eliminate malpractice premiums which will result in an immediate 20% reduction in the cost of health care.
Solutions are ideas that evolve. We are not an expert in every facet of government. Your ideas, comments, questions and experiences us develop these solutions. Please continue to submit your qualified insights.