How to fix Healthcare in America

Yes, this is complicated.  Your brain may hurt before you’re done with this, but if you really want to have educated input on the subject you need to spend a few minutes to understand it to a depth that allows you to evaluate possible solutions.

I’ll start with the conclusion, to save you some reading if you’re already familiar with the nuts and bolts of the issues.

If you’re not, I’ll dive into the rational behind each of these after the conclusions…

  1. Introduce pricing and quality transparency to the medical industry. Require medical providers to provide pricing and quality data to HHS (using existing Medicare standards) for all provided services.
  2. Facilitate comparative shopping.  Require all providers who accept government funds in any way provide price/quality data to a federal database in machine-readable format, which would then be open to third-party search engine developers to facilitate “show me pricing and quality on all MRI providers within 10 miles” searches.Yes, I have heard all the “healthcare can’t be shopped” from people who think most healthcare is administered to people arriving at the ER in an ambulance, but in reality that’s not how most healthcare is done.Stats on “unplanned healthcare” are hard to find, but the link below indicates unplanned healthcare is less than 10% of total medical care.Coincidentally enough, that’s about the same as last minute airline tickets – and no one would say you can’t shop for airline tickets.90% of medical needs could be “shopped”.
  3. Require informed consent from all patients. Medical providers should be required to provide an estimate of potential charges prior to any scheduled procedure or on request.This should be similar to the current “Good Faith Estimate” (GFE) process for home mortgages, where the provider is required to give that to you in a standard format using standard terminology, in a specific time from your request.In healthcare, the terminology should include the Common Procedure Terminology (CPT) code, and should also include the facilitiy’s quality statistics as currently reported to Medicare for that procedure.The “Medical GFE” should be provided within a day of diagnosis, pricing should be reflective of your insurance coverage plan’s rates.

    While the provider cannot tell you what portion of the bill might (or might not) be covered by your insurance under the terms of your plan, they can certainly tell you what their billing rate for that procedure will be, giving the patient what they need to discuss with their insurance company further.

    As a related issue, the insurers could be required to provide their own online service to allow you to log into your actual plan, plug in the facility and CPT code information and get more exact pricing that actually reflected the terms of your coverage.

    Such estimates can’t anticipate complications, but the entire end-to-end cost of procedures “as prescribed by the physician” should be included, as well as the cost of potential complications that happen more than a certain percentage of the time (say, “more than 10% of the prescribed procedures also require THIS to be done…”)Quite likely if you shopped for the colonoscopy and chose the provider who charged ½ as much as another, removing any polyps found would also be more affordable.

  4. Make sure everyone has skin in the game. Every plan should have a deductible, every plan should have co-pays.  To make sure the patient is involved in the cost and aware of the need to shop…This is generally already the case with ACA-compliant plans, one of the few things the ACA got right…
  5. Require that all procedures done without signed informed consent be charged at Medicare rates – both to incentivize providers to get that consent as well as to protect the unconscious from predatory pricing, as well as to compensate providers for unpredictable outcomes.No longer will people wake up after their ambulance ride to find out they’re now bankrupt.
  6. Provide plans that only cover things that are truly insurance issues. Insurance is a product that covers unplanned, unexpected costs.Services like birth control, pregnancy coverage, children to 26, are not unplanned or unexpected needs.Let people who have those needs buy add-on coverage to cover their own specific lifestyle issues, but a basic plan that simply provides coverage for unplanned healthcare needs should be available for those who just need that.
  7. Let insurers sell policies across state lines without having to get approval from 50 (or more) different regulators. There is no difference in the healthcare needs of people who live in Michigan or Minnesota, the only need to separate authorization by state is to enable local politicians to control who has access to their market – which facilitates favoring special interests.Establish a common set of rules for healthcare insurance, anyone meeting those rules can sell to any American, on the federal exchange.
  8. Get rid of the individual state exchanges. The federal site ended up costing a BILLION DOLLARS to set up (a number guaranteed to have anyone in Silicon Valley or who works for rolling on the ground laughing.)The total amount of money wasted setting up individual state exchanges is $5 BILLIION dollars.Each of these sites does the exact same thing – validates income, provides comparisons between plans, and facilitates sign-ups. Can you imagine how much real healthcare that would have bought, instead of spending it to design “the same thing” from the ground up many times?Not to mention all the ongoing annual maintenance costs for each individual site, which I have not yet been able to find a good source for but
  9. Provide a “catastrophic” version of Medicare with more limited coverages, available for sale (at a price that covers the government’s cost, with age banding) on the exchange sites, alongside private insurance offerings.This plan could be subsidized (as ACA plans now are) for those in need as part of means-tested programs (the current tests and income ranges for the ACA is a good start.)The CBO analysis showed the premiums for just “standard Medicare” would be “7 to 8 percent lower” than private plans.And that’s not including any modifications to “Paid Medicare” that would further reduce the cost… some incidental-but-related issues…
  10. Allow Medicare to negotiate drug pricing. Not that that has much to do with providing insurance coverage to Americans, but it just makes sense and would help keep the cost of the public options much better under control.
  11. Streamline the process for approval of generic drugs. A drug that has been on the market for enough time to be out of patent protection does not need nearly the kind of intensive FDA scrutiny that a new drug needs.  Streamline the process of being approved for generic production, to facilitate more competition.
  12. Allow purchase of drugs from overseas sources.  Again, to facilitate competition, allow drugs to be purchased from other countries.

So… how did we get to these conclusions?

A solution starts with some key understandings of what the actual problems are…

We need to understand that:

  • Healthcare service costs are the problem, the cost of insurance is just a side effect.  Subsidizing insurance is a way to fool people into thinking healthcare is more affordable, while continuing to support huge profitability in the actual medical care business.
  • Having someone else pay for some (or all) of the cost of a product or service you receive does not make the actual cost of that product or service cheaper, it simply distributes the same cost over more payors. And, as a matter of well-established economic fact, people who do not pay the full price of anything tend to use it more and be less concerned about the cost – which is common sense as well.
  • Insurance and “prepaid care” are two different things. Insurance is designed to cover unexpected events, not to pay for predictable expenses.
  • True competition is what drives decreased cost and improved quality.
  • True competition requires transparency into both pricing and quality as well as a “level playing field” that doesn’t have artificial hurdles imposed by government.

    If you don’t think true competition is possible in healthcare, you’ve fallen victim to the common myths about that.  Here’s a description of those myths and why they’re mostly untrue.

  • People who are not paying the full price for a product or service they use tend to not pay as much attention to the cost of that product or service.
  • No matter what we do to control medical cost, there are going to be some that can’t afford any cost at all. As “the richest nation on earth” we owe those unfortunates adequate medical care, and it’s going to have to come at public expense.  Letting people die in the street is not America.

And I’ll flesh out this page to dive into each of these understandings in a bit…

For a view of how the quest for medical pricing played out for a couple hours in my own personal experience, here’s an anecdote for you….

[Last Update 2/25/2019 6:23 AM]