When last I wrote of healthcare, I left off with illustrations designed to vex those who would see the United States plunge headlong into communistic, governmental health care. This week, let's look at the current status of American health delivery and see where we stand, or more appropriately, where we wobble.
According to the Center on Budget and Policy Priorities, (www.cbpp.org) approximately 43.6 million persons in the U.S. Are without health insurance. (43.6 million and 1!) This represents nearly 15% of the total population. Excluding government employees who have a non-market based health system (government employees' health premiums are paid by tax revenues from the remainder of the country) perhaps 1/3 of Americans have no form of health insurance.
According to the National Coalition on Health Care (www.nchc.org);
Total national health expenditures increased by 7.7 percent in 2003 (the latest year that data is available) over 2002 - four times the rate of inflation in 2003.(1)
In 2004, employer health insurance premiums increased by 11.2 percent - nearly four times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $10,000. The annual premium for single coverage averaged $3,695.(2)
Health care spending is 4.3 times the amount spent on national defense.
Although nearly 45 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.
The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $9,950, or $829 a month in 2004. Workers contributed $2,661, or 10 percent more than they spent in 2003. For single coverage, workers contributed an average of $558 toward the $3,695 annual premium. (2)
Health insurance premiums will rise to an average of more than $14,500 for family coverage in 2006.
These figgers, are startling in that no one seems to be particularly put off by them. My family and I do not have health insurance coverage, a condition which an increasing number of our friends also find themselves in. (This isn't as bleak as it sounds - more on this later)
So, we have a system which costs more than nearly anything else, leaves 1/3 of the population out of it, and is increasing at a rate only those who are financially well off can maintain.
To some, as I pointed out last week, this sounds like a job for Super-Government! However, we haven't a super-government or even a nearly effective one. If such a government existed (which it does not) it would still not be the instrument by which the health care crisis may be solved.
What are we to do?
Necessity, it is said, is the mother of invention. I herewith present an invention, perhaps not original, yet one which I believe would provide a fair, equitable and highly profitable system, driven at least in large measure by market forces.
I have called this system, The American Health Alliance.
This alliance would be established as an official 501(c)3 non-profit organization with the IRS, the purpose of which would be to manage a membership system which assists health delivery workers in providing their services.
The Alliance - Anyone would be eligible to join the Alliance at some predetermined, published cost. For example, $720 per year, or $60 per month, per family. This is less than 1/2 the average cable TV or cell phone bill in the United States.
The Alliance would be managed and governed by volunteers or persons whose salary was capped, also at a predetermined rate of twice the average national salary. (For example, if the average salary in the U.S. were $40,000 per year, the most anyone at the Alliance could earn would be $80,000 per year - including the Administrator(s). Administrative overhead would have a cap too - perhaps 20% of gross revenue. This isn't supposed to become another insurance company and benevolence organizations become flaccid when they start paying people huge sums (look at the Red Cross and the United Way as examples).
The Alliance would not in any way be an insurance organization. It's sole function would be to manage a membership (member and provider) and payment database.
Members of the Alliance would receive a membership card, along with a rate guide for their geographic area. (Please see Appendix A for a rate guide example)
Health Care providers would agree to become partners in the Alliance and to provide the Alliance each year with rates for their services, to be published in the guide. In exchange for this agreement, providers would receive 50% of the membership fees for their patient, with 50% going to the overhead of the Alliance. So, based on our example of $60 per month, a physician would receive $30 dollars per month from the Alliance for each patient in her patient pool.
Thus, if Dr. Sally C. is a provider and has 100 patients from the Alliance in her pool, she would receive $3,000 per month from the Alliance for servicing these patients, whether she sees them each month or not. Pretty good deal, eh?
Each member who becomes part of Dr. C's pool ( at their own discretion) has direct access to Dr. C (NOT her service) and may see her 1 time per month at no additional charge. If the member sees her for other things or needs additional help, her published rates apply and the member pays the doctor DIRECTLY.
Members of the Alliance would then be directed to capitalistic Health Insurance companies to provide them with Catastrophic Health Insurance. For example, a 40 year old non-smoker can buy a $3million lifetime policy for about $35 per month. A Family policy would be about $70 per month and these rates would DECREASE as the product became more widely available and competitive as has happened with TERM LIFE INSURANCE.
Alliance Members who met certain healthy lifestyle goals, would receive deeply discounted services and even cash rebates on their fees.
As the Alliance grew, additional funds would be used to create a fund in order to purchase additional insurance products for members. In addition to this, the Alliance would give grants for extraordinary services not covered by a catastrophic policy.
The Alliance would also show everyone how to set up a tax-free HSA (Health Savings Account) from which to pay your doctor PRETAX dollars, which saves you even more!!
And, perhaps most importantly, the Alliance would be about health, not about enriching drug and insurance companies. Natural healthy lifestyles would be taught and promoted. Courses on healthy living would be provided and those who attend and implement the material would be given discounts on services.
Finally, the Alliance would offer Physicians, for a fee, representation in claims against insurers or medicare, provided by licensed attorneys in the states of record. (No, I'm not a lawyer - I'm trying to become a doctor)
A scenario:
Lord Xarthon (LX) has a family of 4 and works for Wal-mart as a floor supervisor. He decides to join the alliance, so each month his account is debited for the membership fee of $X.
The Alliance sends him a membership card and has an insurance broker contact him regarding a catastrophic policy. He chooses a policy with a $2million lifetime cap, costing him $60 per month for his family. One of his children is an insulin-dependent diabetic and his wife is pregnant.
LX is assigned to Dr. Mork's patient pool. Dr. Mork is Board Certified in Internal Medicine and has a Family Practice Clinic near LX's crib.
In January, LX wakes up with a severe head cold, and after repeated doses of Benadryl isn't going away, so he opens his wallet, takes out his card and calls Dr. Mork. Nurse Ann answers the phone. "Where's the receptionist?" LX asks. "Oh, we let her, the billing clerk, the office manager and the pharmaceutical liasion all go!"
LX tells nurse Ann the details and she gives him some healthy things to do and schedules him for an appointment at 6 p.m.! About 10 minutes later, LX receives a call from Dr. Mork himself, who gets some details and says that he looks forward to seeing him that evening. (Dr. Mork can now do this because he doesn't need a patient pool of 3,000 patients so that after fighting the insurance providers, he might actually be paid something).
That evening, LX drives to the Dr's office and as he walks in, Dr. Mork, nurse Ann and PA Martha all greet him. He is immediately seen by Dr. Mork who prescribes some medicines to provide an initial benefit to the cold and then also some natural products to help prevent this in the future. He escorts LX to the front desk, and LX whips out his debit card (From his HSA), pays the $Amt ($50 for example) of the office visit, for the natural healing products and heads to Walgreens to fill his prescription, which costs him ($25).
The next day LX is back at work and feeling much better - in a week he is 100%. LX takes Dr. Mork's advice on exercise and diet, loses 20 pounds, and doesn't have to see Dr. X for the rest of the year. But His son Jeremy, who is diabetic sees Dr. Mork each month for a check up. Dr. Mork charges LX, a discounted rate of $45 for Jeremy's visits.
So, at the end of the year, here's where LX ended up:
Annual fees for ALLiance membership $720.00
One visit for LX 50.00
Prescription for LX 25.00
12 visits for Jeremy 540.00
Insulin for Jeremy 550.00
Shots for school (3 kids) 100.00
Annual physical for LX FREE
Rebate for healthy choices 100.00
School physicals (3 kids) 90.00
Natural healing products 600.00
Catastrophic family policy 60.00
Total $2,835.0
LX paid $ZERO in health insurance during this time. this saved him $6,000 for this year.
I realize that each person will have an individual scenario, but consider this one at least for the moment.
Where did Dr. Mork end up?
He received $310 for having LX in his patient pool. He also received $540 in fees for Jeremy, plus $600 for the natural products LX bought. Plus the fee for LX's office visit.
So, Dr. Mork earned (Gross - before EBITDA) $1,450 for LX and his family. Dr. Mork received 100% of his billed amount. If Dr. Mork had, say 900 patients like LX (of varying degrees of illness), then his practice would take in $1.3 million EBITDA. After paying nurse Ann ($75K) and PA Martha ($100K), and overhead, Dr. Mork would find that he makes a good living and can still pay off his medical school and fellowship debt of $200,000.
Having said all that, here's where questions tend to help. So here goes:
1). What about a family? Families may join also. There is 1 rate whether someone is an individual or has 39 children. For families, 1 member of the family would get the free office visit and also one member would receive an annual physical free of charge.
2). Why isn't this a copy of Ameriplan? Because one, Ameriplan doesn't cover medical, and two, this isn't a discounted, fee-for-service supplement. It is a whole new health delivery system.
3). What if I have a broken bone and the doctor wants to charge me $3,000 to set it and follow up with me. Why should I pay $3,000 to a doctor for a broken bone, when my current employer-provided insurance costs only $500 per month with a $20 copay?
You are what is known in the insurance industry as "hoodwinked". You see the $500 per month deducted from your paycheck ( for services you may or may not use) but what you don't see are the thousands of dollars your employer is paying on top of this for your policy - thousands of dollars he isn't paying you, but rather the friendly insurance company. Imagine your greedy employer realizing that he can save $150,000 per year on health insurance premiums, or millions if it is a large company. Now, imagine you showing him how to save this money and give some of it to you instead.
Also, how many times have you received additional bills in the mail adding up to thousands of extra dollars despite your payments and $20 copay? With the Alliance, you pay only what is published in the guide, and you pay the doctor directly.
4). I am a physician. Why would I want to be involved in this?
Right now, the Average doctor spends $17,000 per month to break even. The majority of this cost is built-in, non-productive, non-health-related waste. Do you have an insurance billing clerK, an admin clerk, a manager, etc. none of which provide any sort of health care? Of course. Imagine that these folks and their salaries disappeared and instead you were able to hire an additional nurse or PA and you didn't have to fight Medicare or Humana or Blue Cross for every dollar you earned by healing their customer. Imagine if you received thousands of dollars per month from your patients just for the privilege of caring for them - even if you didn't see them.
5). I am a specialist. How would this work for me?
Just like the wonderful Family Practice Physician. Let's say you are a cardiologist. When Dr. C refers Smokey Joe Turner to you for his wierd arrythmia, Smokey Joe would decide, based upon your published fee rates whether or not he wants to see you. If he does, he will know exactly what he is going to be in for. If he has a defective heart, requiring surgery, then this would be covered by the catastrophic policy which he has and your practice would bill his insurance company directly. Any additional costs (office visits, pallative care, etc.) would be paid directly to you. Eventually, should Smokey Joe need care, not meeting the catastrophic policy requirements , but more than say $3000, the Alliance would consider a health grant to help cover these costs.
6). What about my insurance company? They already hate me. Have you ever noticed whose name is on the multi-story, shiny, new buildings in the downtown area of your city? Yep, insurance companies. Once they began to lose thousands of customers, they might actually decide to offer service and compete in the market, which is what we want.
7). What if I am very poor (below federal poverty level) and can't afford to join the Alliance?
A means test would be performed on you. If you have cable television, a cell phone, a car payment and eat take out every day, then you obviously don't have a money problem, you have a spending problem. But, if you are truly in need, and aren't wasting the resources you have, then the Alliance would provide a discounted membership of perhaps 1/2 the cost.
NOTE: I have met very few truly poor persons in America. In my travels around the world, I have met some extremely poor people in Pakistan, Turkey and Mexico. But, I realize there are some persons in America who just aren't able for whatever reason to earn sufficient amounts of money. These persons should and would be helped by the Alliance. But persons who refuse to work, use illness as an excuse, (folks, I have met with one-legged men in the slums of Karachi who pushed cartloads of vegetables in order to help provide for their families. I have also known severely retarded men in wheelchairs who drove throughout my neighborhood in California selling peanuts so he could feed his family. Don't tell me your back injury or ADHD or Bipolar is keeping you from polishing cars, sweeping floors or answering a telephone).
Folks, what is really at stake here is literally your health and mine. I don't have all the answers - this is simply one man's wacked out idea, which still needs much thought (i.e. what about multiple specialties involved in a patients' care. Perhaps. like insurance, once the Alliance became large enough, rish could be spread throughout the member pool and grants could be provided for those who need ongoing, specialized care. This is only a start. Plus, these ideas aren't new or original. Dr. Patch Adams and the Ithaca Health Alliance thought of this long before I did. I just added some capitalism to their awesome idea. http://www.ithacahealth.org/
Jeffc
