COVID-19 makes us ask, “What Would A ‘Perfect’ Healthcare System Look Like?”
The healthcare debate in the US is caught up in the gridlock of positional bargaining. Both sides have a list of outcomes that form their position, and their discussions consist largely of each side agreeing to concede or give up some portion of their position in exchange for a perceived similarly valued concession from the other side — resulting in a compromise solution that both sides can live with but neither side is happy with. In the early 1980s, Roger Fisher of the Harvard Negotiation Project published a book called Getting To Yes that recommends a cultural change from positional to criteria-based bargaining. In this example, both sides would agree that they share the goal of providing America’s citizens the best possible healthcare. The next step is to determine the criteria for defining what that means. Some possible criteria include:
· Ensure every person in the country would have access to quality healthcare. (Make healthcare a part of the security services everyone gets — just like military, FEMA, fire, and police protection.)
· Ensure the doctor and patient involved, not the government or private insurance companies, make the decisions about treatment.
· Place a major emphasis on prevention and wellness.
· Ensure fair and equitable pricing for drugs and procedures.
· Control costs — Ensure nobody would face financial ruin for medical cost reasons and the national budget does not take a major hit.
· Reward excellence. Devise a financial compensation system for medical professionals that rewards excellence and fiscal responsibility.
· Reduce administrative costs.
· Improve epidemiological data gathering and usage while maintaining individual privacy.
· Increase medical research funding. Manage and coordinate collaborative research efforts. (Reduce cutthroat competition for big drug payoffs in return for more collaborative efforts for earlier and better outcomes.)
· Reduce the obscene profits on pharmaceuticals to lower the national healthcare costs.
· Differentiate necessary and elective services. Make the patients pay for most elective services. [Not sure about this one. What do you think?]
Each of these possible criteria would be discussed and modified until all participants agree with the criteria. Notice, I used ‘all participants’ not ‘both sides’ because there should be no sides in determining the criteria. Everyone is on the same side seeking a set of criteria that everyone buys into. Some of the items in the list may generate some heated discussion, but the heat usually comes from people who see that item leading to an outcome that they do not want. However, because it is a valid criterion, opposing it exposes their selfish bias and can be easily argued away for the greater good.
Access To Quality Healthcare
Americans spend far more than the citizens from other developed countries do for similar outcomes. That is why US Doctors Call For Universal Healthcare: “Abolish the Insurance Companies[1]” For more details, go to the link in the footnote.
The traditional and intended function of health insurance companies is to share the risk and reduce uncertainty about the potentially harmful personal financial impact of a health issue — and to make a profit for the insurer. As presently mandated by law, the insurance companies have to spend 80% of all the money that they collect in premiums on healthcare costs and quality improvement programs.[2] That means the subscribers are paying the insurance provider about 20% of their premiums for administrative, marketing, and overhead costs. If the government caps insurance companies’ share of revenue at 20% of what they collect, then the only way they can increase their share is by raising the premiums. If they raise premiums to increase their 20% share, then that means they have to spend more in order to use up the other 80% share. That is not an incentive to bring down healthcare costs.
If a premium is $100, then the insurer must spend $80 on benefits and can keep $20 for itself. In order to increase its share to $22, the insurer would need to increase the $100 to $110. In order for the books to balance, they would need to spend $88 on benefits.
It’s an incentive to spend more. How does that affect the individuals? Many patients will not see any significant change in what they pay because they will get a subsidy or rebate to offset the increase. However, at the national level, it keeps the total cost to provide healthcare rising instead of falling.
During the debates over the ACA, there was much rhetoric about keeping the government out of making decisions about an individual’s healthcare. That seems like a reasonable idea. As usual, the Devil is in the details. The ACA was supposed to allow people to keep their previous doctors; however, the political discussion did not explain that instead of the government, the for-profit insurance companies would be making the decisions. Oops! The ACA tried to allow people to keep their previous doctors. However, if you have coverage by an insurance plan, you can only go to doctors in their network. Instead of the government, the insurance companies are making healthcare decisions for individuals regarding which doctors the patients can see and what treatments they get. If we remove the issue by providing healthcare to everyone with the government as the single payer, then decisions about which doctors and which treatments go back to the individuals and their doctors, and there is no more financial or medical uncertainty. In the larger view, there is no need for health insurance — just healthcare. Eliminating the healthcare insurance companies also eliminates their 20% administrative and overhead costs. The single payer universal healthcare model also provides leverage for driving down pharmaceutical costs.
The next big, obvious flaw with the ACA is the size of the risk pool. In order for the system to work, everyone has to be in the pool — high, middle, and low risk people. If everyone participates, then the money is available to cover everybody, while all the participants share the risk and cost equally. Consider other government-provided services like military, highways, police, and fire. Everyone shares the costs and benefits. There is no opting out. You may never use the fire department, but it is there if you need it. Everybody pays and everybody benefits by having the security of the availability of the services. The ACA tried to build a sustainable model based on this principle, but it had a fatal flaw. If the distribution of enrollments skewed towards more high risk and fewer low risk subscribers, then the costs would also skew higher. Younger people are lower risk and lower cost than older people. But, if they are not in the pool, then the risk and cost of those remaining goes up. To be a sustainable program, everyone must be in the pool. The best way to get everyone in the risk pool is with a single payer system. The ACA is not that.
Some people may wonder, why should the healthy young people pay the same amount for their minimal care as the older people who are heavier users. (Citizens would pay for healthcare as a part of federal taxes at a nearly universal rate.) One answer is that each individual pays a flat rate for life, so the extra money paid during the healthy younger years is available during the older more costly years — assuming Congress does not treat the money as a slush fund and rob it — as they did with Social Security.
The only way the economics can work is to cover everyone and have everyone pay for the service. We have examples of this single universal service provider model already in place and serving the population very well. They include the military, police, and fire departments, highway departments, and FEMA. Healthcare is similar. An individual may be healthy for long periods, may experience occasional minor ailments, and on a rare occasion, have a major health problem. Just as everyone can drive on our roads and is eligible for FEMA assistance, everyone should be eligible for healthcare. Notice, I did not say health insurance.
From what I can see, if we go to a universal healthcare single-payer system, there will no longer be a need for healthcare insurance companies. With universal healthcare, everyone is in the pool, sharing the risk and getting the services they need. By providing preventive care, wellness, early diagnosis and care for ailments, the cost can come down while health in general should improve. Although the politicians could not pass a single-payer system, nearly sixty percent of Americans want it as the solution (including many Republicans).[3] Big Pharma and the Healthcare Insurance providers through their lobbyists own our elected representatives and continue to prevent any consideration of a single-payer solution. Both parties recognize the need to ‘do something’ about America’s broken healthcare system. It’s time to get to the table and address the issue.
America has some of the very best doctors and hospitals in the world. On the other hand, America has remote and economically depressed areas where access to quality healthcare is problematic. Unfortunately, America also has people living within fifty miles of an excellent hospital, staffed by outstanding doctors, who, for financial reasons, might as well be living in the remote community when it comes to accessing excellent healthcare. Universal healthcare will ensure that all Americans have equitable access to quality essential healthcare.
If you think of national security as more than just being physically safe from foreign attack, then the definition should also include being safe from the catastrophic financial impact of a medical emergency and the provision of lifesaving healthcare. The following quote from an article titled, “18 Ridiculous Statistics about The Health Care Industry That Will Make You Tear Your Hair Out”[4] captures the situation very well.
“Today, virtually every single American is one really bad day from financial ruin. Did you know that medical bills are the number one reason for bankruptcy in the United States? Did you know that the vast majority of people that go bankrupt due to medical bills actually have health insurance?
Meanwhile, there are a significant number of people becoming fabulously wealthy in this system. Our ‘health care industry’ has turned large numbers of doctors, lawyers, health insurance company executives, and pharmaceutical company executives into multi-millionaires. The health care industry in the United States has been so corrupt and so greedy for so long that we do not even remember what a legitimate medical system even looks like anymore.
A recent study found that medical bills are the root cause behind more than 60 percent of all personal bankruptcies in the United States each year. The same study found that three-fourths of people that go bankrupt because of unpaid bills actually have insurance.
Approximately 46 million Americans do not currently have any health insurance at all. That means that 46 million Americans are just one really bad day away from financial ruin without any protection whatsoever.”
From all I can see, healthcare insurance companies add major costs and do not add any value. Even if they could be made extremely efficient, they add no value. To quote Peter Drucker, “There is nothing quite so useless as doing with great efficiency something that should not be done at all.” I cannot think of any good reason for paying a lot for nothing. There are countless references discussing ways to control or regulate the healthcare insurance industry. Because I am recommending eliminating them altogether, I will not discuss any of those here.
[1] https://www.occupy.com/article/us-doctors-call-universal-healthcare-abolish-insurance-companies#sthash.FObX9SUY.dpbs
[2] https://www.healthcare.gov/health-care-law-protections/rate-review/
[3] https://www.washingtonpost.com/news/the-fix/wp/2016/05/16/most-americans-want-to-replace-obamacare-with-a-single-payer-system-including-a-lot-of-republicans/
[4] http://www.businessinsider.com/statistics-about-the-health-care-industry-2011-2?op=1/#recent-study-found-that-medical-bills-are-the-root-cause-behind-more-than-60-percent-of-all-personal-bankruptcies-in-the-united-states-each-year-1
