Everyone agrees that US medical expenses are exorbitantly high for the quality of care we get. But getting consensus on how to fix it seems quite elusive. Since current alterations being considered were only tweaking a few things here and there due to political reality, the resulting system won't solve all the underlying issues. To resolve the source of the underlying problems, we need to implement a solution that resemble other businesses that are extremely successful in driving costs down consistently while making their products & services available to everyone as years go by.
To arrive at the solution we propose, we start with these assumptions/understanding:
Keeping these points in mind, we propose the following framework:
Though much more details could be added to this proposal, listed points highlight all the salient aspects of this plan. Despite what the healthcare industry may say, if true market forces are brought in, cost will come down irrespective of how high-tech provided care is or how different healthcare is compared to other products & services. For example, Lasik surgery is a high-tech procedure performed on such a precious organ as the human eye. But since it is not routinely covered by health insurance, the fee for that service is extremely competitive. It used to cost something like $10,000 when it was introduced about 20 years back. But it costs as low as $1000 now for a version that is much more improved! Same model goes for orthodontic procedures. Though it is not as high-tech as Lasik, price is competitive and continues to decline with improving quality. We can see advertisements for low, low prices in bill boards. We never see such competition, declaration of price for any procedure covered by insurance!
Forcing the price for any product or service to become competitive and openly visible while providing the needed incentives for the users to choose the best possible option at the best possible price is the only principle needed to deliver excellent quality products & services at the right price in any field, including healthcare.
To arrive at the solution we propose, we start with these assumptions/understanding:
- If we totally get rid of insurance systems, market forces will help contain the rising cost of healthcare. Basically this is what happens in societies/countries that do not have any health insurance policies and people pay for products & services from their own pockets when necessary. But in respectable/civilized societies, letting people die since they can't afford healthcare is inhumane. So, some form of healthcare support that is efficient is needed.
- A single payer system run by the Govt (as in UK or Canada) might be good from control perspective (no patchwork care, no incompatible systems, health history consistently available to care providers through a single database/access point, being able to control cost, etc.). But the amount of fraud that goes on with the US Medicare & Medicaid systems run by US Federal Govt is mind boggling. There are also large inefficiencies in the delivery. If we fail to address these concerns, the resulting system will not deliver care efficiently.
Keeping these points in mind, we propose the following framework:
- Two percent of all income gets deducted and put in a personal account (similar to Health Savings Account currently in use in US). Since US median income is about $55,000 this will mean roughly $1100 per earning member.
- No specific insurance company negotiated rates for any medical procedure/medicine/consultancy will be allowed. All providers must list the price for their products and services openly. Care providers will be allowed to revise these prices once a quarter.
- When you need medical care/products/services, you can get it from whomever/wherever you like anywhere in the country. Expenses will be paid from the 2% account mentioned above until it is fully drained. At the end of the year, if it still has funds left, it is given back to the individuals. This will make sure people use coverage carefully and the providers who provide good quality services at low cost thrive.
- Once that account is drained, the healthcare system will kick-in and pay for all additional coverage at 98% rate. The remaining 2% will still be paid by the individual user of the service. This will ensure that all needed coverage is available without bankrupting individuals while the 2% cost share by users will ensure that there is still a small cost (like co-pay) to restrict and discourage abuse.
- Since one huge federal program administering healthcare for such a big nation will lead to fraud and abuse, we can do one of two things. Either setup a separate non-profit entity (like US post office) that handles healthcare. Or let the states manage it at the state level with block grants based on the size of the population so that smaller offices/budgets/geographical proximity can limit fraud/abuse. But the care/products/services are standardized nationwide so that states don't get to limit/deny coverage. Patients will still be allowed to get the care they need from anywhere in the country.
- Allow anyone to buy pharmaceutical drugs from anywhere in the world. This may look like a dangerous proposition at first. Consumers may start to think that just like exploding batteries in devices imported from around the world, poor quality drugs may flood the market and obliterate the quality currently ensured in the US drug development & distribution system that is highly regulated. But this is a big myth. Even within US, there are poor quality compounding facilities that mix and pedal very poor quality medicine putting people's lives in danger. On the flip side, excellent quality drugs (same as the ones sold in US) are being sold by Canadian pharmacies for a fraction of the cost US users pay since the prices are regulated there. The simple act of opening up the market will make sure the prices remain real and not inflated due to regulation and middlemen. So, automatically drug prices in US will come down to the least possible value where the drug maker can still remain profitable. This is exactly how the tech industry makes extremely high quality products available at deflating rates as years go by. If products are faulty or of poor quality, the entities selling them will be punished severely by the market and can additionally be punished by regulatory agencies & courts.
- Eliminate Medicare, Medicaid, and other individual Government run healthcare systems to save cost and improve efficiency, as this one model can serve everyone in the country.
- Some of the details could be tweaked. For example, instead of 2%, it could be 1 or 3%; we can deposit a set dollar value into the accounts of those who may not be earning anything. But establishing these principles in a very simple, easy to understand system should be adequate to get things under control.
Though much more details could be added to this proposal, listed points highlight all the salient aspects of this plan. Despite what the healthcare industry may say, if true market forces are brought in, cost will come down irrespective of how high-tech provided care is or how different healthcare is compared to other products & services. For example, Lasik surgery is a high-tech procedure performed on such a precious organ as the human eye. But since it is not routinely covered by health insurance, the fee for that service is extremely competitive. It used to cost something like $10,000 when it was introduced about 20 years back. But it costs as low as $1000 now for a version that is much more improved! Same model goes for orthodontic procedures. Though it is not as high-tech as Lasik, price is competitive and continues to decline with improving quality. We can see advertisements for low, low prices in bill boards. We never see such competition, declaration of price for any procedure covered by insurance!
Forcing the price for any product or service to become competitive and openly visible while providing the needed incentives for the users to choose the best possible option at the best possible price is the only principle needed to deliver excellent quality products & services at the right price in any field, including healthcare.
