This blog is building a new model for delivering and funding healthcare for individuals.

Monday, July 20, 2009

Solving America's Healthcare Problem

Any solution for solving America's healthcare problems should include:

1) Delivery of healthcare to all residents (citizen or guest, wealthy or poor)

2) A way to manage the federal budget devoted to healthcare

3) A way to contain the cost of medical malpractice suits

4) Give control of healthcare decisions to the individual

5) A common framework for defining healthcare and healthcare insurance coverages

6) An efficient healthcare marketplace for allocating resources

7) Education to individuals for managing healthcare choices throughout life.

This healthcare framework contains two delivery systems. One based on predetermined funding by taxpayers to provide rationed healthcare to those who can't pay for it, and another market based system for those who have the resources to manage their own healthcare.

1) The federal government determines how much it will spend on providing healthcare for persons who can't afford their own care and funds the development and management of free clinics to provide that care on a rationed, triage, basis. The healthcare model used in Cleveland Ohio would be a good model for how to manage this network. New doctors and nurses would be required to serve a minimum of 2 years in this network upon graduation.

2) Individuals who can afford healthcare establish a Healthcare Account tied to social security number. The federal government defines minimum coverage requirements for nationwide insurance, states can add additional requirements within their states, and healthcare companies can add any additional coverages they wish to offer. Any government entitlements or subsidies, employer contributions, and individual savings for healthcare are deposited in the healthcare account. The individual decides how best to spend the money on their healthcare.

With this basic structure I think you will find the healthcare delivery system becomes highly competitive and very efficient in allocating healthcare resources among those willing and able to pay, yet provides a predetermined level of resources determined to be morally responsible and economically doable for those in need. The education system would support the individual in managing decisions related to healthcare by developing curriculum that teaches prevention and financial management of health resources.

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This model is a framework for providing private healthcare nationwide. It accounts for different levels of government participation and control over most aspects of healthcare but relies entirely on a free market to deliver competitive products and services. A National Healthcare Registry will be maintained that defines all available medical procedures, medical tests, medical product types, and legal drugs.

Four types of healthcare are defined in terms of items from the national registry: 1) Minimum - free, rationed, healthcare with coverage defined by the National Health Board and funded by a fixed dedicated payroll tax, 2) Federal Basic - nationally defined coverage, premium quoted by Healthcare Management Companies 3) State Basic (optional) - coverage defined by State government, premium quoted by healthcare management companies. 4) Premium - Coverage defined and quoted by Healthcare Management Companies.

Minimum coverage will cover four types of care: 1) general care, 2) emergency care, 3) prescriptions and 4) hospice. A National Health Board (NHB) will set a fixed monthly rate of reimbursement and a quantity of authorized clinics by type of care (a clinic may provide any or all classes). Caregivers that want to participate must apply and be accepted by the NHB. Once accepted they must provide the approved types of care to all patients that request it on a triage basis. The minimum coverage will be funded by a payroll tax set by congress that can only be used for minimum care (estimated to be between .05% and .2%). Free clinics will have a standardized way for patients to rate the services of the clinics they use and it will be made available to the public on an ongoing basis.

COMMENTARY - This approach provides a minimum level of healthcare to people who have no other means to acquire it. The amount of resources made available for the minimum level of healthcare is determined by a fixed percentage of the wages dedicated for this purpose. The amount and quality of healthcare provided will depend on how efficiently the available resources are used and the demand by persons with no other options. Service will degrade if unemployment and illegal immigration continue to outpace growth in our economy.

Federal Basic coverage will be defined by the NHB in terms of items from the national registry that must be covered. Health insurance for this coverage can be offered by any insurance provider.

State Basic coverage may be defined by a state health board in terms of items from the national registry that must be covered. It must include all items contained in the federal basic plan. States may require this coverage in lieu of the Federal Basic plan for all state residents. Health insurance for this coverage can be offered statewide by any insurance provider.

Premium coverage is defined and priced by the Healthcare Management Companies. To be available in a State it must include all items that the States basic coverage includes. It may also include any additional items from the national registry.

The insurance providers set the premiums for their plans and specify a standard cost for each item covered. All healthcare items are available in a free market within the private sector. Individuals manage their own healthcare with financial assistance as appropriate from government, employers, charities, friends and family.

Disability insurance with coverage requirements defined at the federal and/or state level may be substituted for the patients "right to sue" for malpractice.

A Healthcare Account is created for all persons who currently have or receive a social security number. Any benefits earned from Federal, State or Employer healthcare programs are monetized and placed in the individuals account. Employer paid monthly contributions for health insurance will be paid to the individuals account. Individuals select a Healthcare Management Policy paid with monthly withdrawals from their Healthcare Account.

Comment - Individuals manage their own healthcare account with children taught in the school system how to do this responsibly. Individuals contribute to their account through life and may receive additional contributions from other sources like employers, family, charities, etc. Upon death, the balance is paid out to the estate of the individual or passed through inheritance, tax free.

Medical Savings will accrue to the individual when they use healthcare items for less than the standard cost specified in their policy and will be credited to their healthcare account. Items in excess of the standard cost will be debited to their account.

Example: A primary physician approves a colonoscopy for their patient. The standard cost in their insurance policy for a colonoscopy is $4,500. They go to the healthcare marketplace and find a suitable source for a colonoscopy and have it done for $3,500. The savings of $1,000 is placed in their Healthcare Account.

Commentary - The government could have a major impact on the current economy right now by spending $40 Billion to acquire and convert distressed properties into free clinics to provide the minimal healthcare. 40,000 clinics could be built at $1,000,000 each, removing homes and commercial properties from the market and create 200,000 "hammer ready" short term jobs. A payroll tax increase of less than .2% could fund the ongoing operations of these clinics (annual budget of $500,000) and create another 200,000 permanent jobs.


A consortium of network companies would be contracted to develop a healthcare marketplace. Specialized versions of existing websites like Facebook, Twitter, Ebay (and/or others) could be implemented to provide a highly integrated system that emphasizes efficient communications between patient and care givers and that facilitates cost management.

Doctors would create and maintain a page on the Facebook like system that gives, as a minimum, their biography, the items they offer from the medical database, and their cost for providing those items.

Each individual would create a page on the Twitter like system and as a minimum it would include required personal information, medical history, insurance provider, policy level, and primary physician. The individual would log of any medical information they feel is pertinent to their health, such as weight, blood pressure, symptoms, blood sugar, health concerns, etc. An interface for health monitoring devices would be included.

The medical ebay like system would interface with the Facebook like system to pull all items from the medical database offered by physicians (with pricing). Suppliers of medial products, drugs and services that aren't physicians would enter their items directly to the medical Ebay system. This would become the "market" for all items covered by all levels of health insurance. Additional items not covered by insurance that relate to healthcare could also be included. The system would provide search and feedback components similar to Ebay.

The system would accommodate purchasing, setting appointments, requesting additional information from the provider, electronic prescriptions, and maintaining a purchase history for each individual. Purchases covered by insurance would be tracked and billed to the insurance provider. Covered items that cost more the "standard cost" stated in the medical database would have the "excess" billed directly to the individual. Items that cost less would have the difference added to the individuals lifetime maximum as an incentive to use less costly items.

Insurance companies would be sent a detailed bill monthly for each individual showing the covered items , standard costs, amounts due, and current lifetime balance.

1 comment:

  1. I would like to propose the following healthcare solution for the 47 Million uninsured in the U.S:

    Step 1. Buy McDonald's corporation with Stimulus money for $70 Billion (15% premium over current market cap)

    Step 2. Restructure and sell off the 17,000 (of 31,000 total) locations outside the U.S. raising $35 Billion

    Step 3. Remodel the 14,000 U.S. locations into healthcare clinics (with drive thru pharmacies) $1.75M/Store - Total 24.5B

    Step 4. Build $1000 new locations ($2.5M/Store) - Total $2.5B

    Step 5. Increase the payroll tax from 7.65 to 7.75 raising raising approximately $11.25 billion/yr

    Step 6. Dedicate the new payroll tax to operate each clinic with 5 medical professionals and annual budget of $750,000.

    Open the 15,000 McDoctor clinics to provide free healthcare for people without insurance and keep the annual budget balanced with the payroll tax revenue. (Just think of all the trans fat that would go away!)

    Now work on fixing the system for those of us with insurance!