A healthy Alternative

SOLUTION 5: Improve competition among insurance companies.

 

Insurance is a numbers game—it’s that simple.  They don’t care if you are a nice person, educated, dog lover, or go to church.  Insurance companies evaluate risk and base the cost of premiums on making a, well, uh, this is difficult to write, fair profit.  So, if you lower your risk profile with a higher deductible, lower annual cap, lower percentage coverage, and positive lifestyle discounts your premium would be lower.  If you notice I didn’t mention pre-existing conditions (more on that later).  Get government regulations out of the way and allow insurance companies from anywhere in the world to compete for your business and you will see a wide range of premium costs from which to choose.

 

SOLUTION 6: Simplify the approval/payment process.

 

Remember solution 2 let doctors determine their costs and solution 4 create a more flexible approach to healthcare insurance?  These two solutions should put healthcare control back into your hands.  Using the above insurance example, if you have a $3,000 deductible before any insurance is paid you will be more careful with your spending. This doesn’t mean not getting healthcare.  Instead, you can choose which doctor to visit and discuss charges in advance.

 

For example, if I need a cataract removed I can choose Dr. Cadillac because, hey they serve wine, at a charge of $2,500 or I can go to Dr. Icare (no pun intended) and pay $500.  Based on my decision I will either have $500 or $2,500 left in my healthcare kitty. Now which do you think I will select?  And, how long do you think old Doc C will keep charging $2,500?

 

So, what happens when I reach my deductible?  When I paid for insurance, my insurance company issued a personal coverage card.  Much like a credit card it tracks your account, outlines coverage, and provides instant payment to medical practices.  Now, there is a catch. All payments including those you pay directly have to be registered to your account for insurance companies to determine when you reach your deductible.  In addition, to help keep costs reasonable insurance companies can provide a list of procedures and the amount they pay for each.  You and your doctor can go to their website and discuss whether or not this is acceptable. So, once again, I’m sipping wine at Dr. Cadillac’s office and have reached my deductible but now need this pesky cataract removed. We visit my insurance carrier’s website and it clearly shows an allowable payment of $1,750 for this procedure.  Dr. C shakes his head and I shake his hand and head to Dr. Icare.  Before I get to the parking lot we have an agreement and everyone is happy. If Dr. Cadillac had not relented and I really really wanted him to perform the surgery I could make the decision to cover the additional $750 out-of-pocket.  The key is that the decision is mine—not the insurance company’s.  Ah, isn’t freedom great!

 

SOLUTION 7: Eliminate pre-existing conditions from insurance considerations.

 

There are two major factors that come into play in this regard. First, health is a fluid and unpredictable thing.  How often have we heard of an individual who is in great physical shape, living a healthy lifestyle having a stroke or heart attack, or being struck down with a completely unforeseen disease?  Lou Gehrig is a perfect example who now has a disease named after him.  The point is that a person who has not had any health expenses may encounter them at any time.  Persons with a chronic illness or who become ill long term are simply a part of the pot that makes up the total sample that is used to establish premium rates.  Yes, we all pay a little to cover those who are less fortunate and in need of more healthcare.  Rather than complaining about the cost be thankful you are not in the category of those who suffer.

 

The second part of the formula is evaluation of usage.  Upon renewal of a policy a relative level of claims will be used to determine the insurance premium.  Now, before you jump up and call me names, understand that those who have greater needs will pay more to be covered.  However, this can be done in a logical and reasonable manner.  Based on level of claims, an individual would pay 10%-25% higher rates, but no more than 25% regardless of claims.  While this sounds harsh go back to the premium example above.  If I pay doctors out-of-pocket up to my deductible of $3,000, have an annual cap of $20,000, expect the insurance company to pay 80%, have catastrophe insurance, pay 20% of prescription drug costs, have a healthy lifestyle discount of 10% and have unemployment premium coverage my annual premium is $2,800.  Now, say I am unfortunate enough to acquire a chronic illness that calls for almost $20,000 in insurance payments my renewal premium might be the going rate, plus a 25% surcharge. My premium would increase from $2,800 to $3,500.  This is still extremely reasonable considering the benefit that I am receiving.

 

SOLUTION 8: Make 100% of healthcare insurance and expenses tax deductible.

 

OK, big fat government, put your money where your mouth is; you want people to have healthcare make it more affordable.  Every penny paid for healthcare coverage and services, including prescription drugs, should be 100% tax deductible.  Don’t worry you get your share from taxes on my $6,000 raise.  Only my insurance premium and any expenses must come directly off my adjusted gross income to make this approach practical. 

 

SOLUTION 9: Limited Government Regulation

 

While government interference most often leads to corruption and waste there are a few areas where government regulation can be, well, uh, this is difficult to write, helpful.

 

           Payment Schedule Review – To protect citizens from insurance company abuse a government agency should review payment levels established by insurance companies for procedures.  Caution: this does not mean the government will determine payment levels.  Rather, it should be a function of tracking cost trends and publishing average costs to promote competition.

 

           Premium Caps – While the government shouldn’t establish premiums as this would eliminate competition and artificially raise the price it can set top limits to protect citizens from being overcharged.

 

           Corporate Income Tax – Insurance companies are in business to make a profit, but they also provide an essential service.  A special lower tax rate should be established for healthcare insurance companies to make it possible to make a profit without raising rates during tough times. 

 

SOLUTION 10: Government Insurance

 

Much like the FDIC with the banking system, insurance companies will contribute to a general fund to cover any unexpected concentration of claims that stresses the financial capabilities of a single insurance company.  Because health is more unpredictable than the weather a safety net is wise to have.

Companies will be able to draw from this account at zero interest to cover unexpected losses.

 

Hospitals

From a financial perspective we all fear a hospital stay.  Costs are astronomical and can destroy your financial ship in a few days.  Here again, we need greater flexibility and more personal control.

 

SOLUTION 11: Develop facility flexibility   

 

This has already begun to happen in the free market and should be encouraged.  Different procedures and diseases require a variety of services, treatment, and technological support.  If you have a sore throat you begin at a “quick care unit” run by nurse practitioners.  If they suspect anything serious they can refer you to a family practice doctor or if really concerned to the emergency department.  I don’t claim to be enough of an authority to do justice at defining types of facilities that would be appropriate, however to get those creative juices flowing here are a few.

 

Full Service Hospital – You’ve seen them, those huge buildings with undersized parking lots.  One night is like a stay at a luxury hotel in terms of cost, but room service sucks.  They are not needed for every condition but great to have when you have a real disease that requires a wide range of services.

 

Medium Level Surgical Hospitals – Some doctors have surgical units in their office for simple procedures.  Smaller surgical hospitals can be used for routine low-risk procedures. These would have to have and maintain less equipment and have smaller staffs.

 

Out Patient Care Facilities – These already exist for simple procedures. 

 

Quick Care Units – Basic equipment, run by nurse practitioners.

 

L.E.S.S. (Lab, Equipment, Staff, and Stay) facilities – Let’s face it medical equipment is expensive to purchase and maintain.  Some equipment is used regularly while other equipment is not.  Equipment that is gathering dust is a waste of money.  A well equipped facility, strategically located, with trained staff that is available to any doctor for a fee would both be profitable as well as save general practitioners the expense of equipment, staff, and training.

 

Home Care – Visiting nurses and homecare professionals can provide the medical monitoring and assistance without the huge hospital expense.  And, let’s face it, we all feel better at home.

 

What should be clear is that there are many ways to be more efficient, thus lowering the cost of healthcare services.you are $600 ahead.


 

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