Sunday, September 13, 2009

Making Healthcare Better

In the Federal Governments mad push to take over the health care industry and call it reform, there are some principals of the free market that have been lost.
Health care ,like any other product or service, has thrived when it's been free to develop and new ideas have been allowed to compete.
Everyone having health care is useless if the quality is lousy or you can't get it when you need it. Freedom and the ability to make profit breeds excellence and abundance – central control breeds mediocrity and scarcity.
America has an excellent quality of health care because of this freedom. The problems come from a lack of competition and the a lack of the information the consumer needs to make informed decisions.
Market Successes

Allow me first to point out a few instances where the free market has worked very well to drive down cost for a high quality product, with no involvement by either the government or insurance companies.
Wall-mart may be the company most vilified by the people who push a government take over of health care, yet they have produced a most dramatic reduction in cost of quality prescription drugs. For a mere $4. a month, they offer hundreds of medications for diabetes, high blood pressure, cholesterol, asthma, mental health etc. This is not a government program, it costs you the tax payer nothing and they make a profit. At $4. a prescription you don't even need your insurance company to pay for it. Sure there are name brand drugs still under patent that aren't on the list but there are many choices for every ailment.
Another great example is lifeline screenings. I signed up for their complete package of preventative tests when they recently visited my home town. Two large buses pulled up to the lions club, full of equipment and medical technicians. The place was full of folks (mainly age 50 and up). I got a complete blood smack (cholesterol, psa, lipids etc) , blood pressure, bone density scan (osteoporosis screening), ultrasound for artery blockage and a couple of other test I can't remember. I was in and out in about an hour. They gave me most of the test results when I left. The others were mailed to me in about 7 days along with an explanation of what the results mean and if they indicated the need to see a doctor.
The cost for this battery of preventative services? $125. Now that's an unbelievable value for high quality, easily accessible health care services. They get not a dime of your tax money and they didn't even take my insurance information. What a crazy Idea, you want something done - you pay for it!
Elective or cosmetic surgery is another example of relatively low cost, readily available procedures that are of very high quality. Cosmetic surgery gets no funding from the government or insurance. 10 grand will buy allot in the land of tummy tucks and face lifts. Many of these procedures are complex and require anesthesia. How far will the same money get you for a surgery at the hospital?
The normal price competition present in other industries is absent in most of health care. 1. If the government or your insurance company is paying who cares what it costs. 2. It is impossible to find out the cost for any procedure or to compare one provider to another on cost or quality. 3. Providers are forced by law to treat those who can not pay and accept less than cost for many Medicare and Medicaid patients. Those cost are shifted to those who have private insurance or can pay cash. You are paying for those who can't or won't.
Some simple solutions.

The problems with heath care care can be boiled down to three issues.
1. Costs for health care is often very high, therefor so is health insurance.
2. Some who develop health problems can find themselves stuck with overpriced coverage or unable to keep their coverage due to job loss.
3. It is hard for many people to compare Health Insurance policy's due to the inherent complexity of the coverage.
So what are some steps we can take to lower cost and get cutting edge quality?
For prices to be controlled there must be open competition and the consumer must have the information to make cost effective decisions.
What if we required health care providers to publish prices for their services as well as yearly statistics as to the outcomes or complications of given procedures? They already have these figures. Don't we require companies who produce food to list the ingredients on the packaging. How else would we know what is in what we are eating?
This would give patients the information they need to make decisions on price and quality and would be a market force for lowering cost and rewarding quality with more customers. With cost and quality information readily available, I am sure a number of entrepreneurs would compile the information on a website to make it even easier for folks to know what they are getting and what they can expect to pay.
People who are paying cash, have high deductibles or are responsible for a percentage of the cost are much more motivated to look for the best value and drive cost down. Cost conscious consumers would also motivate health care providers to find innovative ways to deliver quality care at a lower price. There is a company called “any test now” that is just that. Blood smack, psa you name it. The prices are on the front window of their strip mall storefront, and they are cheap. Those who didn't innovate would loose business to those who did. Customers follow both price and quality – just like any other business.
2.Tort reform. Out of control lawsuits and astronomical judgments against doctors and hospitals are one factor driving up costs. It doesn't take a rocket scientist to figure out if a doctor pays $100,000 or more a year in malpractice insurance that he has to pass that cost on to the consumer. If you limit awards and make the burden of proof more stringent you lower their overhead and the price they must charge. You also save consumers money on care because doctors are not motivated to practice “defensive medicine” - running every test in the book to protect themselves from lawsuits. California and other states have a $250,000 limit on malpractice claims.
3.Eliminate free heath care for illegal aliens. Currently those in the country illegally can go to an emergency room and get care with the cost being shifted to you and I. Illegal immigration intersects here with heath care in a big way as hospitals in the southwest ,in particular, are impacted by having to give free care. Isn't It common sense that a requirement of free care should be citizenship? Can we contain cost when we are giving free care to anyone who can sneak into the country? When someone who is an illegal alien presents themselves to be treated should we not return them to their home country after stabilizing them, at the very least? Repealing the absurd law that makes anyone born in the U.S. A citizen is also a must.
There are 3 cost containment ideas that would cost the taxpayer nothing. Yet those who claim to want to reform health care have come out squarely against 2 and 3. Why is that? I would argue that they want not to fix the problems but to take over the industry.
Insuring access to health insurance from private companies to all citizens.
First, most people have no problem with accessing health insurance. Anyone who is a full time employee and is covered under a group plan can not be denied coverage. The same group rate applies to anyone his age and sex.
Also, anyone who has obtained individual coverage while healthy can not be dropped or have rates raised because of his or her health. Rates for everyone on the plan can and do go up.
The problems that do exist with access can be solved easily by adjusting the laws that govern insurance companies in a couple of minor ways.
Currently, any company who sells Medicare supplement or medigap insurance must allow a retire turning 65 to be accepted at the standard rate everyone his age pays. After that the window expires and he must pass underwriting and may be declined. We Could simply extended that open enrollment to individual health for anyone turning say 21. An open entry point available to everyone. That same open enrollment period would be extended to anyone ending full time employment under a group policy or if their insurance company goes out of business or they loose group coverage due to divorce.
This would allow everyone, weather under an employer group or not, to obtain health insurance at a standard rate. It would be their responsibility to keep it. You can not allow people to just wait till they get sick to buy insurance, obviously.
This would put some pressure on individual policy prices (which are now lower than group) because of the additional mandates for open enrollment periods, but that should be minimal. Medicare supplement plans are overall stable and they already have the age 65 open enrollment mentioned.
One other problem we need to fix is the practice of some individual health insurance carriers to “freeze” or close a particular policy. Once the policy is no longer being sold and no new customers are coming in to it, the claims and the rates trend up, often sharply. This leaves those who where healthy when they took out the policy but have developed health problems stuck with overpriced coverage. The insurance company then starts selling a new policy with slightly different benefits and is able to offer it at a lower more competitive rate since the old sick customers are not on it. If one company does this they all feel they must too, to compete on price for new members.
We need to simply changed the law so that all policy holders in a particular company must be in the same pool. Since no one can “freeze” a group everyone is competing on an even playing field. Yes rates would be a little higher for the brand new healthy customer than they are now but it is necessary to protect those who act responsibly and carry coverage while they are healthy from being priced out of the market when they become sick.
Access solved. And after we do this please lets not feel sorry for anyone who is uninsured because they have chosen to be so. Do we feel sorry for someone who irresponsibly drives around without auto insurance and gets in a wreck? If we ,as a people, want to pay for part of the cost of health insurance for the poor we are free to do it, but this is not an access problem but a cost problem. Reducing cost will obviously also make access easier for us all.
Making understanding your coverage easier.
Currently to understand exactly what you are buying takes some time reading the outline of coverage and exclusions and a general knowledge of terms. Most folks don't do this and may not get it completely if they did.
I would recommend a voluntary branding of policies that have certain minimum benefits. For example, policy one through five from low deductible to catastrophic that must have certain coverage to display the certification. In this way the consumer could look at, say a basic 1 policy and know that all carriers displaying the certification are offering at least the same essential level of coverage. They could then shop based on price and service. It would be required for the insurance company to list those benefits if they chose to market with that certification.
I would recommend those standard policies be formulated by those in the business since they know what the consumer wants. Traditional Medicare supplement policy's are already standardized with plans ranging from A TO J and it does make comparison shopping easier.
I would not recommend we limit what is sold but rater give the consumer a standard they can use if they choose to. Innovation is very important for both cost containment and providing specialized coverage that a small number of people want and need. It is important that companies can sell policy's that do not qualify for the certification or that add to the minimum standards.
Health care in America is wonderful by any standard and is the envy of the world, because providers and consumers are free. If we open up competition, lower cost and improve access it will be even better. Those who would use and exaggerate problems in health care to take it over and control it should be stopped.

James Coyne – Columbia Mo.
James Coyne is the owner of Coyne Agency Inc. and has worked as an independent broker and consultant in the Group and Individual health insurance market for the past 12 years.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.