1) The SolutionPlan Coverage
Every resident identified via Social Security Number or proxy Tax Identification Number is covered by the plan. This includes all persons now covered under government programs such as Medicare, Medicaid, Veterans, government employee plans, state risk pools, and private policies whether on an individual or group type basis, as well as persons currently without any identifiable insurance program status. Also, this coverage is true, 24-hour coverage no matter what the “cause” of the need. This coverage eliminates the need for Workers Compensation, Auto, Home Owners, and other types of insurance products to include coverage for medical expenses. Medical expenses from sickness or accidents are medical expenses, no matter where you are or what you are doing when the need arises.
2) The SolutionPlan Benefits
A single benefit structure designed to minimize per-use affordability and accessibility issues, providing coverage for comprehensive medical and prescription drug services. The benefit plan will incorporate best practice protocols for well care, preventative care, chronic disease monitoring and management, and will be dynamic, constantly being re-evaluated in light of ongoing research, testing, and medical technology improvements. Benefits include incentives for “healthy choices” in lifestyle factors, chronic disease identification and protocol treatment management compliance, and general preventative and health maintenance activities. See Appendix A for a brief summary of the recommended benefit plan description.
3) The SolutionPlan Reimbursement Structure
All providers of services (facilities and professionals) will be compensated by a Medicare type template but with conversion factors that result in a materially increased factor over current Medicare reimbursement rates, perhaps 20% for physicians and 40% for hospitals, such factor to be subject to final determination and ongoing adjustment. However, this is to be a dynamic mechanism with constant research, evaluation, and recommended changes in order to achieve the best packaging of services for combination of quality of care, outcomes, and efficiency. We perceive that many types of treatment will ultimately be globally packaged for delivery. For example, all primary types of care may be capitated, certain types of chronic care may be likewise paid for through global packages for periods of time to totally manage and treat, and certain acute episodes of care may be likewise globally packaged. Appropriate adjustments for case severity differentials, complications, and incentives for achieving efficient care (highest quality for lowest cost) will all be taken into consideration.
4) The SolutionPlan Funding
The Plan will be Payroll/Gross Income tax supported – no deductions from taxable payroll or income allowed. It will incorporate an expansion of the existing HI portion of FICA taxes from both employee and employer into a single 15% tax rate. There will be a cap on the base to which the tax rate applies equal to 4 X the average taxable base. Revenues will go into a central Federal fund from which expenses of the program are paid via subcontracted regional/state program claims administrators. There will be limited but important expenditures for quality control review, standards review, claims audit functions, actuarial equilibrium monitoring (revenue to expenditures), etc.
1) Efficiency
The universal nature of such a plan can achieve the greatest efficiency in the delivery of the most effective medical services providing the greatest social good across the largest population. The best principles of risk pooling require universal coverage, and standardization of what benefits are covered and at what levels they will be paid allow for the least expensive and most cost effective use of resources. There are tremendous administrative savings to be obtained from eliminating substantial billing/pricing overhead within existing provider organizations, as well as from the universality of the benefit plan, standards of claims adjudication, anti-fraud filters, and medical cost effectiveness monitoring. There will be no expense for intermediary insurance entity marketing, underwriting, accounting, and executive expenses, although some of these functions will continue in form but in a much more efficient manner due to extreme pooling economies of scale. Employers gain substantial internal savings through lower human resource expenses, less accounting and expense allocation headaches, and from having more stress free and productive employees who no longer worry about whether they will have medical benefits next month, or how much the deductible will cost them this year. There is no tax or benefit “discrimination” between employers of various sizes, or with individuals having to purchase their own insurance, as is rampant within the current system.
2) Fairness to providers
Across the economic and demographic spectrum, a level playing field from a uniform comprehensive benefit plan that also pays providers a fair and equitable rate for their services can be achieved. Currently, Medicare and Medicaid underpay providers by all statistical measures and studies. This has led to significant cost shifting, which has worked as a disruptive and distorting tax on the health care system, and has caused a significant mismatch between the needs of providers and patients on the one hand, and budgetary restraints on the other. Any “solution” that suggests extending the current policy of underpaying providers in an illegitimate and destructive exercise is doomed to ultimate failure. Hence, current proposals to extend Medicare down in age for early retirees, and to establish a “public” insurance plan to compete with private carriers, while retaining existing Medicare-level discounts to providers, will simply create more distortion to the point of causing the entire system to crack.
The "resolution" to the current crisis is to provide a viable public alternative that does not continue to underpay providers, but recognizes that they need to receive a fair and realistic payment for their services and products. That is, replace all coverage for existing Medicare and non-Medicare eligible persons by a national program that provides insurance payment at a reasonable level for all providers based on appropriate conversion factors to the existing Medicare schedules for both professional and facility services. For example, payment could be made at 120% of Medicare allowable for physician services, and 140% of Medicare allowable for facility services. Such levels should be somewhere in the appropriate range to bring the total blend of current revenue for providers between Medicare patients and non-Medicare patients to a level that offers them the average return against their costs that they need to have overall.
The high level of uniformity in establishing and continually improving protocols for medical care creates an environment where effective tort reform may be established to minimize unnecessary litigation and award costs of the existing malpractice insurance system. This will lead to more productivity on the part of medical service providers while they are relieved of a great deal of the unnecessary stress existing in the current system. “No Fault” and “scheduled” award structures will be viable allowing for the most cost efficient mechanism for compensating patients for medical errors, standardizing the level of fairness to both providers and patients.
3) Fairness to patients
Acceptability, Availability, Accessibility, and Affordability. Many of these elements are missing from the current system. Sometimes all are missing to large segments of the population at the same time. However, uniform nature of the SolutionPlan with the benefit design proposed herein can achieve all of them for the greatest number of people in our society. By providing comprehensive services with manageable cost sharing features and a reasonable spread of program finances across a large base, a most reasonable approximation of equity, equilibrium, and equality in opportunity can be attained.
4) Fairness to employers and consumers
Eliminating variances from employer provided benefits and the underwriting restrictions and pricing variations currently existing within individual insurance markets, and allowing for a reduction in other insurance product pricing (Workers Compensation, Auto, and Home Owners, for example, each of which have material components relating to payment for medical expenditures) are all elements of this plan that generate improved economic results for employers and consumers within society. Consistency in benefits provided and the manner in which the program is financed produce a consistent, stable set of expectations and deliverables, the value of which is almost immeasurable in terms of smoothing the operations of the economy and the strength of our social fabric.
1) General administrative savings categories have already been discussed.
2) Improvements in administrative efficiency as well as better medical treatment due to better medical records and communication can be further obtained through the best practices from information technology as applied to the health/medical industry. Every little bit helps - for example, use of a centralized unique ID medical record, something that is readily available from the market today.
3) Improved environment for innovation and creativity in medical technology, medical treatment protocols, global pricing packaging, centers of excellence, and other features of an advanced “business” society will exist and contribute significant productivity gains (both as measured by fiscal efficiency and medical quality gains). The full power of information technology can be brought to the health care sector, including using immediate, live interaction for elements such as quality evaluation of service provision, confirmation of service provision, and compliance with treatment programs and protocols.
4) Significant savings can be obtained by applying appropriate and best practice protocols to existing utilization patterns. For example, this has been modeled in the Milliman Research Report: Imagining 16% to 12% - A vision for cost efficiency, improving healthcare quality, and covering the uninsured. There are numerous references in medical economics literature and general news sources regarding the practice model of entities such as the Mayo Clinic.
5) Cross product/expense savings, as exemplified by the discussion of how other insurance products purchased by significant portions of our society will be reduced because of the removal of “medical expense” components from within their coverages. It will no longer be necessary to provide for the literal payment of medical bills from within Workers Compensation, Auto, and Home Owners insurance products. Also, uniform all-inclusive provision of medical coverage eliminates the “boundary battles” that currently take place between occupational and non-occupational insurers and costs a fair amount of administrative and legal overhead. It also eliminates the opportunity for “double dipping” benefits and the fraud element from both providers and patients that can exist with multiple coverage environments.
6) Despite increasing the amounts paid to providers for services currently being rendered from within Medicare and Medicaid programs, the overall impact of establishing provider reimbursement at the levels discussed herein should represent a reduction. This overlaps with the administrative savings already discussed, especially in regard to the fact that providers will no longer need the spend 15% or more on “billing and collection” overhead from within the “net” revenues they receive. When combined with the type and frequency of utilization changes implemented in the best-practice protocols suggested by Milliman and others, the overall actuarial cost (frequency times unit cost) is expected to reduce, even accounting for universal coverage. There is, and has been, enough expenditures on health care overall to provide excellent care and coverage to all residents of the country. The key has been allocation and distribution through the use of appropriate and efficient administrative and medical treatment practice.
1) Improvement in longitudinal health through disease management, aggressive lifestyle counseling and preventative care and ongoing monitoring, and true productivity improvement in medical practice and technology will mitigate the natural increased “trend” pressure for medical care consumption generated by aging, affluence, and availability. That is, the rate of increase in medical costs will decrease significantly after the expected transitional increase impact of the first year of the program.
2) Dynamic design elements of the benefit program, provider reimbursement mechanisms, and medical technology (physical, evaluative, and informational) will continuously monitor and evaluate to achieve ongoing quality improvements in the most cost effective manner within the program.
3) Once the obfuscation of the “environment” caused by cost-shifting, a myriad of provider reimbursement schedules, different benefit plans, and inconsistent tax, benefit, coverage, and finance policies is cleared away, clarity and focus can be obtained by actually being able to evaluate, model, and project changes in the elements of the country's health care treatment and financing structure from a basis of having actual, consistent, transparent data. This is not the case now due to the systemic distortions that currently cloud the viewfinder of our attempts to analyze the facts on the ground. This new found ability will allow us to anticipate and make adjustments more quickly and more accurately, so that the new system will be able to adapt to the ongoing challenges of providing and paying for health care services in the United States.
