A segment of our population, 45 million people, do not have healthcare coverage; this seems to be the primary driver of immediate reform. Let’s keep in mind that this number includes about 12 million illegal immigrants and 10-20 million who do not apply for insurance or choose to be insured. The key to meeting the needs of this population is to provide a baseline of catastrophic insurance at low cost, administered by the current health plans who will be required to provide this coverage as a cost of doing business. However, something should not be given away for nothing. Even those with low incomes should pay a small percentage, proportionate to their income, to be covered. Let’s mandate that all must have insurance and define a marginal tax rate that is proportional to one’s income to insure a baseline of coverage. Let’s require the payors, as a requirement to maintain their license and to operate, to be responsible to administer this insurance plan and pay a portion of the cost for each covered life as a cost of doing business. This approach could replace Medicaid, in its entirety and save the cost of having the government administer Medicaid, separately.
On the flip side, today, about $177 billion is expected to be spent on Medicare Advantage programs that essentially duplicate the federally-run Medicare program but provide sponsorship and administration to payors. Either eliminate the charter of the federal government to administer Medicare or eliminate Medicare Advantage. Either way, save duplication of investment of $177 billion over 10 years! This will go a long way towards meeting the budgetary requirements for a new national health insurance approach. Also, when physician reimbursement is covered by a payor’s Medicare advantage program, reimbursement is typically well below Medicare, in the 85-90 percent of Medicare range. This costs the physicians who accept such patients to lose 10-15 percent of their usual reimbursement for the treatment of Medicare patients.
Affordability, pre-existing conditions, controls
The answer is that there needs to be a federally mandated limit on the following key metrics:
A) The percent that premiums may increase per year.
B) Stringent requirements for claims to be processed within a 30 day window from the date of submission.
C) Severe penalties for incorrect payments of claims vs. contracted rates.
D) Provide tax credits to those who have to fund their own insurance.
E) Break down the state barriers and allow payors to compete for business across state boundaries.
The key point is that payors are making money and if their profits are declining, it is due to their own operational inefficiencies. It is not fair or reasonable to ask consumers or companies to increase their premiums 10-25 percent, per year, to make up for inefficiencies in the payor’s financial management model. Much like the subprime mortgage crisis, controls are needed, now to prevent a disaster here. It is clear that there is much inefficiency in the system.
What now?
Few, if any, changes to infrastructure affect our economy as much as healthcare. By way of comparison we spend 16-17 percent of our GDP on Healthcare while our national defense budget is slated to be about 3.3 percent of GDP in 2010. It is important that we not over haul a system in which no one truly knows the impacts of doing so without carefully hashing the issues and making sure we test our assertions before broadly deploying any new program. Once a program like this gets started it is almost impossible to dismantle it. As the President has said, the matter of Healthcare reform is critical to the success of our economy going forward. Let’s take the time that this deserves and do it right.
Susan Charkin and Stevel Selbst are the owners and operators of Healthcents, (www.healthcents.com), a large national healthcare contracting company based in Monterey, Calif. Together, they have a combined background of more than 30 years of executive-level experience at five national and local health plans. Their positions range from hospital trustee and director of outpatient surgery at a top academic medical center to adjunct faculty member and lecturer at some of this country’s top universities. They are also leading authors on managed care and frequently speak at national physician specialty associations.
