Sunday, December 14, 2008

A Better Health Plan


The President elect has begun asking for ideas on how to make our health care system better. I have a few thoughts on the topic, but they may be naive. They're also not fully complete, but are just ideas being formed. Maybe you readers can help fill in some of the gaps. I also admit that I barely understand the complex nature of the health care system. I do know it is very controversial - but we need new ideas. Also, these ideas are my own and do not necessarily represent the ideas of anyone else, including my employer...

The first thing that must be considered when you think of a new plan is understanding what is it that is broken that needs to be fixed? In my understanding of the national dialog, the two issues are 1) that many people don't have health coverage and 2) the health costs are climbing too fast. So the solution must provide a means to keep the costs down and a means to provide for those who don't have insurance. If I understand it right, the biggest reason that people don't have health insurance is that they can't afford it. Therefore, if the costs were brought down, then the number of people with coverage would naturally go up.

So when I think about how to address these issues, the following things come to mind:
  • Don't nationalize it. Just look at Canada and their costs. I can't think of any good models of nationalized health care.
  • Move away from the group health insurance model to an individual health insurance model.
  • Under this model, people shop around and purchase their health insurance like they do for their auto or home. This will provide free market forces and competition, which means lower prices.
  • Employers would provide health insurance premium vouchers to allow their employees to purchase whatever plan they choose on the open market. If the employer is currently paying $600/mo per family for health premiums, their voucher value would then be the same $600/mo.
  • Provide tax incentives for employers who currently provide health insurance to their employees to continue with the vouchers for their employees.
  • Provide incentives for employers who don't currently provide insurance to start providing vouchers of some value. Tax rebates or credits might do the trick.
  • We are required by law to carry auto insurance. Is this going too far for health insurance?
  • Provide incentives for people to save money themselves with their health care. One way could be high deductible insurance plans with tax exempt medical spending accounts to cover the deductible. Remove the copay for an office visit. Then each individual will begin asking how much a doctor will charge for services and maybe even shopping around for better rates. There are still the Dr./patient relationships that enter the equation and would make changing tough. But certainly for lab work, this would be easy! Then, if there is money left over in the spending account at the end of the year, it goes back to the individual as simple taxable income. Don't punish people by making it a use it or loose it endeavor (like current medical spending accounts are). Reward people for saving.
  • Provide incentives for good personal health. People who smoke and people who are overweight are shown to be at high risk for lots of medical problems and expenses. These are two things that people can (usually) control themselves if they want to. Therefore, if there were incentives to quit smoking and to exercise regularly and eat right, there would be huge future payoffs in both longevity and lower heath care costs. I think the best way to do this is through significant insurance premium discounts for non-smokers and those who can show they exercise regularly.
  • Structuring the health insurance industry like the rest of the insurance industry - on a risk assessment basis. The auto insurance industry charges higher premiums for those with a higher risk - like teenagers and those with previous accidents or tickets. They lower your premiums if you haven't had any claims for 5 years or if you are in a low risk age group (married and over 25). If you have extra safety devices in your car, you qualify for premium discounts. Home owners insurance premiums go up when you have a previous claim. They go down if you have a security system. These are simple risk calculations. What if the health insurance industry had similar risk factors calculated into individual premiums? Smokers would pay more than non-smokers. People who exercised regularly would pay less than those who don't, etc. People who get an annual physical get discounts on their premiums. People with lots of previous claims would have to pay a higher premium than those with no claims.
  • What about people who are not employed? Their biggest front burner issue is lack of income. So they are probably on unemployment or welfare. While they are on these programs, the government could probably provide a voucher for their health insurance. I don't like this idea as a long term solution, but for a short term solution, it is palatable.
Today, I don't shop around for my family's health care - because the cost of a Dr's visit doesn't matter to me. My insurance company picks it up no matter what. This is the inherent problem and biggest disconnect in health care today. The person who chooses the provider is not the person who is paying. If we where to remove this disconnection so that each individual is connected to the cost of service and has incentives to save money and live healthy, then I think this would be a better way.

Thoughts?


1 comment:

Anonymous said...

You state your ideas so clearly and rationally. I've been arguing similiarly for the last 30 years that the reason for out of control costs is that patients don't hold doctors or clinics accountable when employers cover all costs, thus relieving a patient of negotiating their costs. I like your arguments better though that address medical saving plans,employer contributions, and tax incentives. You really ought to enter politics with your great ideas

 
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