The Bipartisan Solution ALL Could Accept?
It’s been almost 10 months since I published “The Case FOR Conservative Market-Based Universal Healthcare Reform“. I’ve wondered if “The Voluntary Universal Access Public Option” wouldn’t have been a more effective title. Either way, the words are intentional for a purpose, which should become obvious without further explanation. For those unfamiliar, reading the original post may prove useful but not essential.
The March, 2016 post has achieved over 800 views. Response has been mostly positive but mixed, with some of the harshest criticism coming from hyper sensitive market allies who trip up on the word “universal”. I remember one response simply said, “This just makes so much sense!” Of course, though biased, I agree!
I know it’s been viewed by several very influential thinkers as evidenced by re-tweets or likes of tweets with the link, including Sally Pipes of Pacific Research Institute; Dr Scott Gottlieb, American Enterprise Institute; John Goodman, Goodman Institute & father of the Health Savings Account; and Michael Cannon, Cato Institute & inspiration for Rep Dave Brat’s and Sen Jeff Flake’s Health Savings Account Expansion Act HR5324 and S2980 respectively (114th congress), the only proposal from the GOP so far that completely makes sense. None have criticized (or publicly praised) the Market Universal concept, but Michael Cannon did surprisingly say in my presence “What’s not to like?”. I’ll attempt to confirm his observation by explaining the many advantages of this unique concept.
Market Universal (or The Universal Access Public Option), is an expansion of a suggestion to fix Medicare in David Hogberg’s 2015 book, Medicare’s Victims. In that regard it should be called the Hogberg solution. By simply putting people in charge of the money, with incentives to be frugal in its use, it more than any other proposal from the GOP, most effectively addresses the simple three word solution central to any meaningful healthcare reform – Maximize Direct Payment.
It combines actual direct payment with money a voluntary participant must set aside from income into a personal HSA, with simulated direct payment beyond that from a shared 3 tiered participant funded pool, used only when the personal HSA is exhausted. Incentives to use pooled funds wisely are in the form of percentage rebates of unspent portions annually. Because participation is voluntary, the mandate to contribute to an HSA is not, as some have suggested, coercive, anymore than the requirement to make payments when voluntarily entering into an insurance or mortgage contract.
Since annual pooled fund availability totals $75,000 it is the minimum even the poorest participant has available each year. Note that the risk to the pool is limited, but the need to ration is eliminated by creation of very low cost private personal stop loss insurance to cover any really big events. While $75,000 can be consumed very quickly currently, it will go much farther with the change to direct payment by individuals making choices in their self interest.
The advantage of mostly direct payment leads to huge cost elimination on many fronts….
Imagine the difference when doctors no longer have to incur the considerable cost of getting paid for their services, that some estimates claim reaches 30% or more. This figure becomes quite believable listening to subscription-based direct primary care pioneer Dr Josh Umbehr of AtlasMD in Wichita KS state (at ~6:30) overhead at their practice, completely third party payer free, runs less than 30%, while overhead at insurance involved primary care practices hovers around 60%.
Imagine when ever more complex coding is a thing of the past and practices no longer have more employees dealing with third party payers than clinicians treating patients.
Imagine when doctors or surrogates no longer waste time with pre-authorizations and fighting off rejections, before finally getting permission to treat and then paid, which often itself involves long waits and then arrives in bundles that make it difficult to identify individual case reimbursement errors as opposed to being paid directly at the time of service by the patient at a mutually agreed price.
Imagine how a new paradigm of near ubiquitous direct payment will direct everyone to honest transparent pricing and competition for patients based on price and quality, without being forced by law, like all medical services not traditionally covered by third party payment, such as Lasik, cosmetic surgery, or dental implants, where quality has gone up as prices (often seen on billboards or newspaper ads), have come down. It would not be unreasonable to see the combination of eliminating the cost of getting paid and effects of innovation driven by true competition drive prices down by at least half.
Imagine when third party payer network arrangements with doctors (effectively cartels) become a thing of the past, especially for those with Medicaid, where in some locations accepting doctors can be very hard to find. This means doctors will price their services based on what it costs to provide them, and the same price will be paid by anyone who walks through the door. Each will enjoy the same dignity of access as anyone else. With each doctor currently having a separate network arrangement with each different plan from each insurance carrier, as well as dictated reimbursements for Medicare and Medicaid, and differing cumbersome regulations and requirements imposed by all, it’s no wonder doctors have so little time to spend with patients. It doesn’t have to be this way, but continuing down a road of embracing what has become traditional third party payment will only continue our enslavement to it and its considerable costs to treat no one, both for doctors and the rest of us as patients.
Imagine when the lowest earners among us can participate in the same Market Universal Access Public Option as anyone, instead of another demeaning program (Medicaid) with its benefit cliff adding another cage of dependency. After all, in America most earners do not have to stay low earners and should never be encouraged to do so.
Imagine a voluntary program based on expanded health savings accounts that allow for passing to a beneficiary upon death. Within or without participation in Market Universal, this can present the potential to build family healthcare trusts that also further protect pooled funds by those who continue to opt for Market Universal.
Imagine we can reverse another troubling trend. Fewer and fewer doctors are willing or able to put up with the increasing burden of third party payers and their and government payer regulations, paperwork, and cost to get paid. I’ve heard doctors say 1/3 of their time seeing a Medicare patient involves government paperwork. To escape, they are becoming employees of growing hospital systems, where they feel some relief but are still trapped in a system that demands they see more patients in less time and only make referrals within the family of connected practices, further challenging those who wish to remain independent. Again it doesn’t have to be this way.
That these highly trained professionals we depend on so much can serve our medical needs better at lower cost in a system of freedom and markets is not just fanciful theory. It’s being proven by market pioneers who have been rejecting the third party payer juggernaut for the clarity and peace of honest cash priced practice.
In primary care this rejection of the third party payer is being done both by fee for service and subscription based direct primary care arrangements. Without the considerable overhead of engaging the external payers they can offer services at greatly reduced rates and spend much more time with patients, so important at the primary care level especially. Many use their extra time to run in house pharmacies, labs, or imaging at a fraction of the usual cost, or arrange low cost services with outside vendors. Many make house calls and offer direct access by email, cellphone, Skype, etc. Appointments are scheduled in excess of half an hour for the same or next day. They also can perform the wide range of procedures they are trained to do but which are often offloaded to specialists when they must see 30 patients in a day for 10 minutes each to make ends meet. To easily find a direct primary care practice go here. For one example of the growing number that offer remarkably affordable pricing go here. Most importantly these doctors, without exception are happy. I don’t want a mechanic working on my car who hates his job!
Yet how many, in our current system, on their own, can afford specialist care and complex surgeries for cash? As it turns out over 60% of employers that provide health benefits self fund. They are simply bill payers and, even as the plans are set up to look just like insurance to the employee, they are really not. Led by pioneers like Dr G Keith Smith at Surgery Center of Oklahoma, whose practice has posted low honest bundled cash prices on the internet since 2009 and lowered prices five times, they have been able to reject third party payers entirely by contracting directly with self funded employers (while also accepting individual cash payers), under arrangements where the employee saves as well by having their copay and deductible waived when they choose to use their high value option. In fact, in this report from Dr Smith, he explains how SSO saved their self funded county (and hence taxpayers) over $1 million in the first 9 months and a new contract with the state may save state taxpayers $95 million. Even though it’s not quite like the doctor and patient dealing directly, the benefits of this form of direct payment are enormous and it’s become a growing movement, with cash priced facilities even competing against each other at sites like pricinghealthcare.com. With Market Universal as an option, more individuals will be in the position of self funded employers to choose where to spend based on price and quality. It’s time politicians take notice of these positive developments and understand good policy that lowers costs resides in trusting markets and free choice rather than bureaucratic control.
It’s important to understand Market Universal (or the Universal Access Public Option) is proposed as a voluntary program that precludes nothing else. It starts by putting the Expanded Health Savings Account concept of the Brat or Flake bills, themselves inspired by Cato’s Michael Cannon’s Large HSA concept, at its core. Thus replace should start with expanded HSAs, which alone can inspire many positive changes as employers likely will voluntarily and gladly move from defined benefit to defined contribution health benefits, thereby keeping (but not requiring) the employer connection to health insurance while removing its toxic provision. Employer matches of employee contributions to a personal HSA will then likely become as common as to 401k plans. Whether employees choose to use their HSA to fund medical services only, purchase medical insurance products they own independent of employment, or become a participant in the Market Universal Healthcare program is entirely up to them.
Market Universal is intended as a lifetime commitment, and following an open period upon initial availability, participants would have to sign on after age 18 and before age 25. The mandate to contribute to an HSA, up to set balance limits, is within an entirely voluntary program, thereby a freely accepted obligation. Participants only would be flat taxed sufficient to fully fund the shared pool, which could be kept separate from government hands and administered by private contracted book keepers much like the Federal Thrift Savings retirement plan. Participants would have the opportunity to exit at any time but reentry would not be allowed.
Keep in mind Market Universal is an option that at once replaces Medicare and Medicaid so the current Medicare tax ends, and states no longer have to tax to fund their portion of Medicaid. Since networks become irrelevant, low earning participants have the same access to care as anyone, but the same obligation to direct a portion of earnings, including any government transfer payments or unemployment compensation, to a personal HSA. While low earners pay less into their personal HSA, they will be more likely to use pooled funds, as higher income participants contributing more to HSAs will be less likely to take from pooled funds. Likewise those with higher incomes will contribute much more to pooled funds but, since also contributing more to their HSA, will less often use pooled funds and more often be rebated incentive payments for what they do not spend. Beyond the pool’s annual limit, all will have the option to buy ultra high deductible (pooled funds + HSA balance + other personal savings available) personal stop loss protection, which due to its infrequency of use, should be very inexpensive, even at the minimum $75,000 deductible level and be much less vulnerable to the negative effects of community rating, which itself would be tempered by many older individuals having accumulated more in their HSAs, sufficient to safely allow its inclusion. Guaranteed issue though would still require restriction past initial entry into the program, possibly by surtax to the pool or some other mechanism for those who wait.
No one would be forced into the Market Universal program. Traditional insurance could coexist. Those who now enjoy the Obamacare exempt faith based medical sharing arrangements could continue as is, and new ones, faith based or otherwise could be formed. In many aspects, Market Universal is an institutionalized version of such arrangements. As stated earlier, Market Universal precludes nothing else, as it provides an attractive option, especially with the ending of Medicare and Medicaid programs.
While socialist aspects are admittedly present, as they are by degree in the health systems of every other nation (and indeed are central to insurance itself), they will be under a layer of market discipline and individual responsibility first and foremost. Market Universal can be an uniquely American concept that dares to trust market forces and personal choice to set prices, lower costs, and best direct scarce resources in an area where fellow humans’ lives and health are at stake. It’s not the same as losing a car or house to lack of insurance or inability to pay, and it’s time conservatives recognize this. A great overview of how countries around the world approach healthcare can be found in Chapter 3 “In Search of the Best Health Care System in the World” of James Bartholomew’s intriguing new book “The Welfare of Nations“.
To conclude, perhaps the biggest advantage of Market Universal (or the Universal Access Public Option) is that such an Obamacare replacement proposal would almost certainly garner some support from the Left, allowing passage in bipartisan fashion, as it supplants and roadblocks their otherwise never ending desire for single payer universal healthcare in a way no other suggested replacement plan can do.
The Right has said they seek a market solution, while the Left screams for universal coverage or at least a public option. Under unique Market Universal alone, it is possible to do both!