Tag Archives: Universal Healthcare

Imagine THIS Obamacare Replacement & Understand WHY It Makes So Much Sense [GOP!]

Posted on January 9, 2017 | 4 comments

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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!

 

 

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The Case FOR Conservative Market-Based Universal Healthcare Reform

Posted on March 13, 2016 | 4 comments

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Not Only Possible but Preferable to Anything Put Forward to Date

 

Say what?  Again?  Universal coverage?  Is Bernie Sanders on to something?  Well, in a way yes, as far as good intentions go.  What will be explored here, is the possibility and preferability of achieving the good intention, not by methods of command and control central planning, but government policy that embraces market forces and trusts individuals, making free choices in their self interest, enticed, even when using the money of others, to act as if it is their own, thus avoiding the proverbial road to hell.

The Inspiration

The policy concept presented here, though original, does not deserve to be called The FreeMktMonkey Solution.  It is the expansion and adaptation of  a seed idea presented in the final chapter of David Hogberg’s 2015 book, Medicare’s Victims: How the US Government’s Largest Health Care Program Harms Patients and Impairs Physicians.  In deference to Hogberg’s brilliantly simple but arguably far too timid, solution to Medicare’s flaws, the idea of conservative universal as a replacement to Obamacare, will be presented as the Hogberg Solution, from which it arises.

Starting Points

  1. Just because it’s a policy of the central government does not preclude the possibility of protective legislation that insures and embraces natural forces of voluntary free exchange in the marketplace to achieve desired solutions superior to central control.
  2. The market best achieves optimal setting of prices, and allocation of scarce resources through the direct interaction of the seller and the buyer,  not via the seller and a third party agent of the buyer, who will never share the same level of self interest as the buyer directly.
  3. A person’s life and immediate need for necessary treatment to maintain and extend it is not the same as losing a car to a crash or a home to a fire, or investment to bad advice of a broker.  It’s a tough position for anyone of compassion, including conservatives to stand for denial of treatment in someone’s moment of need, when life is at stake, due to inability to pay.  Accepting this, is to make a strong argument for an individual mandate, that “shared responsibility payment” thing in Obamacare, as an acknowledgement of the implied responsibility of each individual to accept their part, to the limit of their ability,  to protect their neighbor from the potential to have to pick up after their inability to pay.
  4. Medical science has made very rapid advances over the last century.  There are many more treatments, medications and devices available that have drastically improved both quality of life and longevity.  This alone will involve more spending simply because of availability.  It’s sometimes hard to believe that routine use of antibiotics, did not commence until the early 1930s, still about 15 years from being one century ago.
  5. While condition of health is clearly within control for most, it is certainly not for all.  Thus the ability, by healthful living, to protect others from an obligation to have to cover one’s own inability to pay for treatment, is limited.  Sudden unexpected disease, injury, or congenital defects can affect anyone.
  6. As outlined in what remains a gold standard June 1994 study, by Stan Liebowitz, writing for Cato Institute, Policy Analysis No. 211, Why Healthcare Costs Too Much, central to the mess we have in costs of US healthcare, is overreliance on third party payment.  The illusion of free or almost free, in coverage of what can normally be afforded otherwise, adds significant cost by promoting overuse (that must be baked into premium) along with expense to interact, often combatively, with third party payers, to obtain payments that should be made efficiently, directly, at the discretion and choice of the buyer, in direct dealings that preserve the purity of the doctor-patient relationship.  The Cato study suggests the solution is utilization of the highest level of direct payment possible, by health savings accounts and catastrophic insurance.
  7. Only a small percent of healthcare spending is for emergency situations, where there is no time or opportunity to check prices or treatment options, and make informed choices on how to direct resources.  Even this Brown University study that claims previous reports of emergency spending have been far too low, at most estimates emergency spending does not exceed 10% of our total $2.6 trillion.  This argument is often made by those favoring a government single payer system as evidence of why a market in medical treatment cannot exist.
  8. In both the Medicare and non government civilian healthcare markets, use is heavily concentrated into a very small percent of the respective populations, with little of that being priced by normal market forces through the direct interaction between the buyer and seller of services.  This argues for insurance or some backstop protection for the big items, even as the vast majority in most years would have no trouble paying their entire bill without it, and over the long haul, most would be better off by banking premium otherwise spent.
  9. Only small minorities of buyers need to be active in finding the best deal possible to elicit response from sellers that benefits all market participants.  Hogberg notes this as the concept of “marginal consumers” that drive the market, producing price and quality benefits for the non-marginal majority.  This truth is central to the viability of Hogberg’s solution for Medicare (and its extension to universal).
  10. It may not be necessary for buyers to spend their own money to achieve the benefits of the marketplace,  if means can be employed to entice them to spend the money of others as if it was their own, through a system of rewards, that more effectively produces desired results than schemes of central planner bureaucrats.

The Solution

Hogberg comes to the conclusion in Chapter 8, after noting typical failed attempts to get a handle on Medicare spending involve politicians, bureaucrats, and all manner of experts, engaged in elitist planning, at the exclusion of spontaneous order that arises through market forces of individuals freely making choices in their best interest.  He states, “It never seems to occur to them that the best way to align incentives is to let the patient control the money that pays for the care.”  But how to do that in a way that does not promote waste and abuse when it may not be their money?

This is where Hogberg encounters sheer brilliance, that if not so timid with the idea, could have led him to propose an extension of his Medicare Solution pre-Medicare to the entire healthcare sector of our economy, opening the potential to achieve the universal coverage goal of the left in a way that does not make healthcare a right without obligation.

Hogberg’s solution is simple.  Pay the patient, through incentive rewards, to do a better job than various schemes, by CMS, to fix prices, assess quality and value by questionable metrics, determine reimbursement, even direct treatment, all by artificial means far worse than a free market would accomplish on its own.

To do this Hogberg suggests, since we spend all this public money anyway, provide each Medicare beneficiary with 2 annual accounts: a basic account of $5000, and a major medical account of $70,000.  For anything not spent out of the basic account the beneficiary would be paid 10% at the end of the year to use for any purpose whatever.  For anything not spent out of the major medical account 1% would be paid to the beneficiary.

Here is where Hogberg makes a flaw, as he suggests the 1% from the major medical account would only be paid if that account was reached following total depletion of the basic account.  He recognizes the moral hazard of this in producing an incentive to spend out the basic account ($500 max rebate) to get to the $700 max rebate of the major medical account’s 1% rebate.  The obvious way to correct this would be inclusion of both rebates, so the individual who spent nothing in a given year would get $1200, with perhaps only the $500 going to any purpose and the $700 dedicated to an HSA for future medical expenses, also protecting future rebates.

He points out that in 2012 25.7 million of 37.7 million (68%)  Medicare recipients spent <$5,000, and only 3.9million (10%) spent over $25,000, with their average about $57,000; so a $75,000 total account would be more than adequate for most beneficiaries in any given year.  Expenses beyond that could be covered with a private personal $75,000 (or greater) stop loss policy.  This, due to its low cost due to low use, would likely attract widespread voluntary choice, thereby allowing limited government exposure without the need for rationing either by availability or delay.

Hogberg also missed, or was too timid, to entertain a logical extension of his concept pre-Medicare as a solution to the entire national system, unique in all the world, and compatible with extra governmental market solutions being developed and growing rapidly by efforts of pioneers such as Surgery Center of Oklahoma in transparent honest competitively priced surgery or Atlas MD in Wichita KS, leading development of models of Direct Primary Care, both now entering into direct cash relationships with self paying individuals and the approximate 60% of employers who self fund health benefits they provide their employees, bringing competition, quality and value as seen nowhere else.

Indeed, Hogberg’s suggestion of a demonstration project for Medicare, belies his otherwise strong faith in the power of market forces, such that it is Medicare itself that may better serve as the demonstration project to extend his seed idea to the entire healthcare sector of our economy.

Such an extension would also be compatible with the single best reform proposal of any to date that respects freedom, that of Cato’s Michael Cannon, with his 2008 Large Health Savings Accounts concept, or as published here in July 2014,  after noting the failure of Republicans or conservatives, now in almost 8 years following the election of Obama, to develop a plan of their own that doesn’t dictate purchase of a qualifying product to obtain benefits from the government or retain a large proportion of third party payment, the post “GOP Stuck in ACA Replacement ‘Plan Trap’ as Magic Bullet Solution Hides in Plain Sight“, written prior to any knowledge of Cannon’s proposal, but very similar in approach and expected outcomes.

The Hogberg Solution as applied to the whole US system, as presented here, would require modification to Dr Hogberg’s seed concept, but allow market based universal to become a reality that would significantly, instantly create a system of near ubiquitous direct payment.  This is the game changer, as no other proposal to date has suggested such a virtuous possibility exists, and assuming sufficient popularity, could allow for voluntary participation.

Here’s how it would work.  Every participant would be required to pay a percent of all income into a personal health savings account to a limit.  To start, then periodically adjusted for inflation,  this may be 7.5 of all income to a $50,000 balance, then 5% of all income to a balance of $100,000, which would from that point only have to be maintained.  Employers, as enticements, could agree to match employee inputs.  A national tax would be required to cover additional expenditures, but factoring in market induced competitive savings plus elimination of 3rd party payment processing expense, may be little more than total taxes required to fund Medicare and Medicaid currently, and would replace those taxes.

Hogberg’s suggested Medicare accounts would be modified for the universal system.  For working people they would be accessed, only after exhaustion of personal health savings accounts.  One modification would be the creation of three layers of account.  The basic $5,000 with 10% of any unused portion rebated for any use would remain.  Then an intermediate account of $25,000, followed by a $45,000 major account would apply.  Unused portions of these accounts would be rebated at 2% ($500), and 1% ($450) respectively, but not for any use.  These rebates would apply to the personal health savings account, both providing future protection to the public accounts and allowing reaching one’s mandatory individual funding limits sooner as well as protection of future rebates.  Of interest, $950 is sufficient to fund unlimited direct primary care at many of the growing list of doctors offering this choice.

For anyone still working who exhausts their mandated HSA and taps the government pool, continuing work related payments to their HSA would always precede any government pooled funds in paying for services as used and bills come due.

As percentages of any other government cash assistance transfers (welfare) would be directed into individual health savings accounts as well, both Medicare and Medicaid would be rolled into the new universal system.  Opt outs could be allowed but then initial entry or reentry would be have to be prohibited lifetime.  The idea in the mandate is a requirement to buy nothing, just forced budgeting to protect others in a system where we can agree no one will be left “dying in the streets”, as Donald Trump has stated.  It raises the question also if a tax is not a tax, when that set aside is available for that person’s and their immediate family’s exclusive use.

The game changing nature of this extended Hogberg Solution should be obvious.  Price transparency would happen organically overnight as well as huge savings just from elimination of the cumbersome third party payment mechanism in place now.  Providers of treatment and devices would be instantly responsive to concerns of price and quality.  Even well past normal working years for many, into what are Medicare years now, carried HSA balances would continue to protect the government pooled funds, themselves limited without the need for rationing, by personal stop loss private insurance.  Any remaining HSA balances at death could be transferred to a beneficiary.

Private insurance protection expense beyond the government pool could be further lessened in cost by allowing stop loss policies in excess of $75,000 by including other personal sources, such as one’s HSA balance or other assets willing to be spent first.  Thus a person with $100,000 in their HSA and $25,000 in other assets available for medical expenses, along with the $75,000 government funds, would only need a personal stop loss policy to cover expense exceeding $200,000, very unlikely and very inexpensive.

By trusting individuals with control of the money, acting freely in their self interest, and having faith in the predictability of their response to properly presented economic incentives and constraints, along with a system of rewards, we can create a government devised system that respects the marketplace, innovation, and choice, while keeping government command and control decision making out of the equation.

For more please see followup Jan 09, 2017 article here.

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