Thursday, May 11, 2006

US National Health Insurance

Medical care in the United States and the payments for it are an incredible mess!

Roughly 40 million people have no health coverage. Medical providers spend well over 10% of their expenses on billing insurance companies and related expenses. The average non-subsidized medical insurance plan costs an individual at least $600-800/month. Employers are dropping insurance plans and making workers pay increasing amounts for weakened coverage. Prescription drugs cost far, far more in the U.S. than in other countries. The new Medicare Prescription Drug Plan is a mess. Many people can not afford to switch jobs or go into business for themselves because they can't afford "pre-existing condition clauses" or other reasons that will cause medical treatment to be unaffordable.

We have various models to look at in seeking a better health care system. We can look at the Canadian system as well as various European systems. In these systems there is universal coverage which in some cases "rations" particular parts of health care. There also tends to be affordable health care which takes less of the gross national product of these countries. There also tends to be a system which doesn't reward some people based upon their wealth and punish others based upon their lack of assets and income.

The Medicare Program which most USians 65 and older as well as long-term disability recipients use in 2006 has the following basics:

Cost - Doctor's Coverage = $88.50/mo = $1062/year
Deductible - $124
Co-Insurance after deductible - 20% + amounts over the "customary and reasonable charge"

Hospital Coverage (zero cost for most) - $952 for covered expenses for first 60 days hospitalized in a "benefit period".

Drug coverage while not hospitalized - has a maximum deductible of $250/year with varying costs and co-payments.

The Federal Government has its own health benefit plans for its employees, their dependents as well as its retirees. These plans have varying costs, deductibles, copayments etc. Areas of the country which have more competitive medical markets have more choices at better prices than other areas.

The coverage we will have shortly is a national plan which costs $190/month for family coverage (= $2280/year) with a $20/deductible for doctor's visits ($30 specialists) - roughly $300 per hospital stay, $10 per generic prescription ($30 for non-generics), etc.
Increasingly popular are health care plans which allow the user to have pre-tax income be used for their expenses saving money on income taxes and the payment for plans which have lower costs but very high deductibles - e.g. $1500-2500.

Doctors, hospitals and other providers complain increasingly about reimbursement levels for health insurance including medicare. Coverage for psychiatric treatment is increasingly limited. Seeing specialists is increasingly scrutinized. Hospitals face various pressures including releasing patients very quickly and trying to get dying patients into hospice or other care outside so that their "morbidity statistics" are lower.

Uninsured and under-insured people often rely upon emergency rooms for their basic care when they are to the point where medical care becomes a necessity. Such care is extremely expensive.

Chronic alcoholics and homeless people often incur extremely high medical bills which must be paid for out of public funds or out of non-reimbursable funds hospitals pay for. People in their last 60 days of life often incur extremely high medical expenses. As we age - over age 75 and then 85, our medical expenses tend to increase substantially. Health plans which pay for older people tend to be very expensive even as supplements to Medicare.

I am about to retire after 31 years employment with the US Federal Government. I will be able to get health benefits for life for my wife, minor children and myself at a reasonable cost. Others pay much more for lesser health coverage or have no coverage at all.

I do not "deserve" any better health care and health insurance than anyone else does. I'm lucky! It's one of the perks of the work that I have done for most of my working life.

I would like to suggest a model for a national insurance health plan that I think would be the best option for the United States. I've not read of similar proposals elsewhere. I am happy to discuss this with others.

In the explanation below I will give sample numbers, which are only rough ideas I have of what they might be. Such numbers could be adjusted up or down.

Basics of my Proposed Health Plan:

1. Each citizen of the United States becomes entitled to national health insurance which includes a Family Identification Code and and individual identifier within it.

2. Medical Providers and Suppliers have their own separate identification codes.

3. A Federal Agency is established to handle the new health care system probably through the existing HCFA (Health Care Financing Agency) which handles Medicare and Medicaid.

4. The Federal Agency either independently or in coordination with the Internal Revenue Service (IRS) has a new taxation management system.

5. The Federal Agency together with likely contracts with insurance companies handles the entire payment and reimbursement program with all medical providers.

6. Individuals and Families pay their medical expenses on a yearly basis either as a part of their federal income tax or in a parallel tax tied to the income tax.

7. The medical tax payments due are based upon the expenses incurred as well as the taxable income of the family unit (or individual).

8. By "tax day" - April 15th, individuals and family units are responsible for paying for their medical costs for the prior taxable year.

9. Individuals have a series of costs for medical treatment. Examples of this might be:

a. Deductible - $500 - Year - Total Expenses
b. Co-Payment per Doctor Visit - $25
c. Co-Payment per Hospitalization - $200
d. Co-Payment per Prescription - $25

10. Caps on Costs might be:

a. Family Deductible - $2000 (would only apply if family had 5 or more members)
b. Prescription Costs - $200 once $500 deducdtible had been met
c. Individual Total Expenses - $2000
d. Family total Expenses - $5000

11. The deductibles, caps and some other costs for the individual or family would be reduced as their taxable income was below certain levels - perhaps $30-40,000/year taxable income for a family of 4 for example. Thus a family with taxable income of $10,000 might end up paying a total tax of a token amount such as $100 perhaps.

12. Medical providers would accept their patients based upon various guidelines and reimbursement policies, but with no necessary concern of them having health care coverage or any particular kind of such coverage.

13. Cost containment policies, audits and related procedures would attempt to minimize fraud and waste.

14. Workers and the Federal Government would need to work with employers and others in terms of liability for worker's compensation and other issues of liability.

15. Other than related to worker's compensation, employers would have no expenses for medical insurance.

16. Individuals could choose to pay 100% of the costs of any medical care outside of the national healthcare system if they chose to do so for whatever reasons they wished.

17. Medical providers could choose to not participate in the national healthcare system, however there might be tax incentives to do so if the "market" alone wouldn't make it financially to their advantage to do so.

18. Certain medical care might be not-covered by the national healthcare system such as elective plastic surgery that had no clear medical value.

19. This health plan would result in the end of Medicare and Medicaid. It would include all these programs recipients in it.

In such a healthcare system poor and chronically ill people could get more equal medical treatment. Almost no one would be bankrupted by medical expenses. Employers could afford to hire employees with medical conditions as well as having one huge expense they need not deal with. Everyone could get medical care as they need it. Where individuals are healthy, there would be incentives to not "overspend" with the deductibles and co-payments.

Obviously such a system is far more complex than my explanation can cover. It is however I think a model for a future national health plan for the United States that I hope others will consider.



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