The Lobbyists Are Winning

"The lobbyists are winning," according to Representative Jim Cooper (D- TN) in an interview for the New York Times (10/11/2009 Pg. 1). This is hardly surprising. The health industry (insurers and providers) represents huge amounts of money and profit. Theses players understand how to make money in the current system, but they are not so sure what change will bring.

It is a big industry and someone is going to make money out of it, whatever system is employed, even a so-called "public option". As a patient, I am not concerned with who makes money, or whether service is provided by a private or public organization. Rather, I want to receive good care at a reasonable price.

Transformative change does not always emerge from plans or systems already in operation. Incumbents tend to prefer the status quo. Telephone companies resist the entry of cable companies into the voice communications business, canal companies resisted railroads. This is a normal state of affairs. It seems unlikely that the current players can be easily forced to change.

Can we imagine a system that insures that people will not be bankrupted by health care costs and that will provide profitable opportunities?

Consider that this is a long term project and that it will not be helpful to court dissent. Let us leave Medicare alone and available unchanged from people who are currently of working age or retired. It is in any case difficult, if not impossible, for them to re-orient their plans at this point in their lives. When we have developed a reasonable alternative, they may wish to join it. In any event, we should honor the commitment to our seniors. Medicaid should be considered similarly, but with the expectation that people in Medicaid will move to a different arrangement when their economic position improves.

For the rest of us, suppose we add a new system, a Clearinghouse System which would consolidate all bills and payments. They would simply move money and data. Payments for premiums (from individuals or employers), payments to providers, all to the same channel. Each person, doctor, employer, hospital, lab, deals with one payment entity only. The sorting out happens behind the scenes. The reasons for this change are to: facilitate the creation of a marketplace, and to take the task (and cost) of administering health insurance of the backs of our employers, particularly the small and mid-sized ones. With the clearinghouse in place, we can now add the various entities roles, and then explore the role of the Clearinghouse.

• Employers would make a contribution per employee per pay period for health insurance and, through its payroll service, remit this employees portion as a deduction from pay. Employers would no longer enroll employees or negotiate with insurers. Employer contribution could be graduated: optional for smallest employers, mandatory for the largest.
  
  
• Insurers would accept any and all applicants regardless of health, previous condition or employment. Premiums would be uniform - no preferential pricing for groups. If they lower prices to compete, they lower them for all participants (even those who signed on at a higher price). In general, insurers would be in the patients geographic area.
  
  
• Offerings and comparisons to be standardized. There would be two or three standard plans with statutory coverages, one basic the others more comprehensive. Additional products or coverages could be offered at an additional cost. For example a young unmarried person could have a very basic plan with high deductibles and co-payments but coverage for disastrous events.
  
  
• Individuals could change insurers or providers at will with no penalty. This is essential. In general individuals would expect to pay something for services. But, individual annual and lifetime liability for costs is capped, and special loans available at low interest.
  
  
• Provider charges to be non-preferential. Whatever the provider accepts from an insurer, that is the price to the individual. Providers have to talk to patients about money if the patient will be charged a fee outside of insurance.
  

In all of the transactions, the billing or payment goes only to one Clearinghouse. There may be many functioning clearinghouses but this is transparent to the parties involved. Whatever my role, I deal with only one entity for payments. This means that paperwork is vastly simplified.

All prescribed services are provided, cosmetic services may require pre-approval. The patient is not liable for uncovered or unnecessary procedures. Through the clearinghouse data insurers will be able to see patterns of prescription of a provider, and outcomes. The provider would then be called to account, not the patient. Consequences of improper prescription would be at least financial, possible loss of license, possible criminal.

Duplicate tests or procedures would be billed to the last provider ordering them, unless previous tests are specifically referenced with a reason to repeat. This means there will be pressure to provide a timely systems of sharing results.

The clearinghouse may act as the conduit to provide coverage at lower cost. For example, applying subsidies for low income, loss of employment, disability and so forth. And, thet would provide channels for payment and finance of all medical related bills.

By changing to the clearinghouse model, the patient has choice in who his insurer is and who his providers are. The providers have responsibility for their decisions: over-billing and inappropriate care will be caught and have consequences for the provider, not the patient. The insurers are moved closer to a role of providing insurance for many policies and can manage and re-insure their business on that basis. And, the insurer has new opportunity in offering additional products to patients.