The Jensen Family: Health Insurance
Problems with Current Policies
Goals of Proposed System
Multiple Provider Types
Appendix A. Re-evaluating the Employer–Employee Relationship
Health care costs and provision are a serious political issue again, almost a decade after the last health care battle. Demographic projections show us that we cannot duck the problem this time. Like many other features of American life and politics, the health care system we have in place has grown as a collection of ad hoc solutions to separate parts of the problem. Other solutions that have been successful in other countries and for other types of problems inspire this proposal.
The following medical care proposal which I have called EssentialCare is a model of the way the United States could go to a primary payer system that provides adequate services at a reasonable cost to all citizens and qualified legal residents. EssentialCare fully replaces Medicare, Medicaid, Veterans Administration and other federal, state and local programs and deals with the most critical problems of the current health care system—acceptable costs for all with fair access.
Funding for EssentialCare will come from a no-exemption VAT and moderate co-payments from most patients. A VAT of less than 20% can fund all of the proposed health care coverage and replace all of the payroll taxes collected for Social Security and unemployment benefits and add family leave, and medical leave benefits for all.
Government agencies, private businesses, and voluntary organizations will provide care under this program. Supplementary services will be available through contract services or direct payments, but this program will abolish all current tax benefits for health insurance and health expenditures.
Our current system has developed in response to specific problems that Congress, the states and localities needed to deal with. As we made each change in the law, specific groups of people gained specified coverage. The resulting patchwork provides good coverage to some, but little to others with wildly varying costs.
Health insurance is not like any other insurance in America. Coverage varies from prepaid health care services to true insurance in the form of catastrophic or major medical insurance. For many Americans, the government already pays for most of the cost. For others, their health care program is purchased through a place of employment, with the employer picking up part of the cost and controlling access. Others find that they have to buy their program at two or three times the price that employers pay. Some programs are administered by insurance companies, but the costs of claims are paid by the self-insurance of the employer. Some people are allowed to pay for their insurance pretax and prepayroll tax, others are required to pay tax on the money that is spent on this insurance.
This system often keeps employees chained to employers, either because of problems with preexisting conditions and refusal of insurers to cover it, or because pricing for individual policies is so much higher than for corporate policies. COBRA was one of the attempts to help with this, but COBRA is only partially successful. It does not address pricing discrimination, has a time limit, and does not help employees whose employer has dropped an insurance program or stops paying for a self-insurance program.
While there is some dissatisfaction with Medicare and other government programs, the greatest growth in dissatisfaction is in the employer-provided program. There is a natural conflict of interest between the purchaser, the user, and the coverage provider. Unfortunately, the dissatisfied user has no alternative to the limited options provided by the employer. At the same time, coverage providers have been using political clout to limit their responsibility for unsatisfactory decisions, often justifying their decisions to the employer as the cost control that the employer had been looking for.
There are two simple, unsatisfactory solutions to this problem. One would be to mandate that all coverage providers must pay for all services that the patient wants, a recipe for wildly out-of-control costs. Another would be to abolish all health programs and require all patients to pay for each cost out of pocket. This would certainly cut health care costs dramatically in the United States, but it would also destroy the ability of millions of people in the United States to get adequate health care. Any solution has to be concerned about costs and health care provision.
Health care programs that provide identical coverage vary tremendously in price. Some of these price differences occur because of the location of the services. Sometimes these prices vary because of the difference in experience that the provider has, but sometimes the prices vary because of the way the underwriting has been done. Prices for private purchase are often dramatically higher than for employees receiving their coverage through their employer, even if they have identical health histories. Any solution has to include pricing reform.
Not only are folks unable to choose the coverage they want, take it where they want or get it at a fair price, but Medicaid programs can keep people from trying to get out of poverty. Most low wage jobs tend not to provide health insurance, but often pay well enough to force the employee off Medicaid. Given the choice between taking an effective pay cut of as much as $4.00 or $5.00 per hour or going without insurance, few poor families choose to take the pay cut. We must fix this Medicaid cliff.
Universality. Every citizen or permanent resident will be able to get basic care. The experience in the United States is that our citizens are far more generous and less resentful if we feel that everyone is being treated equally. Covering basic health needs for all will defuse some of the resentment and keep health care from being an unreasonable limitation on economic flexibility.
Affordability. The program should allow everyone to afford basic care. Thge modest co-payments envisioned for this program will be partially offset for the poorest or most seriously affected by health problems.
Portability. Everyone will be able to select from all cooperating doctors.
Employee Freedom. Each family will be free to choose the kind of health care coverage that they find best for themselves. Employers will no longer control which insurance programs you are allowed to use.
Community Rating. Basic programs will be included for all. Supplementary programs, similar in mechanism to todayís Medicare supplements, will be priced equally for everyone in the community market area.
Flexibility. You will be able to buy the supplementary program that you choose. Health care providers will be allowed to choose different ways of affiliating or being reimbursed for services provided. Providers who choose the most flexible program will be allowed to set their rates without regard to EssentialCare reimbursement rates.
Patients will receive care for all treatments, including mental health, that have been shown to be effective through appropriate medical research protocols. If there are multiple effective treatments, the most cost-effective ones will have precedence, but patients will be free to request a different effective treatment if they pay the difference between the standard treatment and a treatment that they choose.
All levels of nursing home and home support will be covered. Current rules, covering various programs for different people, often encourage people to use higher-cost services because that is what is covered by the government program.
Hospice care is covered. High quality pain management, particularly for dying patients, will be emphasized.
Managed Care will be available. Patients will have the choice of a managed care program which will be reimbursed on a capitation basis. It will be completely voluntary and all qualified managed care programs will meet the same minimum standards of care and referral that all other cooperating medical organizations will.
Prescription drugs in a formulary will be covered as part of a treatment regimen. Not all prescription drugs will be part of the formulary, but patients will be allowed to request and pay for appropriate drugs that are not on the formulary. Only prescription drugs that are marketed in accordance with appropriate statutory professional standards will be on the formulary unless the price of these drugs is the same as the lowest cost competitive drug on the formulary. These standards include:
Reimbursement rates for independent health care providers, including copayment, will be 100% of billed rate or 100% of local Federal Health System standard costs, whichever is less. Contract capitation rates will be an alternative reimbursement program for qualifying health maintenance programs.
Elective treatments will be excluded.
Treatments that have not yet been shown to be effective will only be covered if they are part of a qualified research program. The cost of these research treatments will be reimbursed at the same rate as the currently accepted conventional treatment. The rest of the costs of these treatments will be covered by the sponsors of the research program. Other treatments that have not been shown to be effective must be paid for by the patient and need not be offered by service providers.
Premium price services, such as private rooms, will only be covered to the standard rate.
Certain end-of-life treatments of minimal benefit but substantial cost may be excluded as decided by Congress. Patients or their supplementary program will always be allowed to pay for these treatments if they choose.
This program excludes inappropriate emergency room visits. The intake staff at the ER will be authorized to refer all inappropriate visitors to an appropriate clinic.
A board of qualified medical personnel shall create and maintain a priority schedule for treatments, based on effectiveness and cost. For each budget year, the board shall identify the expected costs of all items in the schedule. Congress shall identify treatments that will not be covered during the upcoming year.
Treatment will be provided by the Federal Health System, its affiliates, and contract providers. The core of the Federal Health System will be the VA clinics and hospitals and the voluntary, state and municipal clinics and hospitals that choose to affiliate or merge with the Federal Health System. Affiliates may choose to have their employees become employees of the Federal Health System or retain them. All operating and capital costs of FHS and affiliates will be paid for by EssentialCare, but the boards of the affiliates will have the right to review the quality of service on a regular basis, and may choose to disaffiliate upon appropriate notice.
Contract providers will be any provider that is willing to contract with the government to provide services, either as fee for service or capitation. Capitation providers may charge patients supplementary fees that are no more than the rate as the EssentialCare network charges. Fee for service providers must provide information about the fee schedule of EssentialCare and the reimbursement received from EssentialCare, but will be free to charge supplementary fees for any treatments.
All healthcare facilities that display the FHS logo are assuring prospective patients that they will not charge patients more than the standard EC copayments. If there is a market that does not have an FHS facility or an affiliate, or a contract provider willing to accept FHS reimbursements as full payment, FHS will be authorized to construct such a facility.
|FHS Provider||FHS Affiliate||ECard Logo Provider||No Logo Contract Provider||Independent Provider|
|Payment in full through ECard||Yes||Yes||Yes||Opt||No|
|Scheduled Copayments charged to ECard||Yes||Yes||Yes||Yes||No|
|Surcharge billed separately||NA||NA||NA||Yes||Yes|
|Offers all scheduled services||Yes||Yes||Yes||Yes||Opt|
|Offers nonscheduled services||Opt||Opt||Opt||Opt||Opt|
|Nonscheduled services billed separately||Yes||Yes||Yes||Yes||Yes|
|Supplemental Insurance CoPay Accepted||Yes||Yes||Yes||Opt||Opt|
|Supp. Ins. for offered nonscheduled services||Yes||Yes||Yes||Opt||Opt||Table 1. Impact on Patients for Service Provider Chosen|
Even with a national program that covers basic health services, there will be a place for supplementary health care and insurance. Every vendor of such insurance will be allowed to sell their choice of programs, but must include standard supplements that provide fair comparison of all insurance programs. FHS and ECard Logo providers will accept supplemental insurance for covered copayments or any supplemental services they provide.
The United States has a history of three tracks of health care provision: government, voluntary, and for-profit. As with higher education, we have seen substantial benefits from this arrangement. Unlike higher education, we do not have reasonably priced alternatives available for purchase. The goal of this reform is to provide multiple service levels, but with a basic level available to all for a moderate, subsidized price. As with higher education, those who are unable to afford this will receive supplementary grants.
Health care run through employers is failing. Private coverage is extremely difficult to get and offered grudgingly. Costs are exploding out of control. The US spends more than enough to provide the best health care in the world, yet our health statistics do not tell us that we are getting our money's worth. It is time for the United States to have a government health program available to all and the above program will work in the ways that Americans have shown they want to see it work. They will be able to select the provider they want. They will be able to buy better services if they choose. Health care providers will not have to become government employees, but may choose to do so. With private, voluntary and government agencies competing, the United States could have a health care system that is the envy of the world for all of its people.
Originally written October 2002.
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