Won an Honorable Mention in a healthcare reform contest run by CodeBlueNow
Executive summary
This proposal is based on the principles in the Health Care Magna Carta, at www.oconnorhealthanalyst.com/magnacarta.html and included in Appendix 1.
It is important that sweeping change in the U.S. healthcare system take place in a short period of time. This document lays out the changes and transition plans, as well as an ongoing plan for funding and support for a new style of healthcare system, which will result in high-quality affordable healthcare for all Americans.
The problems are legion and well-known: cost shifting from government onto the sick and the infirm; lack of choice for medical expense coverage, leaving either an all-or-nothing plan, or payment out-of-pocket for everything; money squandered providing insurance rather than care; and lack of individual choice of care, provider or payment method.
The opening moves in this renovation of healthcare can only be made by government, which is the sole group with the power to bind itself and others to a process of change.
Therefore, the Congress shall enact, and the president shall sign, a sweeping healthcare reform bill, based on the principles that the U.S. government is bound to protect the interests of all Americans; many Americans have no healthcare and many more have trouble affording it; and it is the duty of Congress to act to cause healthcare to be accessible and affordable to all Americans.
Contained within that legislation will be:
1. A continuation of Medical Savings Account laws, with some important clarifications.
2. Malpractice liability will be capped, limiting liability for all medical professionals and facilities.
3. Reform prescription drug coverage.
4. Reforming government administration of Medicare and Medicaid.
5. Providing incentives to businesses to participate in this new system,
6. Creating national, regional and statewide health planning boards to allocate healthcare resources effectively across the nation.
Proposal: A reformed U.S. healthcare system
This proposal is based on the principles in the Health Care Magna Carta, at www.oconnorhealthanalyst.com/magnacarta.html and included in Appendix 1.
It is important that sweeping change in the U.S. healthcare system take place in a short period of time. This document lays out the changes and transition plans, as well as an ongoing plan for funding and support for a new style of healthcare system, which will result in high-quality affordable healthcare for all Americans.
The problems are legion and well-known: cost shifting from government onto the sick and the infirm; lack of choice for medical expense coverage, leaving either an all-or-nothing plan, or payment out-of-pocket for everything; money squandered providing insurance rather than care; and lack of individual choice of care, provider or payment method.
The opening moves in this renovation of healthcare can only be made by government, which is the sole group with the power to bind itself and others to a process of change.
Therefore, the Congress shall enact, and the president shall sign, a sweeping healthcare reform bill, based on the principles that the U.S. government is bound to protect the interests of all Americans; many Americans have no healthcare and many more have trouble affording it; and it is the duty of Congress to act to cause healthcare to be accessible and affordable to all Americans.
Contained within that legislation will be:
1. A continuation of Medical Savings Account laws, with some important clarifications. Contributions of after-tax dollars to MSAs will become tax-deductible. Distributions from MSAs will become non-taxable. In keeping with a recent IRS ruling, funds remaining in MSAs at the end of a calendar or fiscal year will be able to be rolled into the following year without tax penalty.
Two incentive programs will be created to encourage people to use MSAs, and to permit them to use their money intelligently.
First, the federal government will pay $1,000 to each American citizen and legal permanent resident each year, into the person’s MSA. If a person does not have an MSA, the money is not paid. This money is intended to provide funds for preventive care and treatment for small routine illnesses that occur throughout the year.
Second, MSAs will be able to be held jointly by, and for the benefit of, immediate family members, such as married people or parents and their dependent children. When joint holders of an MSA no longer wish to hold their funds jointly, they may divide them in any mutually agreeable way, but the money must remain in someone’s MSA. That is, funds cannot be withdrawn from one MSA without being put into another one immediately, much like an IRA rollover.
Rationale: (HCMC 1, 2, 3, 5, 6, 8, 9, 10) People and employers will be able to contribute amounts they can afford on a regular basis into their MSAs, making money available for later use to pay for medical expenses. The present system requires people and employers to contribute amounts they cannot afford toward the profits of private companies, pulling that money out of the pool available for people to pay for actual medical care. In effect, they pre-pay large sums for the privilege of paying even larger sums when they actually need services. If they do not use medical care in any given year, that money has been spent for no useful purpose.
Revamping this system will permit more money to be used to pay for actual medical services, without putting additional pressure on working people to pre-pay for medical care they may not use. Further, it will allow them to save that money to pay for medical care they actually use in the future.
Funding: Find out how much people and businesses pay in insurance premiums vs. how much they pay for actual healthcare
Impact on healthcare services: Services will remain as accessible as before, but people’s access to them will improve dramatically. Rather than paying expensive premiums for future discounts on services, all of the money spent will go directly to providing healthcare. A family that pays, say $300 a month for insurance today will be able, instead, to visit the physician for preventive checkups from time to time, using that same $300.
Impact on healthcare costs: Costs will not go down or up, but people’s ability to afford the costs will increase. Money for insurance premiums, now taken away from the pool for spending on actual healthcare, will become available again for buying actual care.
2. Malpractice liability will be capped, limiting liability for all medical professionals and facilities. Malpractice liability must remain in existence to protect patients from accidental wrongdoing by medical professionals. However, to protect the public from malicious professionals, malpractice claims resulting from wilful wrongdoing or wilful negligence will have no liability cap.
In cases, however, where the intent of the medical professionals and facilities was to help, and there was no intent to harm, the liability cap will be:
• For a procedure of which the damage can be repaired, the amount of the cap shall calculated by:
-Figuring the amount of any money paid by a patient, government or private company for a procedure or other action that is deemed to be malpractice. Fees for services provided by parties not judged guilty of malpractice shall not be included in the cap.
-Adding the costs of the procedure to repair the damage.
-Adding the patient’s actual lost income and wages while repairs are made.
-Doubling the sum total, to include actual damages plus a penalty.
• For a procedure of which the damage cannot be repaired, the amount of the cap shall be calculated by:
-Figuring the amount of any money paid by a patient, government or private company for a procedure or other action that is deemed to be malpractice. Fees for services provided by parties not judged guilty of malpractice shall not be included in the cap.
-Adding the amount required to perform the procedure properly (e.g., amputate the correct leg).
-Adding the amount required to cover appropriate, medically necessary amelioration of the situation (if the wrong leg has been amputated, for example, add in the cost of prosthetics).
-Doubling the sum total.
-Adding the compensation that would be available under the standard Accidental Death or Dismemberment insurance policy offered by airline carriers at the time of the miscarried procedure.
Rationale: (HCMC 1, 3, 6, 7, 8) This will permit patients who have suffered at the hands of medical professionals to recoup losses and cause the responsible parties to feel some punitive damages. And it will permit medical professionals and facilities to keep a better handle on their insurance premiums, which are one of the factors driving up the cost of healthcare.
Funding: In 2000, doctors paid $6.4 billion in insurance premiums. All of this cost was shifted to patients, insurance companies and government agencies paying for healthcare. Reducing this amount would reduce upward pressure on doctors’ prices. (According to the National Association of Insurance Commissioners, Statistical Compilation of Annual Statement Information for Property/Casualty Insurance Companies in 2000, (2001).)
Impact on healthcare services: Services would be no more or less available than they are today. Some medical professionals might actually begin offering services they had not before because of high insurance costs.
Impact on healthcare costs: A major factor in the high cost of some procedures is the malpractice coverage required for professionals who conduct those procedures. This would reduce some of the cost pressure, resulting in lower costs and increased access to services by all Americans.
3. Reform prescription drug coverage. Prescription drugs may be paid for by money from MSAs. Pharmaceutical companies who refuse to sell their drugs at Medicare-negotiated rates to all purchasers will have their drugs subjected to prior review by Medicare. That requires state or federal approval before a doctor can prescribe a medication. Drugs and companies subjected to this will effectively cut themselves out of the Medicare market.
Drug companies will be prohibited from advertising their products to the general public, whether on television, on radio or in newspapers, magazines or on-line advertisements.
Drug companies will be allowed to have their company web sites describe the drugs they sell, but those pages and descriptions must be approved by the FDA as including full disclosure of results of all clinical studies.
Drug companies will be allowed to advertise their products to doctors, under FDA rules that require full disclosure of the results of all clinical studies and only making FDA-approved claims for treatment or prevention of diseases or conditions.
Drug companies will be prohibited from sponsoring conferences for medical professionals.
Drug companies will be permitted to send marketing personnel to meet with doctors, but may only drop off FDA-approved literature, and may not purchase meals, gifts or other small items (including office supplies) for medical professionals.
Rationale: (HCMC 1, 4, 7, 8) Companies that make revolutionary drugs that they want to make large profits on will remain allowed to do so, but not at the expense of taxpayers and private citizens who want important medical services.
Drug companies today spend more money on marketing than they do on research and development, and take less in corporate profit than they spend on marketing. If marketing budgets were reduced, drug companies would have more money to do research and development of products, and would still be more profitable than they are today.
This ensures doctors would have access to complete information about drugs they might prescribe.
Further, members of the general public would not be subjected to advertisements for things they have no power to actually procure for themselves. Members of the public would also be able to learn more about important drugs, but would have access to the full range of information given to doctors about the drug, rather than just a phone number to call. This limitation on advertising is an extension of the existing FDA rules on drug advertising, but ensures that marketing spending by drug companies is limited, allowing them to focus on their core function to their shareholders and society: making drugs and finding new ones.
Funding: FDA approval costs are covered in application fees for licensing and regulation. FDA fees may increase for drug companies, but no more money will be needed from taxpayers or healthcare consumers.
Impact on healthcare services: Some drug companies may change operations or cease some operations. This could disrupt prescription drug development in the short term, but will provide better access and information in the middle and long terms.
Impact on healthcare costs: There will be decreased upwards pressure on costs of prescription drugs. While they may not drop, drug companies will see public pressure brought to bear on their profiteering. They will still be allowed to charge money for their drugs, and to make a profit, but their role as providers of important public services and needs will be recognized and held to account for the public’s well-being.
4. Reforming government administration of Medicare and Medicaid. Government will pay the full amounts of “accepted reasonable costs” for services provided to Medicare and Medicaid patients.
Rationale: (HCMC 2, 3, 4, 8, 9) The government is now hiding, from the public and from itself, the true cost of treating the elderly and the poor with proper medical care. Those costs are being shifted onto private insurance carriers and people who pay out of their own pocket for medical care, in effect taxing the sick and the injured.
This would require the entire society to pay the true cost of treating the people who need help. It would prevent government from hiding the costs, and would create a built-in incentive system to improve access to preventative care for the poor and the elderly, to cut costs overall while improving the public health.
Funding: According to the Centers for Medicare and Medicaid Services (CMS), in 2002 Medicare paid $256 billion. Medicaid paid $258 billion, to match on a 2-to-1 basis $129 billion from state funds for Medicaid. This represents 80 percent of the total cost of care to Medicare and Medicaid beneficiaries, leaving $161 billion in unpaid Medicare and Medicaid benefits to be covered by people with private insurance. Reducing this burden will lessen upward pressure on medical prices for private payers.
Impact on healthcare services: Services would be no more or less available than they are today.
Impact on healthcare costs: This will appear to make Medicare and Medicaid costs go up. That appearance is false, however, and will merely reflect a readjustment of the cost structure now in place for medical care. Medicare and Medicaid will be charged the full cost of caring for beneficiaries, while private-payers and third-party insurance companies will see cost savings because they will pay only the full cost of caring for their beneficiaries, without also paying for services rendered to other patients.
5. Providing incentives to businesses to participate in this new system, by encouraging them to contribute to MSAs and assist with sponsoring major medical insurance coverage for catastrophic medical needs. Specifically, creating tax exemptions as follows:
-Business contributions to employee/family health insurance plans are only considered tax-deductible business expenditures if the insurance plans have a deductible over more than $4,999 for a single person or $9,999 for more than one person.
-Business contributions of any amount to employee MSAs are tax-deductible business expenses. Contributions may not be made based on discrimination of any kind, but need not be equal in amount for each employee. (That is, employees with families may be eligible for additional MSA funding. Also, employees are free to make arrangements for part of their salaries to be allocated directly to MSAs.)
Further, the law will put a 5 percent payroll tax on all businesses employing two or more people, to cover federal and state healthcare expenditures (This will be less than those businesses would pay in medical premiums under the present system.)
Rationale: (HCMC 2, 4, 5, 6, 9) Businesses are key to this, because of their historic role in providing or helping to provide medical insurance. They also are used to spending money to benefit employees, and are used to getting tax credits for it. Major medical insurance is much closer to a single-pool insurance system, despite the fact that different providers offer it. There is much less demographic variation in who could be hit by a bus or fall off a cliff than with other conditions or illnesses.
Funding: Based on the U.S. Department of Commerce’s Bureau of Economic Analysis, total payroll in 2002 was $8.276 trillion. A 5 percent payroll tax would raise $414 billion, more than twice as much as necessary to cover the Medicare/Medicaid shortfall detailed in section 4, leaving plenty left over to fund the remainder of the programs prescribed in this document, especially if future cost savings are incorporated into the healthcare cost system to further offset cost increases.
Impact on healthcare services: Services would be no more or less available than they are today.
Impact on healthcare costs: Healthcare costs would not necessarily change, but people’s ability to afford healthcare certainly would. Today many employers cite cost as the major reason they do not provide any health insurance, or only limited health insurance, to employees. They are locked into an impossible choice: provide a plan that neither company nor worker can afford, or provide nothing at all. With this system, employers would be free to allocate as much as they want to afford towards employee healthcare. Further, the money spent would go to providing actual healthcare, rather than paying in advance for discounts if and when healthcare is provided.
6. Creating national, regional and statewide health planning boards to allocate healthcare resources effectively across the nation. At present, for-profit companies determine where they will build new hospitals or other healthcare facilities. Profit is the motive for locating these important centers of public health and well-being.
Instead, the motive should be intelligent design of services, so that all people will have reasonable access to all levels of care, with quality practitioners providing top-level care in well-maintained facilities not subject to cost-cutting by corporations seeking shareholder revenue.
The boards would plan where new healthcare facilities will be constructed or moved, and what services will be provided at those facilities. They would take into account existing facilities, patient demand and utilization, cost-sharing opportunities of regionalization, and medical importance of immediate access.
Government representatives, medical professionals and community members will collaborate to determine where services shall be provided, such that everyone has access to quality medical care, with more basic and often-used services provided at more locations and specialized high-level services centralized regionally, all spread intelligently across an area of human and physical geography.
Each type of medical service requires a certain level of usage to keep medical professionals skilled and up-to-date. Specialized services, such as open-heart surgery, shall be provided at regional centers, rather than out at primary care centers.
These boards will also become venues for healthcare advocacy, urging people to take better care of themselves and each other.
Rationale: (HCMC 1, 3, 7, 8, 9, 10) Profit is the wrong driving factor for choosing locations of healthcare facilities. Instead, the goal should be to provide services equably to everyone.
Funding: This will pay for itself. Rather than just going out and constructing a hospital or other care facility in one place, a company will have to justify the location and services to regional planners. Competing companies will not be able to build two similar hospitals on the same city street and leave rural areas in the same region without services.
Impact on healthcare services: Specialized services will be somewhat less immediately accessible in some areas, but more accessible in many other areas. Further, the quality of care will be higher, because medical professionals at the centralized specialty facility will have better and more consistent practice to keep their skills fresh.
Impact on healthcare costs: Costs will see downward pressure, because services will be provided more effectively and more efficiently across a region. All people will have relatively easy access to all ranges of healthcare, and all medical professionals will have a workload that neither overwhelms them nor leaves them idle to forget specialized skills.
Appendix 1
Health Care Magna Carta
www.oconnorhealthanalyst.com/magnacarta.html
Copyright July 2002
Kathleen O’Connor
1. We believe we must all participate in health care decisions and that health care is too important to be left to someone else. Just as war is too important to be left to the generals, our health care is too important to be left to the industry and employers.
2. We believe everyone who participates in the health care system should pay for it—individuals, businesses and government. If we all benefit, we all must participate and support it. No one gets services without paying for them, at least in part.
3. We believe all people should have access to a common set of health care services that promote the health and well-being of our nation, including access to preventive services, full maternity and well-child care, childhood immunizations, and full dental and mental health services for children, as well as comprehensive health services for seniors. We believe that this includes culturally sensitive health care services that recognizes the diversity of our nation and that includes complementary and alternative therapies, as well.
4. We believe no person should face bankruptcy because of catastrophic health care costs and needs.
5. We believe in the freedom of employers to offer more than a common set of health care services; but in return, large employers should not oppose the needs of small businesses to offer at least a common set of benefits, so people don’t live in fear of insufficient insurance.
6. We believe we should all be in the same risk pool rather than separate our society into smaller and smaller segments.
7. We believe we all need clear and succinct information about health care services and benefits, and that information about services and benefits should be written for the average reader, not just for lawyers, physicians and government employees.
8. We believe we need central standards and management of health care financing and services, just as we have central standards and management for the banking industry. We need an independent national board, but we also need local flexibility to meet the specific health care needs of our communities. We also need to define care standards for ourselves, our providers and our communities.
9. We believe funds for health care services should not be dictated by the specific health care categories as we now have, so we can be more flexible in meeting the wide range of needs of clients vs. the compartmentalized requirements of each separate system as we now have.
10. We believe we must all assume personal responsibility for our health and help our friends and family members do the same. We encourage individuals, employers and community groups to put their efforts into health promotion and disease prevention and reduction.