9. The Health Plan for the USA: A deductible equal to the basic costs of routine care

by admin on 11/05/2019 5:15 AM

The healthcare debate in the United States has totally become a State issue. It has been blown out of proportion as to insurmountable costs. The liberal left think that health care costs are too expensive unless the government takes over the industry. However, past experience of the government controlling costs in any industry is a failure, whether it be the Post Office, the Rail Roads or the Space Industry. The government has not had any space travel or significant exploration of space since the Mir Cooperative Solar Array (MCSA) was delivered to the Russian space station by Shuttle Atlantis (STS-74) in 1995. Except for Voyager 1 which is currently about 11 billion miles from Earth, and Voyager 2 currently 9 billion miles from home, very little NASA activity into space has occurred. This may be one area that government is ceding to the private sphere. The era of private spaceflight is breaking new ground since June 4, 2010, with the first test launch of the Falcon 9 rocket by the company Space Exploration. Much of the current space activity is done privately. Does this give hope for an economical private post office? Or to a fully private railroad travel industry since Amtrak continues to be in the same economic plight as the USPS? Or to a private healthcare industry?

We have worked on a health plan that would solve the current conundrum on health care in the United States. A small group has met in my office every Thursday evening for 4 hours over three years to come up with a tiered plan that would please both the Liberals and the Conservatives. We believed this would accommodate Americans of every stripe. However, we were unable to find any insurance company that was remotely interested.

Without any funding, our incubator project was terminated. Now with the Democratic Presidential candidates making this a national crisis, we have gone back in our files to update portions for further discussion.

To be realistic, the cost of health care falls into two categories—routine predictable outpatient office and ambulatory care which health insurance makes more expensive—and the unexpected emergency/catastrophic care which requires health insurance.

This has been distorted since hospitals, the highest cost centers, have established outpatient departments that are considerably more expensive than office and other freestanding private establishments including urgent care, laboratory, x-ray, CT, and MRI facilities. When hospitals entered the outpatient laboratory business using their hospital service codes, they found they couldn’t compete because their charges were more than twice that of private establishments. So, the hospitals established two tier charging. A blood count done in the hospital outpatient department was usually more than twice as expensive as one done in their own free-standing laboratory.

We will limit our discussion of these issues to private outpatient care not the high cost hospital centers. Office and outpatient ambulatory care covers three-fourths of our medical problems. As we have confirmed in our own experience, these are more cost effective if paid directly rather than through insurance. The costs would be on the same order as your house or automobile maintenance which is never covered by insurance. Insurance for auto and house are only for catastrophic destruction, whether fire, hail, hurricane, tornados, or earthquakes.

We obtained information on the cost of basic routine (expected) ambulatory medical care which patients normally obtain from their personal physician. These costs can be predicted and would include the office evaluations, baseline laboratory tests including screening for diabetes and lipid analysis, preventive medicine, immunizations, minor traumatic injuries and most extremity fractures. This represents general outpatient or private ambulatory health care. These costs are related to age and can be estimated by each decade of life with slight to moderate increases with each decade. These are affordable with costs which could be less than recurrent utility bills or car maintenance costs.

Humans achieve physical maturity by the third decade of life. Hence our age of majority is generally in the range of 18 to 21 which varies by States from HS graduation, to college or establishing a vocation. Veteran and marital status lowers the age of majority. Driver’s licenses are generally available by the age of 16 although there is a movement to delay this.

Our brain is not fully developed by the age of majority. For the business/professional group this may be after graduate education or a career where the brain has been utilized to near its fullest capacity. Thus, full mental maturity isn’t reached until about the age of 25. Cognition, discriminating judgement, and decision making are occurring during those 5 years. The cost of health care during this period of human development can also be reasonably predictable. Therefore, the risk is insufficient to justify health insurance for basic care which would more than double the cost in this age group. Patients can control the cost of basic health care by dealing directly with their doctor, lab or x-ray facility. The savings can be as much as half the cost of insurance for these medical issues.

Health insurance is only necessary (or even appropriate) for the unexpected costs. This would include surgery, trauma, and major medical care requiring hospitalization. This type of major medical which requires hospitalization/surgery/trauma/or any diagnostic or treatment procedure is generally affordable in the private sphere.

By estimating the cost of basic care, a logical basis for the deductible portion of major health care can be established. This should be a level that prevents overutilization and does not limit necessary care. We found the following ranges met these criteria.

In estimating basic healthcare, we found that a deductible of $200 per year would cover basic health care costs until age 25 or 30 before any insurance was needed to cover medical care such as hospitalization, surgery, trauma or pregnancy complications.

We found that a deductible of $300 per year would cover basic health care costs in the fourth decade of life—the 30s. In the 40s (fifth decade of life) one is subject to more medical issues. Chest x-rays or electrocardiograms or other laboratory tests may be required. This will generally be covered by a $400 per year deductible before insurance would be cost effective. A deductible of $500 in our 50s (the sixth decade of life) would more likely than not cover basic healthcare. A deductible of $600 per year in our 60s (the seventh decade of life) would more likely than not cover our basic healthcare requirements.

These were estimates which allowed for known variations. However, we were able to determine that when paying cash, the costs would be less than half of what insurance is requested to pay. Therefore, to obtain insurance coverage for the known cost of care, health care costs are doubled or even trebled. Hence, insurance is not cost effective for routine medical care but does form the basis for the deductible portion of major health insurance.

This may not be apparent because hospitals may charge up to 8 or 10 times as much as a doctor or outpatient facility would charge for the same procedure. We have observed hospital charges of $420 for a CXR which we did in our office for $40; or charge $380 for an electrocardiogram which we did for $24 in our office. This is why transparency of charges would immediately cause huge drop in cost of health care.

Covering the cost of major medical problems (heart attacks, strokes, diabetes, hospital care in general) does require insurance. Surgery, trauma, cancer treatment, or any critical care also requires insurance. This is a separate issue which should be the only debate that requires national attention.

There are a number of policies available to cover hospital, surgery, trauma, and even cancer care. Blue Shield had such a plan in the past. These seem to be reasonably priced. For the majority of Americans, this would also be affordable. Hence, there is no need to proceed into expensive national health care or in Medicare-for-all. Senator Bernie Sanders’ plan would also eliminate private health insurance, Obama Care, and ACA.s. That would be such a major change in our country and a number of things could go wrong. It could be catastrophic for our country.

A major item of concern would be covering the poor. Who is poor versus who is needy needs to be redefined? This stratum of society should be defined in terms of a standard deviation. One or two SD at the lower end of the bell curve would be in the range of the bottom 10, 12, or 15 percent which could then be defined as poor. A debate would not be productive in our present polarized government when half of our representatives feels that everybody is poor or needs Medicare. In some states Medicaid coverage represents half of society. Defining who is poor should eliminate the constant encroaching of the “needy” society” which is so elusive that the left and the right can never agree on it legislatively. After defining who is poor, the Medicaid program would be employed to cover them.

This gives full coverage to the poor and the rest of us can purchase affordable major healthcare on the open market. The open competitive market will drive health care costs to the lowest possible range. This would be automatic for the health insurance industry which would then become affordable to all Americans.

The Health Plan for the USA (HPUSA) has to neutralize the insurance/hospital/medical complex.

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