Another Installment of the War on Broccoli

During an interview on 60 Minutes, Romney was asked if the government had a responsibility to provide healthcare to million Americans who do not have it, and he replied: “We do provide care for people who don’t have insurance. If someone has a heart attack, they don't sit in their apartment and die. We pick them up in an ambulance, and take them to the hospital, and give them care.” When asked in an earlier interview on Morning Joe whether he believed in universal healthcare coverage, Romney said, “Look, it doesn't make a lot of sense for us to have millions and millions of people who have no health insurance and yet who can go to the emergency room and get entirely free care, for which they have no responsibility.” Romney can, of course, explain why his statements are somehow consistent with the Republican platform. Democrats can, of course, use his statements as an illustration of Romney’s lack of a true center, a flip-flopper.

My interest in those statements has to do with the broccoli mandate.

In making those statements, Romney was siding with the liberal judges on the U.S. Supreme Court who were of the opinion that, because uninsured persons must be provided care in hospital emergency rooms, the federal government had jurisdiction under the commerce clause to pass a law with a mandate requiring all people to maintain health insurance. It is not as though Romney was somehow not aware of the connection. He made the logical/legal connection as governor of Massachusetts and called it a personal epiphany: a) uninsured Massachusetts residents received healthcare because federal law requires hospitals to treat people with emergency medical conditions; b) the cost of treating uninsured patients was being paid for by insured patients; and c) insured patients would pay less for care if the cost of caring for the uninsured in emergency rooms was used instead to buy insurance for them so they would get care before acute conditions worsened.

Obviously, Romney was not the first to have such an “epiphany” but he deserves credit for being governor of the first state to translate the epiphany into legislation.

If Romney were somehow insulated from his handlers and able to speak his mind, I believe he would admit that the mandate in the Affordable Care Act was constitutional—under the commerce clause and not solely under congressional taxing authority a la Roberts. His problem with it is not legal; it is political and economic. The political problem is straightforward: it is Obamacare, a hot button that works with a certain constituency. He would have to be absolutely against it even if it worked better than advertised. The economic problem is more complex. I do not believe Romney’s statements that Americans already have a kind of universal healthcare—i.e., the emergency room—constitute some sort of flip-flop. His priorities have simply changed from when he was governor of Massachusetts. His epiphany was economically neutral. The theory was that the government would pay for universal healthcare by reducing the cost of uncompensated care in hospital emergency rooms. The same theory underlies the ACA and is being used to justify dramatic reductions in Medicare and Medicaid. So, what happened to the economic epiphany he had as Governor? Did new thinking prove the theory unsound?

No. Romney has simply embraced a more fundamental economic priority: reducing taxes on wealthy taxpayers. Everything else is secondary—one might even say expendable. 

Broccoli and Healthcare Mandates

Nearly two years have passed since the Affordable Care Act was signed into law by President Obama. Since then, you may have noticed a lapse in my updates. This is simply because I had no reason to comment further. Now that the individual mandate is on the verge of being overturned, the time has come for me to comment again.

In a bold use of the persuasive reductio ad absurdum logical tactic, the US Supreme Court seems poised to declare that healthcare is the same as broccoli. Since the Supreme Court does not believe government should have the constitutional right to mandate that people eat broccoli, it follows that the government should not mandate that people buy healthcare insurance.

In Citizens United, the Supreme Court declared that corporations have the same constitutional rights as people. Ozarks Community Hospital is a corporation. Therefore, OCH has the same constitutional rights as a person.

Since OCH is a person, OCH is entitled to the same right as a person to be free from governmental mandates regarding broccoli and healthcare. Therefore, if the Supreme Court rules that the healthcare mandate is unconstitutional, OCH will post signs in its emergency rooms that the Supreme Court has declared that patients have no more right to healthcare than broccoli.

We believe that these signs will be in violation of the governmental law known has EMTALA that requires all hospitals to provide healthcare to all persons regardless of their ability to pay. This law has resulted in the enactment of a number of regulations--one of which would prohibit hospitals from displaying a sign such as the one just described. When OCH is fined by the government for displaying its "no right to broccoli; no right to healthcare" sign (below), OCH will appeal all the way to the Supreme Court where it will assert its constitutional right to be free from mandates regarding broccoli and healthcare. If the government does not have the power to create a system that requires people to be responsible for the cost of healthcare, then the government does not have the power to create a system that requires hospitals to provide healthcare to people who do not pay.

Hospitals are people too.

Quod erat demonstradum.

Paul Taylor, J.D.
CEO
Ozarks Community Hospital

Health Insurers Making Record Profits as Many Postpone Care

What is wrong with this picture? It is enough to drive a rational man to irrational behavior. The healthcare system in this country is the evolutionary product of the exercise of brute, political force over time. There is nothing rational about it.

For some reason, a line from Conrad’s Heart of Darkness keeps replaying in my mind. Marlow was reading a “white paper” typewritten by Kurtz, the epitome of what was then the best and brightest political system in the world—the European empires of the 19th century. Kurtz was in Africa bringing “civilization” to the natives while raping them for ivory. He had written the white paper for publication back in Europe. Marlow noticed that there was a handwritten note at the end:

"It was very simple, and at the end of that moving appeal to every altruistic sentiment it blazed at you, luminous and terrifying like a flash of lightning in a serene sky: 'Exterminate all the brutes!'"

I am tired of being raped by the lords of money and power while puppet politicians promise reforms to benefit the peasant class.

This article written by Reed Abelson appeared in the May 13, 2011 edition of the New York Times.

The nation’s major health insurers are barreling into a third year of record profits, enriched in recent months by a lingering recessionary mind-set among Americans who are postponing or forgoing medical care.

The UnitedHealth Group, one of the largest commercial insurers, told analysts that so far this year, insured hospital stays actually decreased in some instances. In reporting its earnings last week, Cigna, another insurer, talked about the “low level” of medical use.

Yet the companies continue to press for higher premiums, even though their reserve coffers are flush with profits and shareholders have been rewarded with new dividends. Many defend proposed double-digit increases in the rates they charge, citing a need for protection against any sudden uptick in demand once people have more money to spend on their health, as well as the rising price of care.

Even with a halting economic recovery, doctors and others say many people are still extremely budget-conscious, signaling the possibility of a fundamental change in Americans’ appetite for health care.

“I am noticing my patients with insurance are more interested in costs,” said Dr. Jim King, a family practice physician in rural Tennessee. “Gas prices are going up, food prices are going up. They are deciding to put some of their health care off.” A patient might decide not to drive the 50 miles necessary to see a specialist because of the cost of gas, he said.

But Dr. King said patients were also being more thoughtful about their needs. Fewer are asking for an MRI as soon as they have a bad headache. “People are realizing that this is my money, even if I’m not writing a check,” he said.

For someone like Shannon Hardin of California, whose hours at a grocery store have been erratic, there is simply no spare cash to see the doctor when she isn’t feeling well or to get the $350 dental crowns she has been putting off since last year. Even with insurance, she said, “I can’t afford to use it.” Delaying care could keep utilization rates for insurers low through the rest of the year, according to Charles Boorady, an analyst for Credit Suisse. “The big question is whether it is going to stay weak or bounce back,” he said. “Nobody knows.”

Significant increases in how much people have to pay for their medical care may prevent a solid rebound. In recent years, many employers have sharply reduced benefits, while raising deductibles and co-payments so people have to reach deeper into their pockets.

In 2010, about 10 percent of people covered by their employer had a deductible of at least $2,000, according to the Kaiser Family Foundation, a nonprofit research group, compared with just 5 percent of covered workers in 2008.

Doctors, for one, say patients’ attitudes are changing. “Because it’s from Dollar 1 to Dollar 2,000, they are being really conscious of how they spend their money,” said Dr. James Applegate, a family physician in Grand Rapids, Mich. For example, patients question the need for annual blood work.

High deductibles also can be daunting. David Welch, a nurse in California whose policy has a $4,000 deductible, said he was surprised to realize he had delayed going to the dermatologist, even though he had a history of skin cancer. Mr. Welch, who has been a supporter of the need to overhaul insurance industry practices for the California Nurses Association union, said he hoped his medical training would help him determine when to go to the doctor. “I underestimated how much that cost would affect my behavior,” he said.

Dr. Rebecca Jaffe, a family practice doctor in Wilmington, Del., said more patients were asking for the generic alternatives to brand-name medicines, because of hefty co-payments. “Now, all of a sudden, they want the generic, when for years, they said they couldn’t take it,” she said.

The insurers, which base what they charge in premiums largely on what they expect to pay out in future claims, say they still expect higher demand for care later this year. “I think there’s a real concern about a bounce-back, a rebound, in utilization,” said Dr. Lonny Reisman, the chief medical officer for Aetna.
Because they say they expect costs to rebound, insurers have not been shy about asking for higher rates. In Oregon, for example, Regence BlueCross BlueShield, a nonprofit insurer that is the state’s largest, is asking for a 22 percent increase for policies sold to individuals. In California, regulators have been resisting requests from insurers to raise rates by double digits.

Some observers wonder if the insurers are simply raising premiums in advance of the full force of the health care law in 2014. The insurers’ recent prosperity — big insurance companies have reported first-quarter earnings that beat analysts expectations by an average of 30 percent — may make it difficult for anyone, politicians and industry executives alike, to argue that the industry has been hurt by the federal health care law. Insurers were able to raise premiums to cover the cost of the law’s early provisions, like insuring adult children up to age 26, and federal and state regulators have largely proved to be accommodating.

But 2014 and 2015 are likely to be far more challenging, as insurers are forced to adjust to the law’s greatest changes, like providing coverage to everyone regardless of whether they have an expensive pre-existing condition. “I think they’re going to go through a winter,” said Paul H. Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of the consulting firm Deloitte.

And while the slowing down of demand is good for insurers, at least in the short term, the concern is that patients may be tempted to skip important tests like colonoscopies or mammograms. The new health care law will eventually prevent most policies from charging patients for certain kinds of preventive care, but some plans still require someone to pay $500 toward a colonoscopy.

In recent times, insurers have prospered by pricing policies above costs, said Robert Laszewski, a former health insurance executive who is now a consultant in Alexandria, Va. The industry goes through underwriting cycles where the companies are better able to predict costs and make room for profits. “They’re benefiting from a very positive underwriting cycle,” he said.

“Maybe managed care is finally working,” he said. “Maybe this is the new normal.”
Still, he emphasized, health care costs, even if they are rising at 6 percent or 7 percent a year, are increasing at a much faster pace than overall inflation. “We haven’t solved the problem,” Mr. Laszewski said.

Insurance revisions steal Obama-care show

This article appeared in the April 6, 2010 edition of the Springfield Business Journal.

This article appeared in the April 6, 2010 edition of the Springfield Business Journal.

The much-debated health care reform legislation is now law. Despite all the rhetoric, name calling and brick throwing, the act does very little to reform health care.

The law focuses on health insurance reform, and it is not the end game; it is little more than the end of the beginning. As the post-enactment dust begins to settle, certain hot-button topics will fade: government-run health care, Medicare cuts and abortion. Those issues were overhyped to alarm constituencies preprogrammed to react.

Two issues will dominate as the fight shifts from the U.S. Congress to the states: the mandate to purchase health insurance and the cost of expanding Medicaid.

The insurance mandate

Some states threaten legislation to block the mandate, and others threaten litigation.

Do not count on state laws and lawsuits accomplishing much more than giving talking heads ammunition (though people with no knowledge of constitutional law will begin making confident statements about the true meaning of the interstate commerce clause).

There also will be a proliferation of claims that the mandate was actually a Republican invention.

If the goal is to protect the health insurance industry, a “universal” mandate to purchase private insurance is certainly preferable to “universal” governmental insurance such as Medicare for all.

Insurance companies already are funding millions into an Enroll America campaign. The battle over the mandate will fade.

The Medicaid expansion

It does not have talking-head appeal, but it will be the real battleground as to the future of health insurance.

The act requires states to expand Medicaid to cover households earning less than $30,000.

The expansion is paid by the federal government, but the subsidy eventually drops to 90 percent. The federal subsidy only covers the “expansion” of Medicaid, but money is fungible and so are Medicaid “covered lives.”

Questions linger. How soon before the lines become blurred between existing and expanded funds and covered persons? What happens when a state cuts benefits or eligibility in its existing program while expanding its program with federal funds under the new law?

The feds will regulate the expansion, but states will prove extremely inventive in leveraging federal dollars.

For years, the federal government has attempted to rein in states which impose a “tax” on providers to increase matching funds from the federal program, but every year more states climb on the provider tax gravy train. Imagine the clever ways states will transform “existing” into “expanded.” How soon before federal regulations merge the two?

Medicaid varies not merely in eligibility criteria but also in services covered. Relocating recipients will lose certain services covered in their old states. Does the new law give rise to a federal mandate to cover a certain menu of services under Medicaid?

Medicaid also varies in what states pay for the same service. The new law requires Medicaid programs to pay primary care physicians Medicare rates.

How soon before federal regulations require Medicaid to cover the same services and pay the same as Medicare?

The new law subsidizes the mandated purchase of health insurance for households earning less than 400 percent of the federal poverty level, which is approximately $88,000. Depending on each state’s eligibility standards for Medicaid and the Children’s Health Insurance Program, the insurance subsidy could cost more than existing programs.

How soon before federal regulations transform the subsidy into coverage provided directly under Medicaid – with a sliding scale determining individual premium payment responsibility?

Pressure now exists to evolve Medicaid into a federally funded doppelganger of Medicare for persons in households under 400 percent of the federal poverty level. Everyone else would be covered under private insurance until they attain Medicare eligibility.

Paul Taylor is CEO and chief legal counsel of Springfield-based Ozarks Community Hospital. He can be reached at healthcare@OCHonline.com.

Healthy Americans must help pay for the sick

This article appeared in the March 15, 2010 edition of the Springfield Business Journal.

President Obama wants to get health care reform back on track.

The tactic he has been using did not work. He used presidential authority to “demand” a bill meeting his reform expectations.

If Congress could produce nonpartisan reform, Obama’s approach might have made sense. Unfortunately, no one in Congress seems capable of drafting legislation designed to solve the problem.

The only way this Congress designs “reform” is by benefiting certain players (the insurance industry, the hospital lobby, the pharmaceutical companies, etc.) at the expense of other players, and above all, by satisfying a particular political agenda.

The nation is in desperate need of a reformed health care system, because the current one is a complete mess. However, as urgent as the need is, the leading House and Senate bills would do little more than postpone the inevitable day when the system must be finally, fundamentally reformed.

It is possible to provide universal health care to all U.S. citizens without adding to the deficit and while promoting individual responsibility and preserving a meaningful role for the private insurance industry. All it really takes is a frank assessment of the current system and a willingness to design a reformed system with only one goal in mind: providing quality health care to everyone for the lowest possible cost. The 60/40 split in the Senate became the focus of so much national attention centered on health care reform that it might as well serve as the model of reform: a 60/40 solution, as follows.

The total cost of providing care for every U.S. citizen is calculated at Medicare rates, divided by the total number of lives and discounted to 60 percent, creating a “universal” annual premium. The cost per life would be low because the pool would cover everyone, including young healthy people. This premium would be assessed against everyone but collected in a variety of ways. Those who are covered under Medicare or Medicaid would have the premium paid under those programs. Employees would have half of the premium deducted from their wages with the other half paid by the employer.

Self-employed persons would be expected to pay the premium, and those who do not would have it assessed against them as a tax. Those covered under unemployment would have the premium paid as a benefit. There would be no tax deduction applicable to payment of the premium. The program would collect the premiums and disburse funds through a system of statewide fiscal intermediaries – insurance companies processing and paying claims much as they do now for Medicare. The Democrats will favor this part of the solution.

The total cost of care in 2009 was approximately $2.5 trillion dollars or about $8,000 per U.S. citizen, according to the Centers for Medicare and Medicaid Services. The annual premium to cover 60 percent of that cost would be $4,800 or $400 per month.

Is it fair to burden the young with the cost of caring for the old? Yes. It is more than fair: It is necessary. The U.S. Department of Health and Human Services says one-tenth of the population accounts for 63 percent of spending on health services, and one-half accounts for just more than 3 percent of spending. The healthy half must pay a premium based on helping to cover the whole.

Unlike the per capita distribution of the cost of care for the 60 percent pool, the cost of paying for the remaining 40 percent would be assessed against the pool of payers based on individual and group loss ratios and risk factors. The assessment of cost based on individual utilization of health care is a critical element in cost control. Universal health coverage in this country will collapse without it. The distribution of risk and responsibility for payment would look similar to the current hodgepodge of governmental resources, private insurance and individual payment arrangements. Legislation would prohibit loss of coverage for pre-existing conditions and other nefarious insurance practices, but individuals with higher risk factors would pay higher co-insurance premiums to cover the 40 percent share. The Republicans will favor this part of the solution.

Health care providers will say it is impossible to provide quality care at Medicare rates. It can be done, and it will be done, if there is a level playing field among all providers – and if there are payers covering all patients.

Paul Taylor is CEO and chief legal counsel of Springfield-based Ozarks Community Hospital. He can be reached at healthcare@OCHonline.com.

Charity Care at Missouri Hospitals 2004 – 2006

Prepared by the St. Louis Area Business Health Coalition for the Missouri Foundation for Health (Click here to read the full report http://www.mffh.org/mm/files/Charity%20Care%20at%20MO%20Hospitals.pdf)

In 2005, the Missouri legislature approved significant cuts to the state’s Medicaid program. While many studies have examined the effect of those cuts on the newly uninsured, there has been less research on how this loss of coverage impacted hospitals. This project examines whether hospitals suffered an increased financial burden, how hospital utilization patterns changed, and the ability of one hospital to meet the challenge with an innovative strategy to improve service to the uninsured in its area.

Hospital Utilization Pattterns Change
Greene County had the largest decline in Medicaid where patient days fell (20%).Medicaid patient days fell at all three hospitals in Greene County; Cox Health Systems (22%), St.John’s Regional Health Center (19%), and Ozarks Community Hospital (10%).Aggregate Medicaid utilization decreased in the St.Louis region, though Medicaid admissions increased at the two largest hospital systems, BJC HealthCare and SSM Health Care.Closure of Forest Park Hospital’s obstetrics practice and expansion of the Illinois Medicaid program may partially explain the increases at BJC and SSM.

Regional Snapshots
As part of the study, hospitals were asked to describe the effects of the 2005 reductions in Medicaid eligibility on their numbers Medicaid and uninsured patients.The following hospitals provided information and narrative descriptions of the impact on their hospital: Audrain Medical Center in (Mexico, MO) Audrain County, and Cox Health System, Ozarks Community Hospital, and St.John’s Regional Health Center in (Springfield, MO) Greene County.Information on St.Louis metropolitan area hospitals is supported by reports from the St.Louis Regional Health Commission (RHC).

Greene County
Cox Health Systems (CHS) reported a significant increase in the amount of care provided to the underserved.More than 65 percent of 2006 neonatal ICU discharges at CHS were Medicaid and uninsured.CHS provides access to primary care through its Federally Designated Rural Health Clinics.Although CHS’s charity care in 2006 was the second highest in Greene County at $6.5 million or, 0.95 percent of operating revenue, it was below the average for study hospitals of 1.3 percent.Bad debt was the highest in the county at $23.7 million or, 3.42 percent of operating revenue.

In a position paper from the CEO of Ozarks Community Hospital (OCH), Paul Taylor reports, “Before the Medicaid program was reformed in 2006 by reducing the number of covered beneficiaries state-wide and entirely eliminating certain benefits such as physical therapy and wound care, over 40 percent of our patients were covered by Medicaid.Following the Medicaid reforms, the percentage of our patients covered by Medicaid declined dramatically and we saw a corresponding increase in the percentage of uninsured patients.By September 2006, the percentage of uninsured patients seeking treatment in our emergency room (ER) had climbed to more than 50 percent.At OCH, given the fact that a large percentage of our ER patients were uninsured, and in need of follow-up care by a primary care provider, we created a primary care follow-up clinic.While we did not offer the care free of charge, we did not require payment at the time of service and we billed for the services provided at a substantial discount.”
St.John’s Regional Health Center (SMHS) provided the largest amount of charity care in Greene County at $9.3 million, or 1.51 percent of operating revenue, and bad debt was the second highest in the county at $21.5 million, or 3.52 percent of operating revenue.

At the time this report was written, St.John’s provided a general description of a future plan to conduct a medical management demonstration project to provide access to health care for adults (18-64 years of age) that suffer from chronic disease and have annual household incomes equal to or below 150 percent of the Federal Poverty level.The demonstration project will be limited to a maximum of 25 patients per quarter and 100 per year.Patients will be eligible for this project if they have utilized St.John’s provider network or ED in the past.Patients will be required to apply for enrollment, and make co-payments for care.Specific details on the type or amount of any additional payments required of enrollees were not provided.

Bad Debt and Charity Care – An Important Distinction
Individual hospitals and regions had higher percentages.Greene and Polk counties exceeded the aggregate percentage for study hospitals and the all Missouri hospital average for uncompensated care as a percentage of operating expense in 2006.Why is their uncompensated care so much higher? Exhibit 3 below shows the service area of hospitals located in Greene and Polk, indicated by a circle on the Missouri map.Many of the counties they serve are in the lowest per capita income category.

Greene County
Financial performance for certain hospitals in Greene County was also impacted.Charity care nearly tripled at Cox Health System (CHS) from 2005 to 2006 and bad debt increased by a third.2006 operating and profit margins were 0.90 percent and 2.47 percent respectively.Yet, in 2006 CHS had $476 million in reserves, equivalent to about eight months of operating revenue.CHS’s 2006 debt-to-equity ratio of 0.6 was slightly below the Missouri average.
Similarly, St.John’s Regional Health System provided the highest amount of charity care as a percentage of operating revenue in the county and bad debt increased 21 percent from 2005 to 2006.However, St.John’s was financially strong and, although operating results were affected, they were able to achieve a 7.3 percent operating and profit margin, well above state and national averages.Non-operating revenue was not reported by the hospital.In 2006, St.John’s had $350 million in reserves, equivalent to about five months of operating revenue, and a debt-to-equity ratio of 0.3, well below the Missouri average.

Also mentioned previously, Ozarks Community Hospital (OCH) experienced a large increase in uninsured patients resulting in a 52 percent and 7.5 percent increase in bad debt and charity care respectively from 2005 to 2006.OCH lost more than $2 million resulting in a negative (6.5%) operating margin in 2006.OCH’s low level of reserves fell to approximately $1.7 million in 2006, on average equivalent to less than one month of operating revenue.OCH had high levels of debt with a debt-to-equity ratio of 8.3, up from 3.0 in 2005, more than 13 times the state average.

Dear President Obama and guests of the President’s debate on healthcare reform

I believe it is possible to create a reformed healthcare system with the essential elements desired by both political parties. Please put aside partisan politics, pry open your hearts and minds and listen to what I am actually proposing. I say that because I have found that politicians seldom really listen. Instead, they translate what they hear into something they already planned to say.

We can provide universal healthcare to all U.S. citizens without adding to the deficit, while promoting individual responsibility and preserving a meaningful role for the private insurance industry. I call the system Americare. I know that name is already in use, but I like it.

1. At the center of Americare is a Medicare-for-all basic benefit package covering every U.S. citizen. [Please, dear Republicans, keep listening.] The total cost of providing care for every U.S. citizen for one year would be calculated at Medicare rates, divided by the total number of lives and discounted to 60%, creating a “single payer” annual premium. This premium would be the same for everyone and would thereby cover 60% of the cost of providing universal healthcare coverage. As with Medicare currently, the government would contract with insurance companies to serve as fiscal intermediaries to process and pay claims efficiently. The cost per life would be as low as possible because it would include everyone, including young healthy people who often do not pay for health insurance. This premium would be assessed against everyone but collected in a variety of ways. Those who are covered under Medicare or Medicaid would have the premium paid under those programs. Employees would have half of the premium deducted from their wages with the other half paid by the employer. Self-employed persons would be expected to pay the premium and those who do not would have it assessed against them as a tax. Those covered under unemployment would have this premium paid as a benefit. There would be no tax deduction applicable to payment of the premium.

2. The remaining 40% of the cost of covering every U.S. citizen would then be assigned to a system of payers very similar to the current hodgepodge of governmental and private insurance, and individuals. [Please, dear Democrats, keep listening.] The cost of providing coverage for this 40% “co-insurance” would be assessed based on individual and group loss ratios and risk factors depending on the nature of the coverage. Legislation would prohibit loss of coverage for pre-existing conditions and other nefarious insurance practices, but individuals with higher risk factors would pay higher premiums. If the patient will not quit smoking or lose weight, the premium goes up.

3. There would be no deductibles, but the 40% co-insurance would include mandated individual co-pays so that patients would pay something out-of-pocket each time they accessed healthcare. The individual co-pays would vary based on the underlying co-insurance. Medicaid beneficiaries might pay smaller co-pays than a patient covered under private insurance, but everybody would have to pay something. We cannot cover everyone without making everyone “feel” the cost of utilizing healthcare.

4. In addition to the basic benefit package provided through Americare, governmental and private insurance would be allowed/encouraged/required to offer additional benefits such as vision, dental, etc. A restricted, formulary-driven drug benefit would be provided through Americare and the rates paid to the pharmaceutical companies would be set by the Americare program, just as with all other healthcare providers. Expanded drug formularies would be available for additional premiums. Someone with money to pay for an expanded benefit package or “platinum” service would be allowed to find a willing partner to take his or her money.

5. Medicare would function basically as it does now, but there would be a tremendous savings over the current system because 60% of the Medicare “premium” would be based on the cost-sharing accomplished by putting everyone in the risk pool. The Medicare program would no longer be bankrupting the government. It does mean that young people would, in effect, be helping to pay for care of the elderly, but it is the fairest and most economical way of doing it. Someday those young people will be old. The state Medicaid programs would provide coverage for the 40% co-pay for covered persons—with coverage determined through a combination of federal and state mandates. Employer-funded groups would cover the co-pay through traditional commercial insurance. Self-employed persons would be required to purchase insurance through a newly created insurance exchange to cover the 40% co-pay. Individuals would also be allowed to “self-fund” the mandated insurance requirement through individual HSA investments. State Medicaid programs would be encouraged to create a virtual HSA account for Medicaid recipients to promote healthy life choices and to reduce over utilization. Those who reduced their co-insurance premiums would be allowed to choose additional benefits such as dental and vision coverage, education or child care.

6. In order to control the cost of care, it is important to include economic incentives for patients to reduce over-utilization and to maintain healthy lifestyles, which is why the premiums for the cost of covering the 40% would be based on individual rate factors. Insurers would still have financial incentives to develop innovative programs. Private insurance companies would be required to spend at least 88% of premium revenue on true medical costs (the so-called “medical loss ratio”).

7. In order to foster true competition among hospitals and doctors, Americare would mandate an “any willing provider” rule, but, since the pay would be the same for all providers, the competition would be for quality and efficiency of service. To maintain a level playing field, state and federal tax exemptions granted nonprofit providers would be phased out over four years—unless the provider was a true charity and received no money from patients for care.

8. The Americare program would create incentive payment programs to encourage quality and to create cost efficiencies. The program would encourage the creation of accountable care organizations, pooling providers into contracted affiliations rewarded for reducing the cost of care. Americare would mandate pay for performance incentives and would create economic disincentives for inefficient or poor quality care. However, instead of focusing reforms on mass-produced, “one size fits all” database-driven, mandated clinical pathways, Americare would promote the development of a nation-wide army of general practitioners, better trained and more highly compensated than specialists. Patients would be required to choose a general practice physician to supervise their care. These general practice physicians would be paid a monthly capitated rate for every patient assigned to them as the patient’s “medical home.” Chronic disease management and wellness care would be covered under the capitated rate, but acute care would be paid according to a fee schedule. The 40% co-insurance would not cover care accessed by the patient outside the medical home unless the general practice physician authorized it. Patients would be allowed to establish a medical home with any physician, but “home jumping” would be discouraged by financial disincentives.

9. There would be a four-year transition period to give private insurance companies and healthcare providers time to adjust to lower profitability.

10. Americare would be regulated by a national panel composed of representatives from all the stakeholders: patients, private insurance, governmental insurance, hospitals, physicians, CMS, etc.

Insurance and pharmaceutical companies will scream that they will go broke. The good ones won’t. They will make a rationale return for a legitimate service or product. Mega health systems will cry that they will close—that it is impossible to provide quality care on Medicare payment rates. No doubt less money will be spent on new facilities and new equipment for many years, but the healthcare delivery system will adapt and survive. Americare is one of those compromises that everyone would hate and complain about bitterly, but it would work.

Paul Taylor