Solving Health Care- Part 2

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Tue, Dec 30, 2008, 5:29 pm  //  Craig Mayberry

One potential solution for health care that has not been discussed is changing existing laws such that communities can set up a local health care authority (LHCA). A LHCA would serve a local community and be owned by the community in the form of a Co-op or other structure that is independent of government or for-profit business interest. The only way to solve the health care crisis is as a community and the community should own the organization. The LHCA would cover all medical issues in the community, regardless of income, employment status, etc. The LHCA would only be responsible for covering residents of the community. This would eliminate the current health insurance system and replace it with a local solution.

Governance Structure
The LHCA would be governed by an executive director that would report to a board of director. The board would consist of the following: 2 elected officials, 2 doctors, 1 hospital administrator, 2 business owners, 1 nurse, 1 medical administration person, 2 community citizens. The board members would be elected by the people they represent. All of the doctors in the community would elect the 2 doctors on the board. All of the nurses in the community would elect the nurse on the board. All of the citizens would elect the 2 board seats for citizens, etc. The structure ensures that the board is represented by all of the key stakeholders and all have a say in the operating decisions of the LHCA. Board meetings would be held regularly and would be open to community members.

There would also be at least two committees, one made up of doctors that would determine medical policy and procedures and make recommendations to the board. The other committee would be made up of an equal number of doctors and citizens to handle any malpractice issues as the first step of avoiding the court system. If a problem arises and a patient has an issue with the actions of a doctor it would go to this committee for resolution, including any monetary award.

The board of directors would be required to have an annual meeting where all members of the community can come and get updated on latest financial information, performance data, and address any issues. The board would also be required to mail periodic statements outlining financial and performance data. The board is ultimately accountable to the members of the community, all of whom will use the health care services.

Cost Structure
Revenue to the LHCA would come from a number of sources. First, any money currently being spent by state government, local government, and businesses on providing health insurance would be redirected to the LHCA. This would provide a bulk of the money necessary for operations. Any shortfall between this amount and what is necessary to pay expenses could come from a couple of potential sources. One option would be co-pays from those that use the system (potentially a sliding scale to account for income), another option is a tax (or required monthly insurance payment) from local business or citizens. The board of director would be responsible for figuring out the amount and method of gaining additional revenue when necessary.

The LHCA would then turn around and arrange agreements with local hospitals and private doctors for payment for services. Contracts would be established to set pricing and reimbursement rates. Doctors would have the benefit of not dealing with multiple insurance companies and dealing with only one organization for payment. Doctors would remain private entities and the hospital could be a for-profit or non-profit, but almost all of their business would come through the LHCA. Any medical procedures that require the patient to get treated outside of the local community would be contracted for and paid for by the LHCA. The LHCA would also be responsible for prescription drugs and would make arrangements with local pharmacies for payment, similar as to doctors. Any “profits” made by the LHC over and above what would be necessary for reserves would go back to the organizations or people that paid into the system.

Primary Changes
There would be no health insurance companies doing business in the local community as the LHCA would be responsible for collecting the revenue and making payments to doctors. Citizens would only have to deal with the LHCA for all issues, which would be a much smaller and local organization, much different from having to call a 1-800 number to somewhere else to get issues resolved. There would be no real change for the doctors, other than only having to deal with one organization for payment instead of multiple insurance companies. Processing could be streamlined to minimize overhead, which frankly is a big deal. Patients would be able to see any doctor they wish as all doctors in the community would be contracted with the LHCA.

The benefits are many fold, but the main ones are a reduction in overhead and streamlining of the process which would then be used to reduce cost and cover more people. The second benefit is that the system is run by local people for the benefit of local people. I have never understood the assumption by many people that a national system would be more efficient. There is no reason to tie Bellingham’s health care system to Florida or California, with the exception of some services. There is also not any economies of scale so bigger is not necessarily better in the health care system.

I recognize that it is hard to cover every scenario or question in a few hundred words, so questions and issues are appreciated. This is a big change from the current dialogue around solving health care issues, but the changes are not that radical that it could not be done and it does solve all of the fundamental concerns that critics of the other proposals have expressed.

Tip Johnson  //  Thu, Jan 01, 2009, 3:58 pm


I’m surprised that your thoughtful articles have not evoked more response.  Health care is not my area of expertise, but it sure was a big issue in the last election.  It is becoming both more urgent and difficult as our aging demographic collides with a collapsing economy.  I guess everyone here has good health insurance?  If so, please drop me a few hints!  Looks like Gregoire will have to gut the state program.

I like the concept of a local authority.  How such things are organized will likely be subject to lively debate.  That’s a debate we ought to get started - which is why I’d hoped for more response.

On the subject of the economy, I have been recently pitching the need for “bottom up” approaches in the wake of “trickle down” failure. However, current corrective measures are still very “top down”, shoveling money back into the chimneys that smoked the last batch. On an optimistic note, Obama has already stressed the need for “bottom up” strategies in education.  Maybe localization can apply to successful reform in the economy, education and health care?

The Mondragon Cooperative Corporation has already accomplished much of this, localizing finance and management of production, integrating education and building an internal system of social services, including health care.

I’d be curious as to your thoughts on this type of approach and thought you, particularily, would be interested in this.

Bob Aegerter  //  Fri, Jan 02, 2009, 4:53 pm

Although I cannot find a URL now, The New York Times had a long article in their Sunday Magazine a few months ago.  It pointed out that there any many problems with health care in the United States and solving only one of them will not be satisfactory.

How to build a coalition strong and big enough to legislate solutions to several problems will be a perplexing problem.

We get the government and the health care that we are willing to work for.

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