Real Health Care Reform

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Fri, Nov 27, 2009, 10:00 pm  //  Craig Mayberry

This is a reprint of one of my earlier posts on health care. The issue is more timely now and I thought I would re-enter it into the discussion. The current health care bills before the House and Senate are not really reform, but an expensive continuation of our current system. Although I appreciate many politicians constant shining of positive light on the current efforts, the reality is that at this point it is mostly political show with each party trying to protect their own power and advantage; we are no longer talking about health care. When the logic becomes 'passing a bad bill is better than passing no bill,' you know the politicians have lost their minds. There are many reasons for the current situation, but rather than dwell on the past, we need to start finding solutions to our health care crisis that will actually solve the problem. It may seem like a radical departure from previous conversations about health care reform, but fixing systems usually requires radical solutions and not simply trying to tweak the status quo.

One potential solution for health care that has not been discussed is changing existing laws so that communities can set up a Local Health Care Authority. The LHCA would serve a specific 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 who would report to a board of directors. The board would consist of: 2 elected officials, 2 doctors, 1 hospital administrator, 2 business owners, 1 nurse, 1 medical administrator and 2 citizens of the community. 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 citizen members, etc. This structure ensures all the key stakeholders have representation on the board 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 who would determine medical policy, procedure, and make recommendations to the board. The other committee would be made up of an equal number of doctors and citizens who would handle any malpractice issues as the first step toward avoiding the court system. If a problem arises and a patient has an issue with the actions of a doctor, they 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 could be updated on the 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 the state, local governments, or businesses on providing health insurance would be redirected to the LHCA. This would provide the bulk of the money necessary for operation. 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 who use the system (potentially a sliding scale to account for income), another option is a tax (or required monthly insurance payment) from local businesses or citizens. The board of directors would be responsible for determining the amount and method of gaining additional revenue when necessary.

The LHCA would then 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 dealing with only one organization for payment and not with multiple insurance companies. Doctors would remain private entities, and the hospital could be a for-profit or non-profit, but almost all their business would come through the LHCA. Any medical procedures requiring treatment outside the local community would be contracted 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 to the arrangement with doctors. Any “profits” made by the LHCA over and above what would be necessary for reserves would go back to the organizations or people who paid into the system.

Primary Changes
There would be no health insurance companies doing business in the local community because the LHCA would be responsible for collecting the revenue and making payments to doctors. Citizens would deal with the LHCA for all issues, which would be a 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 costs 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 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. Also, there are not any economies of scale, so bigger is not necessarily better in the health care system.

I recognize 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 so radical that it could not be done, and it does solve all the fundamental concerns critics of other proposals have expressed.

Tip Johnson  //  Sat, Nov 28, 2009, 5:31 pm

I strongly recommend folks listen to T.R. Reid’s Seattle Town Hall Speaker’s Forum. Reid authored “The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care” after studying heath care in various nations of the world. The talk he gave did the best job I have heard of outlining the different systems and targeting why ours works so badly.

He describes four basic models:

The Beverage Model, named after Lord Beverage, commissioned by Winston Churchill to develop the British system.  This is socialized medicine, similar to our Veteran’s Administration system.

The Bismarck Model, also set up after the war, but for Germany.  It follows the private system used here when employers pay a share of the employee’s premium.

The Canadian Model, a national system, but the service providers are not government employees as in the Beverage system.

The Out-of-pocket system also prevalent here, but mainly used in the world’s poorest nations, where there is no safety net and you only get the health care you can pay for.

One of his most adroit observations is that, except for the out-of-pocket system, any system applied universally cuts costs by about half and provides better, more reliable care.  The reason our lower quality care costs twice as much is because we use a patchwork system including all of the above.

Another interesting observation concerned administrative overhead.  Again, in other systems, administration adds at most 5% to costs.  Not so in the US, where administration adds an average of 25%.

Finally, he allows that universal single-payer is not necessarily the best, that some of the best care in the world is provided by private insurance companies.  The difference is that every other nation with a system has decided that health care should not be a for profit marketplace commodity and that all citizens should have equal access to equal quality care.  Private companies under this precept are more strictly regulated, as we now regulate gas and electric utilities, for instance.

Anyway, after visiting something like 190 countries, he does a lot better job explaining it than I can.  Take a listen.

Doug Karlberg  //  Sat, Nov 28, 2009, 7:42 pm

It is not a matter of “us” listening. Until Congress listens, or the President takes Congress behind the woodshed, publicly, nothing much will change.

Congress has some of the World’s experts at its’ disposal, and the two bills produced today, is more of the same.

Campaign contributions are corrupting the political elite from taking care of us, before they take care of themselves.

The bills before Congress force everyone to obtain insurance or be fined, or jailed. What kind of insurance, PRIVATE 24KARAT GOLD PLATED insurance, from private companies with no limit as to what they can charge.

This is not free market capitalism, this is cronyism.

The single largest avoidable savings that can be wrung from our system is tort reform. Doctors practice defensive medicine, in fear of attorneys.

A Democtaic Congress will never control this cost, as it will cost them campaign contributions. It doe not help that the over whelming majority in Congress, and the White house ...

... are also attorney’s.

This issue has been studied to death, and there are a variety of changes that can be made that would change our system for the better.

The changes needed are clear. There are too many systems in the world that have been studied to death, for us to plead ignorance.

Pleading corruption, would at least be honest.

We will never get affordable and efficient medical care in the US, as long as we leave the current Congressional members in control, as they have now proven that they are not capable of putting the citizens first.

I honestly hope they lard the current bill up with pork and pass it. It may take a crisis to break the logjam preventing efficient health care that is affordable, and passage of this bill will create the crisis.

I just hope that the proponents of this bill, will admit its failures and join together to pass real reform, that we desperately need.

They say a crisis shouldn’t be wasted.

There is one in the making.

David Camp  //  Sat, Nov 28, 2009, 10:15 pm

I’ll add my depressing 2 cents worth - The Federal Government of these here United States of America is utterly corrupt. It operates for the benefit of wealthy corporate interests and the military. It regards the American people as useful only insofar as they can be fleeced. Its police agencies, secret and otherwise, are racketeers, and its minions lie as a matter of habit.

It will never pass any health care bill which does anything to threaten the status quo. And any health care bill which passes will be cumbersome, inefficient, expensive, and corrupt. All of the earnest efforts of tens of thousands of citizen volunteers for health care reform are given the back of the hand by Max Baucus smirking as he stage-manages a show of hearings, where dissenters (we want single-payer healthcare!) are arrested by uniformed thugs.

I can’t believe this country ever had a revolution. The tories are in charge and they’re worse than the Brits ever were.

And the handsome fellow in the White House is on the payroll, always has been. He could never have been a candidate otherwise.

What a pathetic end to a remarkable experiment, killed by greed and unjust dominion and institutionalized sociopathology.

I think the only solution is abdication (the Amish tactic)- don’t deal with corrupt corporations, don’t pay federal taxes (the hard way - by reducing income), and definitely don’t watch TV, which is the most subtle and malevolent and sophisticated of mind control systems. (Control by distraction).

Consider this: what benign institution spends trillions on agressive foreign wars, but won’t look after the health of its citizens? Gives trillions to corrupt banks that created a financial crisis, and allows them to charge the poorest over 400% interest rates? And gives hundreds of millions of dollars in subsidies to corporate farmers to grow unhealthy food (creating an epidemic of obesity and diabetes), but makes illegal a benign plant which requires no pesticides and was grown by Thomas Jefferson and George Washington?

Things are pretty good in our little green and furry corner. But the tentacles of corruption are growing, not shrinking, despite Mr. Hope & Change. False hope and change only of the hired help.

People don’t want to believe their government holds them in contempt. They want to believe the fairy stories they were told in school. Someday, maybe, they’ll wake up to the sad reality and our wall will fall.

Aaron Brand  //  Sun, Dec 13, 2009, 9:26 pm

This is a great idea.  I don’t think there is anything in the current version of the senate bill that precludes the creation of such an organization.  I may be wrong, but I’m pretty sure that a co-op can become part of the exchange, as long as it meets the requirements set by the commissioner.  Now is the time for a change in the status quo, if there has ever been a time.

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