Toward an Effective and Sustainable Healthcare System

The author, who has come up with a sample set of principles to guide our healthcare system, also identifies the 15 biggest problems facing our dysfunctional system

January 19, 2011 -- Unless you were an insurance company, you desperately needed healthcare reform last year. Despite health plans lobbying to defeat reform using more than half a billion dollars of our health insurance premiums, money that should have treated our loved ones instead of fighting to treat no one, reform became law.
 
Despite the partisan obstructionism, health insurers will be required to actually provide the insurance that they promised when you signed a contract and paid a premium. Despite the court challenges, reform should prevail.
 
Why? Because mandating that Americans pay for something that they already receive is constitutional. Even if you never call your police or fire department, you still must pay the taxes which support your safety net. Did you read about the fire department that watched a home burn down because the owner didn't pay the optional fee for fire service?
 
Federal law requires that every patient coming to an emergency is given emergency healthcare, even if they refuse to pay for it. This emergency room safety net also has a price, currently paid by those who work there and those who buy insurance. Our government created this inequity and only our government could fix it. It is long past due for every American to pay for their fair share of our healthcare system.
 
Americans need more reform than became law, but we got several reforms that we needed.
 
Health plans must spend at least 80% of the premium dollars that we pay them for healthcare (at least 85% for group plans). This means that the plans currently spending only 65% of premiums on our care must spend at least 15% more on healthcare and less money on administration, costly executive management, shareholders and lobbying. A large insurer notified shareholders to expect lower earnings. What is not so good for insurance company shareholders tends to be much better for policy holders. Every absolute 1% in combined spending by all private health insurers equals one billion new dollars for care or, under the new law, a refund to policy purchasers.
 
Rescission is prohibited. Something was very wrong with our system when health plan employees received bonuses to find anything that a woman newly diagnosed with breast cancer might have forgotten to put on her insurance application. These women found their insurance rescinded for having had a nosebleed, or something equally minor and unrelated to their cancer. They then had no insurance and could not buy new insurance. Sometimes companies had collected premiums for years and when it was time to pay, abandoned these women to die. Rescission is no longer permitted.
 
There are no pre-existing condition exclusions. During the reform debate last year, one insurance company denied the hospitalization of a newborn baby who was overweight at birth. The insurer called it a pre-existing condition. In a newborn baby? Within a two week period, a different newborn had an insurance denial for being underweight as a pre-existing condition. Only perfect babies were insured? If the insurance companies weren't so brazen in the violations of their responsibilities, even in the middle of the reform debate, reform might not have passed. Now no one can be denied care for pre-existing conditions, not even newborn babies.
 
Reform included several other benefits, including carrying children on a parent policy until age 26, caps on out-of-pocket expenses, preventive care, and state insurance exchanges (if your state favors constituent health over politics and insurance company profits).
 
As a start on reform, this was an incomplete and potentially expensive way to go. Paying for this portion of reform will require additional reforms. We got an individual mandate to purchase insurance, but in name only. An effective mandate would require a penalty comparable to treble damages, perhaps three years of income-adjusted premiums. A penalty of one or two monthly premiums will not compel anyone to buy insurance. The argument that the mandate is unconstitutional is misguided. The mandate is not a mandate to buy insurance. The mandate is to pay for insurance that the "uninsured" already have, but is currently paid by others, those who treat the "uninsured" and those who do buy insurance.
 
We also did not get a fix to the SGR (Sustained Growth Rate), the biggest factor leading to the impending bankrupting of our healthcare system. This 1997 Congressional "fix" to rising Medicare costs that we could not afford, reduces payment rates to physicians and other care providers every year that costs exceed an arbitrary percentage. Congress has postponed the proposed cuts each year for several years. Less than one month after President Obama signed the reform legislation, Medicare payments were cut by about 20%, to a level below the cost of treating Medicare patients. (Congress reversed the SGR cuts three times in the months that followed, but without a permanent repair or repeal.)
 
We cannot get the reform of our healthcare system that we need by using the same processes that created our dysfunction in the first place (Einstein paraphrased). Using the existing political process and applying it to the negotiating table tilted heavily in favor of the health insurers will only give us similar incremental, but insufficient changes. We need real reform, beginning with the process that performs reform. We must first define how our healthcare system should work, how it should look. Once we know that, then we need to define the principles which support that system. Only then should we define the policies (through legislation and regulation) that constitute reform, avoiding policies that violate our principles.
 
To learn more about why our system is so broken, a sample set of healthcare principles, and the 15 biggest problems in our dysfunctional healthcare system (four of which were partly addressed by reform), please review the 8-page, non-partisan "Blueprint for an Effective and Sustainable Healthcare System."
 
Dr. Larry Ozeran is chair of the Yuba-Sutter Healthcare Council, a consortium of healthcare providers, insurers, educators, economic and workforce entities. He has been involved in healthcare policy for more than 15 years. He has been a practicing general surgeon for 18 years and a health informatics professional for 20 years, and is currently an associate clinical professor at the University of California, Davis with an emphasis on organizational and policy issues in health informatics.
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Comments

The California provider organization's principles (link from Dr. Ozeran's article, above) correctly point out a number of the flaws in the consumer's and insurer's views of our "system". I'd submit that these principles gloss over the need for accountability by the providers of health care (physicians and hospitals, especially, since the principles are written by and for a provider organization) for the over-selling of services including the technology advances discussed, and for failure to allocate resources to improvement of quality and safety of care, in proportion to the large revenues to health systems and some physicians associated with advances in technology (and marketing). The glib principle #1, that we will indeed all die, does not help us take this as seriously as we otherwise might. Unfortunately this comes across as sophisticated finger-pointing without accountability appropriate to its source. It does not help the discussion become more productive.

I agree that mechanisms for some of the protections in the health insurance bill are desirable and necessary, the real problem is our health delivery system and the associated costs. For regular and expected services, we should be able to shop and compare costs for these services with quality outcome indicators. We should not be encumbered by insurance since insurance is to protect us from the unexpected costs and protect our financial assets. I will use the example of a physical exam with blood screening. Every office that chooses to do those would be required to list their charges. Since customers would pay these costs out-of-pocket (except the impoverished) they could have the services done at Walmart or anyplace that provides these services. All information would be entered on your comprehensive medical records that you own access to and can share access with any medical provider. The impoverished would be required to use the local county health service for routeen screening. Insurance coverage would be sold on a guaranteed issue basis (open enrollment limited) for those who can afford it and provided for those that can't based on a national standard of established covered proceedures. This would be used for treatment of defined sickness and injuries. Any private market could sell broader coverage but the "basic" plan would be provided to all and all companies would compete on the basic plan in their service area. At all levels, the cost of basic proceedures would be required to be listed and a full listing of charges for all services provided be given upon leaving the facility except for emergency situations. Customers would be able to review the cost of services and make arrangements for any copays at the time of leaving the office. We need to make the cost of care transparent and expose the inefficiencies. Physicians would be protected from doing unnecessary proceedures by a standard of care defense for professional liability judged by a removed professional review panel. If the standard was met no liability would be awarded and no direct legal involment. Let us work together to bring production efficiencies to our healthcare system.

Thanks for the thoughtful commentary. However one of your presuppositions was illogical; because Congress passed Medicare which was unconstitutional, they had to pass the Emergency Medical Treatment Act in 1986 forcing free assessment and treatment upon Emergency Rooms which was unconstitutional and to fix the problem of high costs from subsidizing the free treatment Congress had to pass ARRA which therefore, is constitutional. Perhaps Congress should ask themselves if they have the constitutional authority to pass laws before they legislate them. There seems to be a pattern we can learn from: Medicare, the Emergency Medical Treatment and Labor Act and ARRA are clearly outside the boundaries of "Regulating Commerce". However, we continue to justify Congress's increased power and authority over us individually trying to resolve the problems their desire to impose and control created in the first place.

According to the Oregon insurance department, the 7 largest insurers are already well over the 80-85% medical loss ratio, so don't hold your breath waiting for that refund check -- see Pg. 30 of this report: http://insurance.oregon.gov/health_report/3458-health_report-2011.pdf And recission in cases of FRAUD is still legal, and exceedingly rare - a hot headline / hotbutton issue, but seldom actually happens. And I agree with previous poster - medical spending is still a wild card, very little in reform bill to curb it. The more people - and risk - and "preventive" scans - that we want health coverage to include, the more we will pay for it.