THE PEOPLES PLAN FOR HEALTH CARE


The People cannot afford to have the Government run health care and with all the debates going on, the People cannot attempt to understand exactly what proposals are on the table. So the People have decided to accept President Obama’s invitation to present alternative plans.

Any health care program is going to take decades to implement but we can define our goals today and develop the objectives to complete the implementation to meet them.

All that is required to meet the goals is a solid infrastructure accomplished through information technology and supply chain management. These two components put everyone in the health care industry on the same level while drastically reducing costs. This is a one time investment by the government providing decades of stability.

Here are our simple goals

Goals:

1) Control/Reduce Costs

2) Insure Everyone

3) Train Everyone

So how do we accomplish our goals?

Until I listened to Dr. Weil recently, I was totally against any form of “social” medicine. But as I heard Dr. Weil explain that for centuries healing the sick and afflicted was a social effort – an environment where those with the skills, knowledge and/or resources provided their services for a modest fee. This thought jolted my concept of social medicine – but not completely!

There is some part of me that realizes there might be social value when a group of people use their resources to strengthen their community. All too often we mentally view money as the tool to strength our community but there’s more to a strong community than money.

Sick people weaken the community AND the economy. If people can’t work, they are a burden to the community even if they only miss 1 day of work their employer loses money. So maybe, just maybe there is some economic value to helping the sick. And it doesn’t make sense that only the wealthy can afford health care. But we have to find a way to control and reduce costs before we start paying out of our pocket to help others.

1) Control /Reduce Costs

Costs are reduced and controlled by creating a common IT infrastructure that streamlines operations. This builds a foundation where all providers start at the same point and compete based on quality of service. We the People, through taxes, must pay the initial cost to build the foundation, but it is self supporting for the long term.

My 30+ years experience developing IT systems, primarily for procurement, customer service and sales automation provides the background to identify with problems in the health industry.  A quick Internet search reveals these types of stats:

  • Today, only about 8% of the country’s 5,000 hospitals and 17% of its 800,000 physicians use electronic medical
  • Studies done by Harvard, RAND and the Commonwealth Fund peg the cost of the digitization plan between at least $75 billion to $100 billion, according to the CNN article.
  • However, the health care industry spends $2 trillion dollars a year, so the $100 billion may be well worth the long-term savings.
  • David Brailer, the former National Coordinator for Health Information Technology, who worked under President Bush from 2004 to 2006, expects the computerized system to save the industry $200 billion to $300 billion a year.

If computerized medical records alone can fetch a $300B dollar savings, what could be done by standardizing the primary functions for the entire industry?

The health care industry comprises only 4 simple partners: Patients, Providers, Insurers, and Suppliers. We are the patients, hospitals, doctors, and clinics are the providers, big corporations are the insurers and drug companies are the biggest suppliers but there are also thousands of smaller companies providing beds, chairs, needles and gloves. Compared with other industries health care is a pretty simple organization to standardize.

Kaiser Permanente is the largest provider in the U.S. and invested $3-$4B automating their processes for patients and providers. Since Kaiser is also the insurer, they have a tight, closed circle where they can control the outcome. Automating health care records of an entire industry is quite a challenge but it can be done and, at least from a cursory perspective, attain billions of dollars of savings.

Simple Math: If national health spending is expected to reach $2.5 trillion in 2009, and the above two examples show $600B in savings, shouldn’t the cost of health care be reduced by 24%? This would reduce the family plan from $13,375 to $10,165.

  • 46M Americans have no insurance
  • 255M Americans have Insurance

Using the above numbers, the 255M Americans are spending $3.4 trillion @ $13,375 each. It would cost $615B to insure the uninsured. (The government should have added this to the economic recovery program and we wouldn’t be fighting over it today!)

2) Insure Everyone

If every American paid $201 per month, the uninsured would be insured. But this doesn’t solve the problem long term, and very few of the 255M Americans can afford $201 per month. The government can allow Americans the choice of paying into a fund for the uninsured via pre-tax deductions. It would be easy to calculate a pro-rated chart whereby those that make more can pay more. By providing a choice we eliminate the debate from both political parties.

“The average cost of an employer-provided family plan is now $13,375, up 5 percent from 2008, according to a new report by the Kaiser Family Foundation and Health Research & Educational Trust.”[1] (Note: Kaisers number doesn’t work with the numbers below. If there are 255M with insurance @ $13,375 each, $3.4 trillion is being spent in 2009.)

National health spending is expected to reach $2.5 trillion in 2009, accounting for 17.6 percent of the gross domestic product (GDP). By 2018, national health care expenditures are expected to reach $4.4 trillion—more than double 2007 spending.

National health expenditures are expected to increase faster than the growth in GDP: between 2008 and 2018, the average increase in national health expenditures is expected to be 6.2 percent per year, while the GDP is expected to increase only 4.1 percent per year.

In just three years, the Medicare and Medicaid programs will account for 50 percent of all national health spending.

Medicare’s Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures this year than it receives in taxes and other dedicated revenues.  In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays for physician services and the prescription drug benefit will continue to require general revenue financing and charges on beneficiaries that will grow substantially faster than the economy and beneficiary incomes over time.

According to one study, of the $2.1 trillion the U.S. spent on health care in 2006, nearly $650 billion was above what we would expect to spend based on the level of U.S. wealth versus other nations.  These additional costs are attributable to $436 billion outpatient care and another $186 billion of spending related to high administrative costs. [2]

Assume we automate medical records and standardize the processes between all the partners in the health care industry. The industry would now be on a level playing field. All providers, insurers and suppliers would be providing the same service and compete solely on the basis of customer service. What a novel idea!

Competition is the very heart of the free enterprise system. If every industry had a standard set of processes and procedures when they started in business, they would be quickly weed out the inefficient businesses and the customers (and suppliers) would be much more financially solvent.

To some this may not be viewed as free enterprise, but capitalism is still the primary factor in the equation of success versus failure. This proposal does not alter capitalism based on the following definition:

Capitalism typically refers to an economic and social system in which the means of production (also known as capital) are privately controlled; labor, goods and capital are traded in a market; profits are distributed to owners or invested in new technologies and industries; and wages are paid to labor.[3]

Every aspect of capitalism – the right to run the business as private interest desire – is still in tack. The only new ingredient is the requirement of the private interests to operate based on a predetermined set of operational conditions. This is a very standard practice within every other industry. When a supplier wants to be a vendor to Wal-Mart, the supplier must conform to a predefined set of rules, processes and procedures. In the health care industry, the patients (i.e. taxpayers) are the customer and we demand those who provide our health care conform to rules, processes and procedures that meet our requirements and objectives.

It is conceivable the savings simply from IT would grow to over $1T dollars – and cost at least that much to implement.  In the economic recovery act, the government authorized $1B for the formation of National and State agencies whose sole purpose is to educate the providers on their electronic medical record options. These dollars should be spent to create a team of IT professional who understand how to evaluate the health care industry and present a solution. The evaluation and requirements phase must be completed in 12 months.

The second phase would be application development. Normally this would take 5 years however since there is a successful model (Kaiser), we should not re-invent the wheel, but acquire their system and spend 1 year modifying their application for a broader range of options. This would include processing patients through multiple providers, pharmacies, etc. (because Kaiser does this all within their organization, their system is not designed to support 3rd party groups.)

Training would begin towards the end of year 2 and extend into year 3. New hardware, software and network infrastructures would also be installed in year 3.

3) Train Everyone

Healthcare cannot continue down the current path of healing sick people. Health “CARE” is taking care of people so they don’t get sick. This effort should start with adults, but we all know the difficulties of getting adults to change their habits. So we start with children and wait a couple of decades before we see any results. But it’s a start.

I don’t know the differences between PPO, HMO and all the other types of plans available but there should only be 1 plan – PREVENTION! Everyone must receive regular checkups. I’ll let the doctors decide what types of tests and how often for every age group, but these checkups must be mandatory. Monthly premiums should be adjusted up if you miss your checkups. And if you don’t follow the advice of your doctor(s), then your premiums continue to rise. Smokers, over and underweight people and any other group should have to pay additional fee’s each month to cover the cost of being unhealthy. Insurance premiums should also be adjusted based on the number of people on the plan. It is not fair that a family of 10 pays the same rate as a family of 2. If you can’t afford the health care for 10, then try birth control.

SUMMARY

Once the decision is made to create a financially self-sustaining model, the People (patients) would benefit forever. The government would pay to create and deploy the first system with each of the parties in the health care industry paying for its maintenance and support as a cost of doing business. All the work – short and long term- would be provided by a for-profit company or even a consortium of businesses.

The scary part for all lobbyists is the resulting systems would allow the People to negotiate prices and service levels!

Imagine a health care industry where the People decide which insurer they want, which provider they want and what drugs they want based on the service of the provider – not the price!


[1] http://www.kaiserhealthnews.org/Daily-Reports/2009/September/16/Benefit-Costs.aspx

[2] http://www.nchc.org/facts/cost.shtml

[3] http://en.wikipedia.org/wiki/Capitalism

One comment on “THE PEOPLES PLAN FOR HEALTH CARE

  1. 10/04/2009 Nadine

    Super post, Need to mark it on Digg

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