I’ve been thinking a lot lately about our health care system in America, and why it works well in some areas, and sucks in others. Because of this, I’ve come up with a new way to look at health care, well at least new to me. Let me tell you how it goes.
Imagine in the future, there’s this middle aged guy. We’ll call him Fred. Fred is married, 46, and has two children. He has a job which he has kept for the past 12 years, even in this recession. He is mid/upper level management, and his prospects for higher management look good. Because his wife is at home with their children (ages 12 and 8), they live off his income alone. They own a house, and a few investments, but they do not have a lot of capital otherwise.
When Fred goes to see his doctor for a routine physical, he gets a surprise: he appears to have heart disease, and looks to need a double-bypass. Fred is shocked, but not worried. Fred has been making regular payments for his health care to the government (as a part of his taxes), and his company also has paid for a supplemental health insurance. Fred didn’t have to pay for either. Just by being a citizen he is automatically granted access to quality medical care. However, his company’s payments to the government are not for nothing. They have given him access to speedier care.
So after calling his wife, and telling her the news, Fred calls his health insurance agent.
What? You are thinking. Why would he call his insurance agent? Well because his health insurance agent actually works for Fred, and his job is to find Fred the best deal on fixing his heart.
The agent glances at Fred’s payment history, and policy, and sees that he is insured for up to $200k on a one-time procedure, (long-term care is much higher, as this is good insurance). Downloading Fred’s data from Fred’s doctor, the agent sends out a query to the local hospitals. (patient X, with this medical history, and these symptoms, is looking for Y procedure, by Z date. Budget under $200k) Immediately he gets back lots of responses. The agent tosses the ones from India (cheap, but Fred wants to be near his kids of something should happen), and the ones from the hospital two towns over (the price is right, but their staffing levels are in decline), and finally settles with three different proposals, which he emails to Fred with his notes on top. Fred glances at the offers, and looks though his agent’s notes.
The first proposal is from the local hospital, and their ratings are pretty good for second class rooms. For a small co-pay, he can get bumped up to a first class room, and get a surgeon with a slightly higher rating. Fred has played golf with the surgeon before, and was not too impressed, but the price is good. However, the timing isn’t. Their first opening, at this price, is in two weeks. Since it’s near the end of summer, Fred wants his procedure done in time for the family vacation three weeks away. He makes a note to his agent to ask what the additional costs would be to have the surgery done next week.
The next proposal is from a teaching hospital in the nearby big city. The price is cheaper, and there will be lots of over site. All those eager-to-prove-themselves interns will be looking over his chart for any flaw. The actual procedure will be done by one of the school’s best instructors (who has an excellent rating), as a part of a lecture on heart surgeries. The actual surgery will be in two days, which is quick for the price. The procedure will be perfectly safe, even though it will be observed by hundreds of students, as the school’s surgery has one of the highest ratings possible, especially on infection prevention. However, Fred thinks he would like a bit more privacy when getting cut open.
The last proposal is from a hospital in Southern California with excellent medical procedures, but only average room service. Because this hospital is located by several excellent hospitals, local competition has become fierce, and the hospital has had to partner with other companies to sweeten the deal. The advantage for this proposal is that the package includes round trip airfare for the whole family, and a week long pass at Disneyland. Hotel costs are extra, but almost every thing else is covered. If he can deal with slightly poorer room service, Fred can get his surgery next week, and his kids can get a summer vacation they will never forget.
Some nuts and bolts:
First off, every medical procedure is rated, from cleaning teeth to major surgeries. Ratings are made available by government on the internet, and are sorted by doctor, location, cost. etc. Hospitals, and other places where medical procedures are done, are also rated.
Likewise, every doctor is rated, both by specific procedure, and an overall rating (much like an ebay trader rating). Ancillary data, like surgical infection rate, is also attributed, albeit not directly, to them. In exchange, doctors can no longer be sued for malpractice. They can be sued for other things, like neglect, or malfeasance, but the burden of proof is lies with the plaintiff, and the standard for proof is high.
Patients are free to contract with any doctor, nurse, medical practitioner, or health organization (like a hospital or medical group), as long as they are licensed. The federal government pays a fixed minimum amount for almost every procedure (at a rate with is set locally, and is updated periodically). Doctors (health organizations, etc.) can charge whatever they want over that minimum, but half of the overage must be paid back to the government. Because there are some patients who are too poor to pay over the minimum, doctors who have 50% or more of their patient load as these “government only” patients, receive a healthy tax credit. A doctor who sees 90% or more of “government only” patients may be eligible for a reduction in their student loans.
One of the big price points is immediate access. The sooner something is accomplished, relative the to time of asking, the more one pays. Getting an appointment with your doctor for a routine check-up may cost nothing two months out, but cost an additional $100 co-pay if done tomorrow. Some patients may opt to collect a re-booking fee from their doctors if a rich patient wishes to buy their time slot.
Health insurance companies can no longer can tell you what procedures you are eligible for. Instead, they determine what you have invested with them, and what they think they can expect to get out of you. Patients may pay for $10k policies or $10 million policies, depending upon their need. What insurance companies can do is put together package deals, and broker your medical needs, much like a travel agent. They will have a vested interest in keeping the overage costs lower because then they will pay less. This will help to keep overall costs lower.
The government minimum is available for every citizen, and for most medical procedures. Some procedures, like cosmetic plastic surgery, will not be paid for unless it is part of a medical emergency. Illegal immigrants can also use the health care system, but they have to make a small co-pay with every visit, and always receive the lowest priority on appointments.
Money for this program comes in part from overage fees, in part from licensing fees, but the majority of costs are paid by taxes.