Healthcare Crisis Solution - Letter

During President Obama’s mid-term State of the Union address, he issued a call for ideas about how to heal healthcare. The following is a letter I sent him. I have no idea who read it, all I heard back was a form letter. But this outlines the basic ideas I think could cure our healthcare system. Please let me know what you think. Thanks. 1/30/10

President Obama 1600 Pennsylvania Ave Washington DC,

Dear Mr. Obama,

You issued a challenge during your state of the Union speech that I’d like to accept. I have been in practice now for over 25 years and have spent a considerable amount of time thinking about the terminal illness that is afflicting our healthcare system and how to treat it at its root causes.

Unfortunately the root causes of the healthcare crisis, as I see them, are beyond the reach of public policy. But public policy is what we have to work with and the right public policy can create the right environment and motivation for the healing of the healthcare system.

I believe that the solutions I’m about to propose would give all Americans good coverage, fix Medicare, the VA and DSHS, lower the cost of healthcare, keep the paying for healthcare in the private sector, keep competition and innovation alive, allow everyone to have the physician and hospital of their choice and motivate Americans to live healthier lifestyles. Please bear with me as I explain because, like the solutions to most complex problems, these ideas cannot easily be reduced to sound bites.

I believe that universal access to healthcare would not only benefit individuals but also society as a whole. This puts access to healthcare into the same category of social needs that we as a society traditionally meet through social solutions, e.g., public roads, public water, libraries, public education, electricity, trash collection and the most socialist of all organizations, the Military. Most often, the solutions to challenges that we all have in common are solutions that we all share.

I propose that we move the paying for healthcare into the public utility sector of the economy. The country can be divided into five or six geopolitical regions. Within each region, three public utilities would be licensed by the government to manage healthcare payments. The regions would have to be large enough that each of the utilities could be financially sound. Three utilities would balance the need for competition and innovation without excessive duplication of administrative costs. Each utility would be not-for-profit, run by public boards, transparent to the community.

Each utility would devise perhaps three to four coverage packages, the simplest being a minimum agreed-upon level of coverage (I might suggest that be the level of coverage Congress has chosen for itself) and then other combinations of coverage the utility might think would be popular to people. Each person in each region would be required to choose one utility and one of their plans. This would achieve universal coverage. The plans would have to compete with each other to get people to choose their plan. By providing universal coverage this way, there would be no need for Medicare; we would “fix” Medicare by transcending it. The same goes for the VA and DSHS. The rates for each plan would be set by the public board of each Utility.

The utilities would then contract with providers, hospitals, labs, pharmacies, home-health agencies, etc. just as insurance companies do now. Since there would only be three organizations to contract with, providers would be highly motivated to sign up with each one, thus helping to contain costs. And just reducing the administrative duplications from so many insurance companies offering so many plans could potentially free up 10-11% of the current healthcare budget to help cover the presently uninsured.

Then, each person, each month would get their “healthcare utility bill.” (HUB) If an employer wanted to give their employees a perk, they would offer to pay their employees’ HUB. If a person was on public assistance, the government would pay that person’s HUB for the base plan. If a person were retired and needed the assistance (not all retired persons do) there could be a program to pay part or all of that person’s HUB.

By spreading the cost of healthcare over everyone, the cost for each person goes down. People who can’t afford it could then get public assistance to pay for the lowest-tier plan. I don’t have access to the financial data to do the calculations, but my gut sense tells me that this approach would not cost the government any more than it now pays for Medicare, DSHS, the VA, State health insurance pools and the like. Perhaps many of the people now employed by private health insurance companies could work for the utilities.

There is currently a grotesque and horrific form of discrimination being practiced in the United States that is receiving very little discussion: people are treated very differently by the healthcare system depending upon their insurance coverage or lack of it. This discrimination results in many preventable deaths and untold levels of human suffering. Also, I watch as my patients spend dozens of hours of their time just trying to get their insurance companies to meet their contractual obligations. In this plan, everyone from the homeless to the wealthy would have nearly the same insurance. Veterans, the elderly, rich or poor, everyone would be treated nearly the same by the medical profession. This plan would free practitioners to focus on caring for patients, not worrying about reimbursement rates. Since the health payment utilities would be not-for-profit and the rates they charge and pay would be publicly and transparently set, there would be no financial incentive for them to try to wriggle out of paying for care. This would save millions of hours of people’s time and the administrative costs in every doctor’s office would decrease, realizing further savings.

The defined benefit packages would be de facto rationing of care, but no different than we have in our current system. To avoid the need for further rationing, we need real wellness throughout the entire population. How to accomplish this? By my observation, the threat of potential disability and disease is not, by itself, enough to motivate many Americans to take good care of themselves. We Americans are more motivated by our wallets.

We now have the actuarial data to calculate the lifetime healthcare costs of many products and practices. For example, the last figure I heard, the lifetime cost of a pack of cigarettes is around $7. Similar costs could be calculated for beer, wine, Twinkies, donuts, motorcycles, etc. This amount would then be added to the purchase price of the product as a “poor choice tax.” I envision the poor choice tax posted on the grocery shelf on the same label that says how much per ounce, etc. so people can make informed decisions at the point of product selection. No poor choice tax would be levied on products such as organic produce. The numbers could be calculated to level the playing field between junk food and nutrient-rich food. One might also consider stopping the public subsidies to crops that make junk food so cheap. Suddenly…eating well would make financial sense to people.

Then, the money within each region that is collected from the poor choice tax would be divided among the three Utilities proportionally to the percentage of the population from that region that is signed up with that utility. That money would go to lower the cost of everyone’s HUB. This system builds in a statistical probability of “user pay.” As the population starts making healthier lifestyle choices, the revenue from the poor choice tax would decrease, but so would the level of healthcare utilization thus decreasing the cost of healthcare for everyone.

Once we commit to universal access, then society is suddenly motivated to optimize everyone’s health. Right now, there is no financial incentive within the healthcare industry for wellness. I think that the medical profession would respond by being less reliant on the pharmaceutical industry to tell them what to do and more become more interested in pursuing real preventative medicine. Currently, most physicians think preventative medicine means immunizations and statin drugs. During my career I’ve been led to explore not only conventional medicine but also the wide range of concepts and treatments encompassed by what we refer to as “alternative medicine”. Believe me, there are some valid concepts not currently embraced by conventional medicine that, if they were, would save the national healthcare industry billions of dollars. I believe universal access would give us the social will we need to overcome the profit-motive grip that healthcare corporations have on the practice of healthcare and really heal the healthcare crisis. The cure is out there. We just need to take it.

Thank you for listening. I realize that eliminating private health insurance companies and instituting something like the poor choice tax would mean that you’d be fighting a third war, but it is one that is worth fighting. I would love the opportunity to discuss these ideas further with anyone you think might be able to help use them.


Steven M. Hall, MD

Copyright 2012 Steven M. Hall, MD