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Wednesday, October 07, 2009

Cooperation Can Forge Plan for All

By Dr. Ralph Moller
Albuquerque physician
      As a practicing internist I see the problems of our health care system every day. It is being buffeted by issues of affordability, universal coverage and rising costs. I will show how a plan that combines strict federal regulation and subsidies with free market principles addresses these key health care issues.
       The key building block in this plan is a basic affordable health insurance policy that will be purchased by the individual, not his company. It will have a relatively high deductible and, because of that, it will have a relatively modest cost.
       The plan will be structured by the government and insurance industry such that basic health care needs will be met, and the price of the plan (including deductible) will be set at a level that most Americans can afford. Any costs above that will be completely covered with no lifetime cap. Every individual in the country will be obliged to buy this plan, and every insurance company in the country will be obliged to sell it, regardless of one's medical history. Every physician in the country will be obliged to accept this plan. Each individual will own his plan, and if one changes jobs, he will take the plan with him.
       Those who fall below a certain income level will receive vouchers from the federal government to buy their own plan. Businesses that currently provide insurance for their employees will be obliged to reimburse those employees for the money they are no longer spending on insurance, further helping people to purchase their own plan. Insurance companies will be allowed to sell insurance anywhere in the country, vastly expanding the choices for consumers.
       All health insurance costs will be tax deductible, and people can save for the deductible part of their insurance with medical IRAs. Any cash left over from one year can be rolled over for the next year, so people get to keep what they don't spend. Insurance companies can offer and people can buy more coverage building on the basic plan.
       Affordability will be assured by the fact that the deductible and the cost of the basic plan will be set at a level that most people can afford. Below a certain income level, the plan will be free. Subsidizing the poor will be expensive, but far less than a government-run health plan. Affordability will be further assured by competitive pressures that will keep costs down.
       Physician charges will be constrained by prudent consumers looking for the best value as they are spending their own money for part of their care. Insurance companies will face the same constraints as they compete for people's business. As an example of how this is already working today, many companies that have instituted medical IRAs and competing health plans have seen their costs rise much more slowly than conventional plans.
       A number of predictable results flow from this plan. Insurers, freed from the shackles of state-by-state coverage will grow to national size which will allow them to spread their risk as they absorb customers with all kinds of medical conditions. Through economies of scale and due to intense competition, they will be forced to offer attractive rates with a multitude of increasingly innovative plans. Increased government regulation will be key to making sure the insurance companies offer reasonable, easy-to-understand plans and service them well.
       Physicians, in order to contend with the insurance companies and to be able to absorb all the new and different kinds of patients, will aggregate into large medical groups. Many groups like this already exist such as the Mayo Clinic in Minnesota or the Geisinger Clinic in Pennsylvania. Studies have shown they give superior results at lower costs.
       And finally consumers will own their insurance policy. Their employers will no longer select their doctors or insurance plans. So at the end of the day, everyone in the country will have insurance. Medical groups and insurance companies will compete for their business and consumers will be able to shop around and will have the incentive to get the best deal for their money. All of this will promote quality and reasonable prices.
       Can a program like this work? Affordable, quality, cost-effective health care already exists in pockets in this country. By empowering consumers, we can encourage its adoption throughout the country. We can create a truly American system, combining government assistance and regulation with a competitive marketplace. All it takes is the will to do it.
       

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