Three tactics for effective healthcare reform

We don’t have a healthcare coverage problem – we have a health services and drug affordability problem. While costs may be the talk for healthcare companies, prices are the reality for present and future health consumers. 

The reason our past and present solutions have failed is that healthcare reform should NOT be about solving for affordable coverage. It must be about injecting free market forces and consumerism into the health system. This will help drive down pricing towards affordable healthcare services and drugs, catalyzing greater patient activation and responsibility, while increasing quality and efficiency.

{mosads}The fixes needed to be employed are as follows:

Fix #1: Health insurance must change in its structure and nature, so that it no longer functions as the payer for nearly all healthcare products, services, and medications.

What we have seen in healthcare, in terms of rising costs and pricing, is a rational response to the incentives provided by customers. What we have failed to understand is that patients like ourselves are not the customers of healthcare service and drug companies.

The customers of healthcare are the health payers — the commercial insurers, as well as the government payers such as Medicare and Medicaid. They don’t just pay the checks — they determine what services we can and can’t have – and their respective charge.

This also means that unlike most every other consumer-based industry in the U.S., business competition based on quality and pricing cannot exist to serve the ultimate needs of the consumer.

In every other industry, insurance is set up as a safety net, covering for unplanned catastrophic loss. Healthcare coverage by its nature covers nearly all healthcare services, products, and drugs. Another unique facet of health insurance is that it is not actually about covering risk of loss, but in covering the certainty that almost every single one of us will at some point in our lives, need expensive care and medications.

The solution is to keep health insurance. However, this coverage would now be a nationalized safety net – covering only that care deemed ‘catastrophic’. Yes, that term and scope will need to be defined, and there will be arguments. Meanwhile, the risk for delivering these drugs and services with quality, safety, and lower cost would still shift to the drug and healthcare companies. 

Fix #2: Yearly pre-funding of health savings accounts for every single individual in the United States.

Estimates are that the average American citizen (man, woman, infant and child) accounts for about $12,000 per year in healthcare expenses paid out. That known, why not give every single one of them this tax-free money, on a per-paid yearly basis, and let them spend it in a consumeristic fashion on all care deemed non-catastrophic.

Hence, a family of five would effectively receive $60,000 per year. However, those on Medicare, Medicaid and other public programs would receive their last year’s out of pocket costs, for care and coverage, not to exceed $12,000 per person.

These monies could be used for primary care, sick visits, lab tests, medications, and various emergency services. Consumers and patients would be free to use their money, or their children’s money as they see fit (*more on this later) – and if they don’t use it, the money simple rolls over from year to year.

So what happens to drug companies, medical supply companies, hospitals and health systems? Will they go out of business?

No, they will start becoming more efficient. They will lose employees, gain greater productivity, and use more technology to improve quality and see larger amounts of patients (*more on this later).

What will this mean for employer-covered care? Costs will go down, and it could certainly be inferred that employee wages should naturally rise. Moreover, that hiring and new jobs would increase as well.

There will be significant job loss, cost cuts, and salary cuts in the healthcare sector. No denying that its underlying industries will suffer the effects of economic digestion. Remember…we are now in a national crisis with an unsustainable system that takes up nearly 20 percent of our GDP.

Moreover, many people in this country have less than $5,000 to their entire name in savings. Medical debt is the fastest rising debt in America. This country and a vast number of its citizens need to begin growing financially again. It’s time for payers, providers and drug companies to contribute and pay their share.

To that end, our political leaders must be able to grow a spine. That means not propping up and trying to solve for the payer industry, just because our healthcare system has always had this structure in place; or because payers contribute tremendously to both political parties.

Fix #3: Increasing the responsibility of health consumers and patients

Consumers and patients must play a major role in fixing our healthcare system. The high rate of chronic disease and the costs inherent haven’t come by accident – but often from longstanding poor choices in diet, exercise, lifestyle, and lack of proper healthcare management.

Now, we hit upon those two-asterisked items above.

Greater Patient Volume: Like any consumer product or service industry, price is often a competed upon variable. That has not yet happened as healthcare companies gear up for today’s shift to value-based care. However, when these companies are competing for future consumer funds per non-catastrophic care services and drugs, consumer pricing and greater affordability will be a major factor.

Companies must keep up profitability, and will need to reduce cost while also driving greater volumes of consumers to become patients, and patients to become active patients. Thus, more people must become ‘activated’ in their patient care.

Technologies such as telehealth, telemedicine, A.I., population health, risk management, care management, consumer & patient engagement and care communications, and predictive analytics are just some of the necessary technologies needed to adapt to greater patient volume capture and care.

Mandated Services: We know that chronic disease is the biggest driver of health costs in the U.S. We also know that many individuals are not knowingly carrying chronic disease, are living in pre-chronic conditions, or have known chronic disease and choose to not engage in care and lifestyle changes.

The pre-funded health savings accounts will come with requirements. First, everyone will receive regular checkups. Detection of pre-chronic or chronic diseases will be a first-line need. Upon detection, monies would also be expected toward treatment and lifestyle change.

If such care deemed to be at a catastrophic level, perhaps some of all of that care would fall under the safety net coverage. If patients chose to not engage in necessary care for their condition, there would be penalties – most likely financial, relating to their future yearly payments.

Injecting consumerism also allows drug and healthcare services companies to engage in pricing, based upon activation factors. Perhaps if you are an ‘activated’ patient, you may receive a 10 percent reduction on services. If you adhere and communicate with regard to your medication use, perhaps you get a discount from your drug company.

From World War I and II, to times of racial and gender fairness, America has stepped up to plate, and made the tough decisions. Once again, our leadership is being called upon to arrive at a decision that will effectively address the need to effect longstanding change and sustainability.

The changes suggested herein may seem radical, but only because of the growth in severity of this crisis; and that the prior attempts to fix it, have fallen so far short. 

Dr. Steve Ambrose is the host of Red Hot Healthcare, a news and leadership podcast platform, carried by iTunes, Stitcher and other worldwide podcast directories.

The views expressed by contributors are their own and are not the views of The Hill.