DocBrain's Health Care Solution

What are the problems?

• Lack of universal coverage
• People do not take personal responsibility for their health, particularly prevention
• Costs are too high; 17.6% of the GDP on the most recent data available
• Quality could be better

All the solutions I have seen do not address the full picture. The following is my solution to the problem.

All of a person's health care will be paid from 4 sources:

1. A health savings account
2. An umbrella/catastrophic insurance plan.
3. Optional personal spending
4. Public Health Fund

The Health Savings Account

How will it work? Each person will deposit $3000 in a HSA as of January 1 of each year. The HSAs will be in places insured by FDIC and can only be used for health care. The first $1500 of annual health expense is paid from this account. Of the next $10,000 in health expenses, 10% are paid from this account as a copay. Of the next $10,000 in health expenses, 5% are paid from this account as a copay.

Where will this money come from? The money put into the HSA will be pre-tax dollars. An individual can put in no less than 5% of gross income, but no more than $3000. The source of the money can be from income, a contribution by an employer, or a pre-tax gift from a parent or other relative. Dependent children must be funded by their parents to the extent that they have the resources to do it. For those who earn less than the amount needed to fully fund their HSA, the additional funds will come from the government. The government will get it from current taxes or by increasing the national debt (the first year will be the most expensive).

At the end of the year, the person must replenish the fund to a total of $3000. If the entire $3000 is not needed, any additional money can be taken as tax free income. For those who get money from the government to fund their HSA, 10% of the proportion of government contribution of any unspent money will be paid to the individual as tax free earnings. The fund will then be replentished by contributions again as described above.

An example to show how it works. A single woman earns $50,000/year. The first year she puts in $2500 and the government puts in $500. She sees her doctor, buys medications and spends a total of $1000. On Jan 1 of the next year, needs to replenish her HSA, which now has only $2000 in it. As 5% of $50,000 is $2500, she has enough earnings to put the $1000 into the account and needs no assistance from the government. The remainder of the $2500 ($1500), she gets to claim as tax free income.

The Catastrophic Umbrella

Every person is required to also have a catastrophic umbrella to cover all other health expenses. There will be two options, public and private. Copays are required in both plans according to the above formula as described under the Health Savings Account section. No plan may require any additional copays for covered services, including medications.

The Public Option: For those who cannot afford the private option, it is structured like the National Health Insurance of Great Britain. The money available annually is decided by government and is apportioned according to QALYs (quality adjusted life years) to provide the most good for the public as a whole. An overseeing body such as NICE would determine what is covered and what is not. There is no option to purchase what is not covered. Medicare would cover this plan.

The Private Option: Private insurance companies can sell umbrella policies that can be tailored to different groups. Coverage is whatever is decided upon. Different coverages would be available, but law would prohibit the coverages from being too obtuse to be understood by the average person. Furthermore, failure to insure because of pre-existing conditions would not be allowed, although some rating of risk could be done, much like a person who has had a recent auto accident gets rated. A subscriber to a private plan would have the option to purchase additional services that are not covered, directly from providers and at his own expense. Those with Medicare could use their medicare allowance towards a private plan, but might need to pay additional money if the plan desired is more comprehensive.

Optional Personal Spending

At any time, a person can buy additional health care services with after tax income. This especially applies to those who have chosen the private catastrophic plan, but could also apply to uncovered services on the public plan.

Public Health Fund

Health care services that would benefit the population as a whole would be covered under this plan. This might include injections that prevent spread of contagious disease. It might even include preventive maintenance of common conditions that are expensive when not properly treated with preventative care such as hypertension. Funds for this would come from the government (or CDC) and would come from income tax revenue.

Providers

Providers will sell their services on the free market. Prices for services will be available to the public, so the consumer can make an informed decision. Only one price will be available (no different fee schedules for different payers), although providers can have sales or bundled services like other private businesses. The consumers (individuals, public and private umbrella carriers) can choose on the basis of price, quality, availability or any other factors they choose. To combat the scarcity of providers, all provision options would be open to the purchasers, including non-physician providers and telemedicine.

Costs

Initial funding of the HSAs would cost $900 billion the first year. Each additional year would cost on the order of $450 billion. The total cost of the umbrellas would be approximately $1.8 trillion. My plan would cost a total of $2.7 trillion the first year and $2.3 trillion each following year. This compares to the $2.5 trillion expected for 2009.

Advantages of my plan

• Chance to earn tax free money will discourage frivolous ER and provider visits, reducing low yield utilization, and will encourage individuals to live healthier lifestyles, as this will result in fewer expenses in the system and tax free cash at the end of the year.
• Less provider regulation and micromanagement will reduce paperwork and overhead, enabling providers to focus more on patients than paper.
• Competition will lead to quality improvements
• No one is left without coverage at no additional cost over current levels

If you have comments or ideas of how this plan could be modified to achieve even greater benefit, please let me know.