Stanley Feld M.D.,FACP,MACE
I. Consumer Control of their healthcare dollars:
A. How would a medical savings account work to reduce cost, while encouraging physicians, hospitals and the healthcare insurance industry to become more competitive and efficient?
1. By creating a system in which consumer’s demands drive competition and efficiency because they are spending their own money.
2. The government’s role should to support assets designed to teach consumers to drive the healthcare system’s efficiency so that consumers could save their own money for retirement.
B. The cost of healthcare insurance for a family of four is presently over $12,000 per year. Who should be the payers for healthcare?
1. Both consumers and employers should be able to pay for healthcare insurance with pre tax dollars.
2. Medicare and Medicaid should be abolished. Both Medicare and Medicaid are unsustainable entitlement programs that must be restructured to create a sustainable system. They should replaced by The Ideal Medical Savings Account. Medicare recipients should pay a means tested premium directly from their monthly Social Security check. It should be paid with pre-tax dollars.
3. The government should subsidize the uninsured using economic means testing methodology similar to the economic means testing used to determine Medicare premiums. The premium should be paid monthly rather than yearly. The more you earn the more you pay.
4. Consumers who were Medicaid would not pay a premium. They would be totally subsidized by the government as they are presently. They would get the identical healthcare insurance that other consumers have.
The physicians’ and hospital systems’ fees have already been negotiated or imposed by the healthcare insurance industry or government. There are many reimbursement overpayments and underpayments in the system that can be corrected. There are many prices for healthcare services. There are retail and multiple discounted prices.
Presently, uninsured consumers are charged retail price for healthcare services. Under appropriate rules with real price transparency, consumers can negotiate an affordable price acceptable to all. If a consumer elects to overpay it reduces the money in the consumer’s Medical Savings Account. The government’s role should be to support a variety of assets to provide consumers with education. The government should enforce appropriate rules and regulations to protect consumers. The Ideal Medical Savings Account will create incentives for consumers to save their money and maintain their health.
II. Healthcare System Errors
A. The healthcare system does not provide payment for prevention care.
B. There are no good criteria defining preventive care.
C. There is no payment for systems of medical care that will prevent the complications of chronic diseases.
D. There are duplications of testing and costs in the system due to perverse incentives and lack of appropriate information technology.
E. There is overpayment for some procedures and tests and underpayment for others.
This can be fixed by a system of both government and consumer education. Government must educate consumers to be wise purchasers of medical care. It can be done with effective websites. .
III. Mechanics Of The Ideal Medical Savings Account:
A. Goal: Provide consumers with incentives to become wise purchasers of medical care and maintain good health.
1. Employers are willing to pay $12,000 per year for healthcare premiums. Presently it costs $15,000
2. $6,000 of the $12,000 should be put into a medical saving trust account. The second $6,000 is for first dollar insurance coverage beyond the initial $6,000.
3. At the end of each year the unused portion should be transferred to a retirement account.
4. All consumers would be motivated to have healthcare insurance. They benefit from money saved, if they remained healthy.
5. Government subsidies should be available to self employed and uninsured consumers who could not afford healthcare insurance. Universal coverage would be instantaneous. Consumers would maintain free choice. Each consumer would be his own deterrent to abuse of his health and overuse of the healthcare system
6. It is to society’s benefit to maintain a healthy and fit population.
7. Consumers with a chronic disease should be motivated to learn to avoid acute or chronic complications of the disease.
a. For example: A diabetic could be motivated to learned how to avoid acute complications eliminating costly emergency room visit. Continuous control of blood sugars would reduce complications by at least 50%.
b. Diabetics need maintenance with follow up care. If they maintain perfect control he would spend part of the $6,000.
c. If they spent $4,000 but avoided hospitalization or a complication of his disease his employer or the government could afford to give him a $2,000 bonus. Their total retirement account deposit at the end of the year would be $4,000 rather than $2,000. They would have avoided hospitalizations and ER visits . Diabetics would be on the way to avoiding the costly complications of their chronic disease.
d. They would enjoy good health and increase their retirement account. The government or their employers would save money decreasing their premium costs.
Simply providing healthcare insurance (private insurance or public insurance) will not solve the problem of the ever increasing cost of care.
Motivating and teaching consumers to take care of their health short term and long term will decrease healthcare costs.
8. Ideal Medical Savings Accounts would make actuarial sense to the healthcare insurance industry if it could get past its desire to control the first healthcare dollars. It would be able to reduce premiums because fewer people would get sick.
If the Ideal Medical Saving Account would come to pass America would have a positive impact on our epidemic of obesity, environmental pollution and lung disease.
America let us force our politicians to finally do something that makes sense.