Real Health Care Reform

Fri, Nov 27, 2009, 8:00 pm  //  Craig Mayberry

This is a reprint of one of my earlier posts on health care. The issue is more timely now and I thought I would re-enter it into the discussion. The current health care bills before the House and Senate are not really reform, but an expensive continuation of our current system. Although I appreciate many politicians constant shining of positive light on the current efforts, the reality is that at this point it is mostly political show with each party trying to protect their own power and advantage; we are no longer talking about health care. When the logic becomes 'passing a bad bill is better than passing no bill,' you know the politicians have lost their minds. There are many reasons for the current situation, but rather than dwell on the past, we need to start finding solutions to our health care crisis that will actually solve the problem. It may seem like a radical departure from previous conversations about health care reform, but fixing systems usually requires radical solutions and not simply trying to tweak the status quo.

One potential solution for health care that has not been discussed is changing existing laws so that communities can set up a Local Health Care Authority. The LHCA would serve a specific community and be owned by the community in the form of a co-op or other structure that is independent of government or for-profit business interest. The only way to solve the health care crisis is as a community, and the community should own the organization. The LHCA would cover all medical issues in the community, regardless of income, employment status, etc. The LHCA would only be responsible for covering residents of the community. This would eliminate the current health insurance system and replace it with a local solution.

Governance Structure
The LHCA would be governed by an executive director who would report to a board of directors. The board would consist of: 2 elected officials, 2 doctors, 1 hospital administrator, 2 business owners, 1 nurse, 1 medical administrator and 2 citizens of the community. The board members would be elected by the people they represent. All of the doctors in the community would elect the 2 doctors on the board. All of the nurses in the community would elect the nurse on the board. All of the citizens would elect the 2 citizen members, etc. This structure ensures all the key stakeholders have representation on the board and all have a say in the operating decisions of the LHCA. Board meetings would be held regularly and would be open to community members.

There would also be at least two committees, one made up of doctors who would determine medical policy, procedure, and make recommendations to the board. The other committee would be made up of an equal number of doctors and citizens who would handle any malpractice issues as the first step toward avoiding the court system. If a problem arises and a patient has an issue with the actions of a doctor, they would go to this committee for resolution, including any monetary award.

The board of directors would be required to have an annual meeting where all members of the community could be updated on the latest financial information, performance data, and address any issues. The board would also be required to mail periodic statements outlining financial and performance data. The board is ultimately accountable to the members of the community, all of whom will use the health care services.

Cost Structure
Revenue to the LHCA would come from a number of sources. First, any money currently being spent by the state, local governments, or businesses on providing health insurance would be redirected to the LHCA. This would provide the bulk of the money necessary for operation. Any shortfall between this amount and what is necessary to pay expenses could come from a couple of potential sources. One option would be co-pays from those who use the system (potentially a sliding scale to account for income), another option is a tax (or required monthly insurance payment) from local businesses or citizens. The board of directors would be responsible for determining the amount and method of gaining additional revenue when necessary.

The LHCA would then arrange agreements with local hospitals and private doctors for payment for services. Contracts would be established to set pricing and reimbursement rates. Doctors would have the benefit of dealing with only one organization for payment and not with multiple insurance companies. Doctors would remain private entities, and the hospital could be a for-profit or non-profit, but almost all their business would come through the LHCA. Any medical procedures requiring treatment outside the local community would be contracted and paid for by the LHCA. The LHCA would also be responsible for prescription drugs and would make arrangements with local pharmacies for payment, similar to the arrangement with doctors. Any “profits” made by the LHCA over and above what would be necessary for reserves would go back to the organizations or people who paid into the system.

Primary Changes
There would be no health insurance companies doing business in the local community because the LHCA would be responsible for collecting the revenue and making payments to doctors. Citizens would deal with the LHCA for all issues, which would be a smaller and local organization, much different from having to call a 1-800 number to somewhere else to get issues resolved. There would be no real change for the doctors, other than only having to deal with one organization for payment instead of multiple insurance companies. Processing could be streamlined to minimize overhead, which frankly, is a big deal. Patients would be able to see any doctor they wish as all doctors in the community would be contracted with the LHCA.

Benefits
The benefits are many fold, but the main ones are a reduction in overhead and streamlining of the process, which would then be used to reduce costs and cover more people. The second benefit is that the system is run by local people for the benefit of local people. I have never understood the assumption that a national system would be more efficient. There is no reason to tie Bellingham’s health care system to Florida or California, with the exception of some services. Also, there are not any economies of scale, so bigger is not necessarily better in the health care system.

I recognize it is hard to cover every scenario or question in a few hundred words, so questions and issues are appreciated. This is a big change from the current dialogue around solving health care issues, but the changes are not so radical that it could not be done, and it does solve all the fundamental concerns critics of other proposals have expressed.