A SENSIBLE HEALTH CARE PAYMENT SYSTEM
by some random Idaho guy
November 2019
PREMISES
(1) There should be a system that ensures every person is covered.
(2) The most effective way to minimize and control cost is for people to have exact knowledge of charges, direct participation in payment, and skin in the game.
(3) There is always going to be a tradeoff between total cost and level of care.
(4) Health care cannot be free for everybody.
FEATURES OF SOME RANDOM IDAHO GUY’S SYSTEM
(1) Every citizen and legal resident would be enrolled
(2) Opposite of single-payer system - everyone would directly manage their own payments
(3) Reliance on free market principles to minimize cost
(4) There would be subsidies based on financial means
(5) Pre-existing condition would be irrelevant concept - a person’s health status and history would have no bearing on their coverage
(6) States would have space to customize and set coverage boundaries and limitations
(7) Employers would be relieved of overhead involved in managing employee insurance
(8) Medicare and Medicaid would be replaced by the new system
(9) Role of private insurance companies would be to offer supplemental coverage
(10) Insurance premiums would be replaced by taxes
DETAILS
Universal Coverage
There would be a national universal coverage system, wherein each state has substantial leeway to set parameters to reflect local sentiment. Each state could choose to participate or do something else.
For participating states this system would replace employer-sponsored and other primary private health insurance, Medicaid, and Medicare.
A national agency would be set up to manage the national system.
Each participating state would define the services to be covered for its residents.
Every citizen and legal resident of a participating state would be automatically enrolled.
There would be no premiums. This really is not an insurance system.
Each participant would have an annual deductible. Deductible would be based on financial means, ranging from $0 for people in poverty to unlimited for the affluent. Deductibles would be relatively high such that an average person would pay for all of their medical care out-of-pocket unless stricken by calamity. But participating states would set deductible levels as they see fit.
There could be an adjustment to the deductible for the elderly to maintain a Medicare-like entitlement.
The national agency would begin covering a portion of costs once a participant exceeds their annual deductible. States would establish the percentage to be paid for each covered service. These percentages would be based on financial means.
There would be mechanisms to incentivize participants to minimize their health care spending. For example, maybe an annual reward contributed to a special retirement account where the reward amount is based on some imaginative formula.
Payment System
A premise is that for a market to work optimally, consumers need to be personally involved with all payments. They also need to know how much something’s going to cost and to be able to determine if the cost is competitive. The Payment System described here and Market Clearinghouse outlined later are ideas to foster an efficient market.
The national agency would oversee a system of accounts used by patients to make payments to providers.
Every participant would have a payment account. The participant would deposit funds in their account and subsequently use those funds to make payments to providers.
Every provider would register with the national agency and would have an account for receiving payment.
All payment transactions within the scope of the national system, whether before or after deductible, would occur as transfers between participant and provider accounts. Every transfer would be explicitly authorized by the participant.
The national agency would deposit funds in a participant’s account when the participant has reached their deductible and has submitted a claim.
Private sector banks could participate in a tightly regulated role of managing the payment accounts.
Market Clearinghouse
The payment system described above would bring together a comprehensive source of data about health care transactions between patients and providers. This massive amount of data would be supported as a public good, an information clearinghouse.
Providers who wish to have their products and services eligible for payment through this system would be expected to publish current price information within this clearinghouse.
Consumers would be able to add information reviews of providers and products.
The national agency and technology companies would use the clearinghouse data to produce applications to give consumers accurate information so they can compare prices and quality.
The clearinghouse data would be vigorously protected for security and privacy.
Only the national agency would have access to personalized data. Other government and private entities would be permitted access only to anonymized data.
The national agency would be responsible for administration of the clearinghouse. It would use the data for monitoring and oversight.
