Sensible Health Insurance - Part 1

November 1, 2004

Watching the debates about how to improve health coverage in the country, I see all sorts of proposals from socialized medicine to blocking lawsuits so injured patients will have no recourse. It seems to me that there are three legs to a solution which will meet the goals of both more people covered and cost control. Let's look at my idea of how to meet these goals.

The first leg is to get more people into a single negotiating group. This gives the group far more leverage to negotiate fair prices with providers and drug companies. One way to do that is to have the insurance program be a government program, but to have insurance companies bid to be the administrator. Big companies like GE and SBC do this now, using major heath insurance providers to do the paperwork, but actually being self-insured. By putting the administration out to bid on a regular basis, perhaps every three years, that cost is controlled, and by having the negotiating agent find the best prices the cost of the actual care is reduced.

That's leg one, a large negotiating group to control the care costs, and letting health systems bid on the administration costs. This isolates the parts and prices both parts by competitive bidding and negotiating.

The second leg is to offer three levels of coverage at three prices (and costs) to meet the needs and means of the insured. The base level is basic which gives checkups, care using proven effective therapy, and some heath and lifestyle consulting, which reduce the cost more than they add. The next level is standard which adds two major benefits, organ transplant and coverage for experimental therapies when standard treatment is shown or projected to be ineffective. This last feature also will provide some cost support for clinical trials of new treatments, reducing the cost of developing and evaluating new treatments. The standard treatment does not cover life extension treatment, intended to prolong the lifetime of a terminal patient but not to cure the base illness. It also doesn't cover nursing or similar custodial care, and maintenance of life support beyond 30 days for patients declared brain dead and 90 days for a “persistent vegative state.”

The top level is maximum which adds coverage for alternative treatments if proven traditional treatments are not available, and “life extension” treatment for terminal conditions. This covers all possible treatments to extend life even if the treatment is not expected to cure the patient, and where possible provide access to possibly useful non-traditional treatments.

Looking at custodial care information, it would probably cost little to cover custodial care after the first year. Since most patients in custodial care tend to have a short lifespan, this would give protection for the family of a patient who requires years of care, while leaving responsibility for the majority of the cost to the patient and family. And by negotiating the cost of long term care, the total impact of long term care would be reduced.

Next time: part 2, more payment choices to match needs.