The Donelson Files

By Aaron Fausz, PhD. and W. Terry Howell, EdD, 

Imagine moving from Sick Care to an ideal Healthcare System. The US healthcare system desperately needs radical reform to rein in costs, reduce harm, expand access and become customer-centric. Imagine a healthcare system where consumers are respected and in control. Imagine communities focused on prevention and health. Imagine a system where drugs and surgeries are more affordable and effective. Real change requires disruptive innovation. As citizens, employers, entrepreneurs, healthcare workers, elected officials, and patients, it is time for us to drive the change. 

In their new book, Healthcare is Killing US: The Power of Disruptive Innovation to Create a System that Cares More and Costs Less, authors Aaron Fausz and Terry Howell explain how we can disrupt, dismantle and rebuild. They ask the question, “Will you be among the daring disruptors creating the ideal healthcare system of tomorrow?” And they put forward a cogent pathway from a sick care system that is killing us physically, financially and spiritually into a compassionate, affordable and risk-free place for everyone to live longer, healthier lives. Don’t just imagine. It is time to do something.

Free Market Health Care: Summary     by Dr. Larry Fedewa (August 25, 2019)       
Key Points: The goal of any new health care proposal must be to develop a patient-centered system.That is, a system which provides the patient the ultimate power to make his/her own medical decisions, which can be matters of life and death.

A secondary goal is to reduce the 2/3 of medical costs the US spends today ($3.5- $4 Trillion) thereby reducing the cost to the consumer.The five major obstacles to these goals in today’s system are:
1. A critical shortage of medical personnel 2. Employers3. Federal Government 4. State Governments 5. Health insurance companies 

1. Solutions — Medical personnel shortage U. S. Public Health Service offers full cost scholarships to medical, dental, paramedics, nursing and similar degrees to any qualified American student who is willing to serve a 2-year term in designated practices where critical needs exist. 
2. Solutions — Employers are relieved from all responsibilities for employee medical insurance. 
3. Solutions — Federal Government Actions:                                                         a. Federal government maintains Medicare because of ethical and legal obligations.                                                                                                                            b. Federal government declares medical insurance to be interstate commerce, subject only to federal regulation, with one set of rules governing all health insurance. Eliminating a major cost driver for health insurance.                              c. Federal government sets limits on settlements for medical mishaps, ending need for “defensive medicine”. 
4. Solutions — State Governments S                                                                            a. State responsibilities limited to practitioner licensing for medical personnel and other specific responsibilities as indicated below                                                    b. Management of a pool of funding for indigent patients based on a small per capita tax of each buyer of health insurance – critical component to universal coverage. Perhaps a restructured Medicaid without federal involvement.               c. Oversight of standard business procedures governing organizations of private citizens designed to provide health insurance, whether church, credit union, cooperative, small business associations, neighborhood, or any other type of structure. This feature is the key to lowering health care costs by increasing competition for the patient dollar in the extended field offered by reduction of individual state requirements and the end to defensive medicine.           
5.   5. Solutions – Insurance companies                                                             a. There is still a place for insurance companies, albeit radically altered. The first factor to be considered is the new phenomenon of literally thousands of new organizations to emerge as the market for insurance carriers. This is a whole new opportunity for these firms — to seek out the new buyers, to develop new packages for buyers representing basically a new constituency – all anxious to maximize individual benefits to a much more vocal and demanding membership, and then to formalize the flexibility ceded to each member to choose treatments and decisions themselves rather than accepting bureaucratic stipulations blindly. Companies which cannot adjust to the new markets will not survive.                      b. Another opportunity will also arise, namely the custody and deployment of medical savings accounts. One of the first trends may well be the simple transfer of the new payroll income from health insurance premiums no longer deducted from payroll to a medical savings account. The recipient of these deposits may well be in a new branch of financial management. And who better to do so with high credibility than your familiar insurance agent.  

Finally, there will be some differences in how the average person deals with his or her health care, but not that many. The two most significant are 1) you will become the direct buyer of your own health care with the money you saved from your enhanced paycheck; 2) you will now be making the sometimes life and death decisions that now are made by budget-watching bureaucrats in the insurance companies or the government. That’s it!

This week’s column is an updated reprint of a piece I wrote a couple of years ago when the backlash against “Obamacare” first inspired Republicans to talk about “repeal and replace”. Since they are still talking and since the Dems are now also talking about health care alternatives – especially federal takeover of all health care – the topic remains open for new ideas. I have approached the topic from the perspective of a clean sheet of paper. Why try to build a system on the bones of a failed system, a system no one likes? Why not instead build a new system on a foundation of goals which everyone accepts and agrees with? This is my answer to that question. The starting point for a discussion of a national health care system should be setting our goals. I believe that American health care should be:

1. High quality and state-of-the-art

2. Available to all

3. Affordable

4. Abundant

5. Well-fundedWhat are the principal obstacles to these goals?a. The shortage of medical personnel.

This shortage has two facets:1) not enough medical professionals are produced in the first place, and2) too many drop out before their time. There are whole areas of inner cities and rural America, for example, which have no physicians at all. Why? Because our medical schools do not graduate enough doctors to serve the population of the United States. Why not? Lack of intelligent students? Lack of students who are motivated to give their lives in service to humanity? Not at all. The reason is lack of money! Medical education is so lengthy and so costly in this country that very few students can afford to go to medical school. This situation has created a national crisis. One very good use of taxpayer funds would be to offer medical and nursing school students free tuition, open to all qualified applicants. We do it for the military, why not for doctors and nurses? The cost would be minuscule compared to the Department of Defense or agricultural subsidies. This policy would have a massive return on public investment. More doctors would increase coverage of the population (perhaps there should be a requirement for a graduate M.D. and R.N. to spend two years in a “no-doctor zone”). More doctors would increase competition for the patient dollar. More could devote themselves to research. New people, new ideas, new openness to change. The quality of care would go up, and the cost would go down – a mantra we have been hearing a lot lately. This program would also assure continuing support for U.S. medical technology which is already the envy of the world.                             

b. Inadequate fundingSo how do we provide for adequate funding? Where does the $3 trillion we now spend go? The money flow starts with the employers who pay the insurance companies out of profits. It then goes mainly to the vast bureaucracies in the insurance companies which distribute the money, the government which oversees the money, and the hospitals and practitioners who must respond to the companies and the government. Health care expenditures in the USA are approximately as follows: (Source: National Health Expenditures 2017 Highlights – CMS data) – Medicaid $581.9 billion- Medicare $705.6 billion

• From these sources are paid:

–          Practitioners = 20% – $700 billion-          Hospitals = 33% – $1.1 trillion  

Only about one-fifth of the $3.5 trillion spent on healthcare gets to the practitioners. So how can this labyrinth be simplified?1)      It is a drag on the efficiency of the economic system by vastly increasing the cost of starting and staying in a business, and2)     it is a drag on the healthcare system by removing from individuals the responsibility of seeing to their own health needs. c. Insurance Companies and GovernmentA patient-centered system also reduces the role of federal and state governments (61% of health expenditures). The patient doesn’t need the insurance company or the government. If both the government and the insurance companies were completely eliminated from the system, nearly two-thirds of the cost of American health care would be gone.

Of course, there will always be some need for both, so assume that half of that cost would be gone. At today’s rates, that would be about $2+ trillion. This is a gross number, but it shows the potential. 

1)      There is still a place for insurance companies in this system, although dramatically reduced. The most obvious place is for catastrophic insurance. A safety net for when something very expensive happens to someone in the family – or the church, or the credit union, or whatever assembly of people the individual chooses to participate with. And this brings us to the role of governments. 

2)     The first federal government act should be to lift all interstate commerce restrictions on insurance companies, so that they are free and invited to offer policies in any or all the states they wish without the necessity of creating a separate bureaucracy for every state they enter.  

3)     The second federal reform should be the creation of a program for financial aid to qualified students in the medical professions. My suggestion would be a free education in exchange for a period of service in under-served areas of practice as determined by a federal government body, such as, CDC or NIH or HHS (CMS). 4)     A third federal reform which would dramatically reduce national health care costs is tort reform. Everyone makes mistakes, including medical practitioners and hospitals. It is the federal government’s role to protect both the treatment sector and the patient. But the current practice of unlimited liability has led to “defensive medicine,” that is, exhaustive tests and treatments used far beyond medical purposes. These extras are done to provide a defense against the inevitable lawsuit in case anything goes wrong. This uber caution has become a major cost driver in American medicine. Congress should set reasonable and realistic limits on the monies which can be given to the victims of everything from malfeasance to honest mistakes. No more windfalls for injury lawyers.d. Universal CoverageThe larger issue is care for the poor and the other under-served members of our nation. The concept of universal care is a noble and worthwhile goal. But socialized medicine is not the only or even the best way to achieve universal care.

We have governmentprograms to feed the hungry; to provide health care for the elderly;to protect the innocent. We can provide health care access to the poor and the under-served, whether because of poverty or location. We can also do better than the COBRA coverage for those who lose their jobs. It is very tempting to design a system in which no government plays a major role. However, the most efficient way to care for the poor would seem to be a State-run program which levies a small per capita fee on each pool of insured to be placed in a designated fund, administered by the State, for the benefit of qualified citizens. A model for such a program might be the Medicaid programs in each State. Another model is the Uninsured Driver programs administered by the states. e. MedicareWe have now discussed the entire healthcare cycle without mentioning Medicare. There is a moral and legal mandate involved in Medicare which does not exist elsewhere. Medicare works reasonably well as a medical insurance system for those who contributed to it all their working lives.

The most prudent and honorable way to approach Medicare would seem to be to leave it alone for those to whom commitments were made, even while moving the system slowly toward a patient-centered system for those just starting out, with free choices developed for those in mid-career. The pressure of the free market system we have been describing here will undoubtedly alter and reform Medicare as the new system matures in due course. ConclusionSo here is what a free market system might look like. It would fulfill all our goals for an American system that is:

 1. State-of-the-art

;2. Available to all in need;

3. Affordable;4. Abundant; and5. Well-financed. To get there, we need to:1. increase the supply of medical practitioners,2. create a patient-centered system by letting the patient spend his or her own money on healthcare;3. create state-sponsored safety nets for the poor and underserved.These proposals, of course, seem radical today, even in America’s free market culture. But sometimes the most obvious solution is indeed the best. The fact is that the employer-based system we have today was initiated because the elite of another day needed a quick way to exempt health care costs from federal taxes. No one thought that this simple IRS rule would hamper businesses forever. So, let’s change that!