I do not want a government “comprehensive replacement plan” for 1/6th of the private sector economy.

Friend of IP4PI and medical freedom warrior Jane L Hughes, MD writes in:

Greetings,

We need something that does not increase the cost to everyone! Approximately 50% of Americans don’t spend more than $1,000/yr on actual healthcare, and 89% don’t spend more than $5,000/year. Also, in my opinion, “Make America Healthy Again” is more a slogan for the public health department, not physicians per se. 100% of Americans who make it past 8th grade have had health class. They know obesity, smoking, drugs, sex, teen pregnancy all lead to problems. They persist in bad habits/lifestyles anyway. That is a societal problem that we all care about, and each of us in our own way influences as a physician. However, our primary job is screening, treating when necessary, managing chronic illnesses with our patients, and stressing behavioral changes that can impact future health issues with our patients. OK, on to what I think we need.

1. Repeal 100% of ObamaCare and start over with transparency regarding cost and sources of revenue for safety net on federal level.

2. Basic structure of new system centered around HSA’s coupled with inexpensive catastrophic indemnity policies to prevent bankruptcy and allow access to care, i.e. no more “co-pays”, networks, or need to band together to get “good prices” which will drive price transparency, as individuals pay for their care out of their account.

3. Tax parity. Allow $5,000/yr individual/yr, $20,000/family/yr pre-tax HSA deposit (see stats above) regardless of who makes the HSA deposit-employer, employee, grandma, etc. Allow the unused to be rolled over to the next year. Eventually catastrophic policy could be purchased from HSA.

4. Federal mandate that all insurance companies must offer at least 10% of their products as bare bones catastrophic with no mandate for coverage other than meeting the deductible chosen by the insured and covering what they say they cover. Insurance companies could charge a small fee for setting up and hosting HSA, or banks could do the same with a credit card only good for medical goods and services. This is what we have with “food stamps” now. However, this would be without the ability to convert into cash by sale to another individual.

5. Shift to individually held, non-job specific, portable insurance. Risk pool is all of the individuals with that company, much like auto insurance, that are insured by that company.

6. Federal mandate for price transparency. No person shall be charged more than any other for the identical drug, hospital service, individual office visit (each doctor would set their own fees, but no network discounts), etc. This would eliminate cost shifting, the generic drug kickbacks, middle men negotiation contracts, etc. Imagine a website with manufacturers suggested retail price for every drug on the market.

7. Number six would necessitate Medicare and Medicaid to either elevate what they will pay or allow balance billing. Some entities would accept the payments as they are, where others would balance bill.

8. Safety net would be tax payer funded HSA’s with tax payer funded catastrophic policy. This has been successfully done in “Healthy Indiana” and in Florida where they found that even indigent people when given an HSA became much better stewards of their healthcare dollars. There was a reduction in ER visits as those drained their accounts.

The above recommendations could be covered in a 10 page bill, max! As I have said until I am blue in the face, I do not want a government “comprehensive replacement plan” for 1/6th of the private sector economy. There was a mandate in this last election. The GOP was dragged to a great majority, especially in state legislators, by Trump. He and Pence have promised full repeal. It must happen, or this massive message to the US Congress will be once again ignored. And, it will be the tragedy of the ages, because we have been rescued off the precipice of one more failed nation state. I respect the views of everyone on this list, and especially the tolerance for vigorous debate.

Best,
Jane

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2 thoughts on “I do not want a government “comprehensive replacement plan” for 1/6th of the private sector economy.

  1. Dr. Hughes, Thank you for this a well-thought out plan; I’m on board and advocate for most of these same changes. Physician leaders need to speak out more about reform idea with detailed viable plans like yours.

    Dr. Wax: can you forward my comments and questions to Dr. Hughes. I would find her observations very helpful.

    My message to conservatives that favor market-oriented reforms as you and I favor, it to look carefully at the ordering of these changes. With that said, I also advocate full repeal.

    Your points with comments and questions:
    #1 Full repeal is good. Since Medicaid is a State program with federal & State monies, and States control insurance regulations, the impact of Federal Safety Net seems unclear.
    How do you see this actually taking shape and being implemented? A federal version of Medicaid? Entire new program?

    #2 This seems much like Singapore’s Medisave system, which I’m a huge fan of.
    How do we “prime the pump” with low wage worker’s HSA until they can afford to make contributions? Does the catastrophic plan kick in at same time HSA is opened?
    How is it purchased for those just starting out or low wage workers who will require a few years to fund an HSA?
    Once HSA has certain level of funding, do you favor uncoupling it from requirement to have insurance, i.e. self-funded status ?
    I despise networks, but the only way those go away is for physicians to stop signing contracts. If we didn’t sign those, their power and the co-pays would vanish overnight. Comments?

    #3 For a low wage worker who gets most or all of their taxes refunded to them, a $5,000 tax deductible contribution to HSA represents nearly $5k reduction in take home pay due to low tax bracket. Yes, they enjoy those dollars for healthcare, but if they need food,clothing and shelter more they are out nearly $5,000. Can we get this system to scale fast enough if we depend of tax deductions only? I doubt low wage workers will participate if they’re taking that big of a hit.
    Work-around? Alternatives?

    #4 If we repeal ACA, then the EHB and credible coverage mandates go away too. With that, I doubt another “mandate” will be needed to influence availability of high deductible and/or bare-bones policies. Those should arise spontaneously if law allows and consumers demand.

    #5 Here is where the tax laws related to deductibility of insurance and State control of insurance regulations come into play. I love the idea of the risk pool being sum of all those enrolled as policy holders. This may stimulate formation of Mutual companies and Risk Retention Groups. But like auto, liability limits will come into play and probably be a point of contention.
    The issue of job-lock, being replaced by portable, owned & uninterrupted coverage, won’t go away unless the tax code is changed such that the incentive to obtain ESI is neutralized… But if employer is still kicking in a sizable percentage of the premium cost, then pre or post-tax, this amounts to a subsidy of sorts for the employee. No such thing will exist for the 1099 wage group or small business owner. Comments on how this will be handled or phased in? What tax laws need to change? Shouldn’t we have those in place prior to replacement plan, instead of trying to put all in one bill with chance of important items being negotiated away?

    #6 I think transparency in pricing and advanced pricing capabilities are essential. I really don’t see true transparency of the kind you are referring to, and the kind I favor, until we rid ourselves of CPT billing and charge master. Those have their origins in Medicare billing protocols, then adopted by commercial carriers over time. How would your “transparency mandate” deal with CPT billing and allowable charges and network discounts, which are the fluff that drives the Medical-Industrial complex currently? But can you really mandate transparency? With mandate, comes a necessary definition. This definition, like most all mandates or requirements will likely have all manner of exceptions and a long list of “if’s, and’s and but’s” all of which will be manipulated.

    #7 I don’t see either of the alternatives you list as viable. The latter will be met with much opposition in that it will raise the specter of the abuse that balance billing is famous for and cause a two-tiered system to be lopsided; charge some “what insurance pays” and write of the rest while charging others full fare. The former is arbitrary and not market based unless it is based on reference pricing. But reference pricing will require a strong healthy cash market over time to develop and it will encourage inflated prices to raise the reference range.
    Maybe a better option is to have Medicaid designed such that it offers a defined contribution or allowance in form of vouchers for all things routine, and then a defined benefit portion for emergency, serious unexpected illness, hospital admission, trauma, etc… The voucher portion would function much the way food stamps or bridge cards work. They would be viewed as cash and could be used virtually anywhere that had appropriate scanner. No need to file claims or be a “contracted” physician.

    #8 Again, very similar to Singapore’s system where people are automatically enrolled into a high deductible plan with deductible in range of about $1500 U.S. Would these tax payer funded dollars come from taxes already going to Medicaid? What about all the funds currently being used for subsidies in the ACA? It is hard to believe we can support HSAs and catastrophic safety net coverage without these funds. I’ve not done that math, but for sure the way Medicaid is currently being used would have to change.
    If we make assumption that most of these recipients don’t pay any net income tax (receive full refund and/or EIC), then would the HSA funds be in form of a “Healthcare Bridge Card” where they can only be used for healthcare? Would claim be needed or would they function as cash? Where does funding come from? Taxes currently in place for pharma and insurance companies or re-routed from Medicaid budget?

    This is why I always get back to the idea of a fix-sum tax credit based on age, regardless of where you obtain your health insurance. But an equivalent “cap” must be placed on deductibility or use of the credit-equivalent in the group market. This approach solves the two biggest problems and much of the inequity in the ACA and it can be done budget neutral as long as feds keep the taxes raised by pharma and device manufacturers and insurance companies. It also allows using the full amount of the tax credit buy into Medicaid-like policy for net-zero cost, which provides automatic public option of sorts. It also keeps money in hands of recipient instead of giving it to insurance companies or government bureaus.

    I love the idea of expanding and liberalizing HSAs. The Rand Paul plan is very robust regarding HSA changes. You would probably like it. But for those without adequate savings, it will take a long time for lower wage workers to reap any benefit. And a significant percentage of the early premium years costs will be paid with after-tax dollars if the needed change the tax code are made law in order to create parity (or no distinction) between employer market and individual market.

    Currently, many of these low wage workers are getting subsidies. While I am a huge critic of the ACA subsidy system, and it needs to go away; I doubt if tax deductibility alone will be enough to finance purchase of insurance until prices deflate from current levels.

    Please comment on any solutions or answers to this conumdrum.

    Thank you,
    Bob Nelson, MD

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