Comprehensive Federal Reform Act of 2012: HealthCare

In reality no such act exists. This is basically my suggestion of what a by partisan reform bill should look like. While everyone has their idea of how to reform healthcare and the governmental budget I don’t see any thing that represents a real solution to the real problem. Lets face it, despite if you like it or not Obamacare is flawed and really doesn’t make anything better. It does this by not addressing the causes and reason’s why healthcare is so expensive in this country. It pushed the burden to insurance companies that are for profit units that will only pass the buck so to speak to the consumer. In the end it all lands on the consumer and none of the real concerns are addressed. This is part one of my Real Solutions for Reform musings.

1. Insurance Reform

Before we can get to actual healthcare reform we have to start with insurance. Passing a law making it mandatory for all persons to have insurance serves nothing but to hand money to insurance companies and penalizes people who can least afford it. So in order to change that we first have to address insurance reform. How to go about that. Top of the list is malpractice insurance, which for doctors is extremely expensive. Right now the malpractice laws are a hodge podge of federal and state regulations. This needs to change. There needs to be clear and concise regulations regarding what is and isn’t malpractice. We have to face facts that doctors are people and are prone to make mistakes. If a doctor makes a mistake that doesn’t involve negligence, or willful malpractice such as operating or performing services under the influence then the civil penalties should be reduced and damages capped. In the case of negligence, by that I mean mistakes that could have been prevented, the penalties should still be capped but if there is a pattern then the doctor should lose his license. When willful malpractice is litigated the damages should be at a higher cap but a cap nonetheless and there should be criminal penalties attached.

Another part of insurance reform is what I can “Individual liability Control”. As it stands right now a person can come to your house for a visit and step in a hole in your yard and turn around and sue you. Most insurance companies have to cover this and this makes premiums that much higher. Liability to homeowners should be limited to specific neglect issues such as trees that are dead that fall on the neighbors house not if someone trips in your yard. As above, damages need to be capped to actual damage and not perceived damage. This applies to stores and businesses as well. All of this feeds into number two.

2. Tort Reform

There are to many frivolous lawsuits in this country that do nothing but raise the cost of living for everyone. Recently in Midland, Texas a float filled with veterans were hit by an oncoming train while crossing a grade.  The lights were working and the bell was working and the engineer of the train followed all procedures but could not avoid hitting the float and killing several people. In response several victims filed a lawsuit naming the railroad. While I admit the situation is tragic and unfortunate but the railroad was not at fault. In fact at this stage it looks like the design of the light near the crossing is at fault. The railroad has no control over that. Now, the railroad and its insurance company has to spend money defending against a lawsuit that really has no merit. Let me give you another example. In the last decade there was a lawsuit filed against a railroad in Texas by a women struck by a train while walking on the tracks. Her excuse was that no one ever told her that trains travel on tracks and therefore it was the railroads fault. Still another example, again using railroads because they have deep pockets according to trial lawyers. A teenager was struck and killed by a train while he was walking on the tracks listening to his mp3 player. His parents sued the railroad saying it was their fault. How was it their fault? Trains don’t stop on a dime and the engineer is responsible for the safety of that train. In all the examples I have given the railroad followed all proper procedures but still had to spend millions in defense of normal business activities that other people due to their actions interfered with.

You are not going to be able to lower costs in healthcare until the first two issues are resolved. Restoring personal responsibility and capping damages go a good distance to lowering costs without letting bad corporate decisions to go unpunished. We can still punish negligence and bad behavior but we can do it in such away that it helps companies be better neighbors without trying to drive them out with frivolous costs and lawsuits.

3. Real Healthcare Reform

The first thing what would have to occur is the repeal of Obamacare. Not because I don’t think everyone should get healthcare but because it would only get in the way and over complicate an already murky situation. So far we have addressed Insurance Reform and Tort Reform, that removes two pressures on costs. Now we can address the actual costs themselves. While the government exchanges are a good idea for insurance the truth is that it will over burden not only the budget of the Federal Government but it will create a new program that will serve as another entitlement program but deliver little in actuality. How do we fix Healthcare?

There are several steps to this process.

A. Reduce drug costs. We do this by reducing the patent term length from 20 years to 15.  Introduce margin caps for big pharma on all new medicines to no more than 125 percent of production and research costs for the first 5 years. Reduced to no more than 100 percent of production costs in the next 5 year cycle and reduced further still to 80 percent production costs for the remaining 5 for the total of 15 years of the patent with no caps afterwards. The reason for no caps afterwards is most drugs are picked by companies producing generics there by introducing market pressures and competition and those that don’t for the more specialized medicines and to provide an incentive to keep producing those niche drugs.

B. Encourage all hospitals in the individual states to combine purchasing power for items such as linens, gloves, syringes and items that are organic to all facilities. When you go to a hospital each one will have the same items if different brands. By creating state cooperatives if you will rotates on a three year basis you lower the overall costs to the patients. The hospitals are still free to compete based on services performed but the unit cost will go down.

C. In conjunction with the co op system the prices of certain items are regulated to be the same across the board. If you visit a hospital in New York and then say one in Los Angeles the costs for a syringe or a box of gloves is the same. By creating a standardized pricing model for what I call every use items like gloves and the like you control the costs for both the hospitals and the consumers as well as insurance companies. Of course this would not apply to specialized equipment for specialized services.  Have each state form a commission that reviews pricing levels for these items every three years to keep up with inflation and patient flow and demand.

Finally we come to the most controversial part of my Comprehensive Health Care Reform section, State exchanges.  In this type instead of exchanges where each person can purchase insurance the state contracts out for a three year term bases on services of an insurance company. How does this idea work.

Based on the total number of population in a given state the  state opens bids to insurance companies to provide services to the states inhabitants. All employers pay instead of paying an insurance company pay into the state the monies that would normally be paid to the insurance companies.  The state turns around an pays the insurance company who won the bid for a term of no less than three years. The bidding selection is based on services and not on money. Meaning each company will get a three year guaranteed sum based on their services winning the bid. This allows the insurance company to have guaranteed income and the state to provide insurance services to all its citizens.  Now, I know you might be thinking that “Well why should I do that when the state can’t pay their way outta a wet paper bag?”

That isn’t the end of it. Each state will be capped on administrative costs. No more than 2 percent of the costs of maintaining service can be used for administrative costs. Right now, medicare and medicaid run at 7 percent administrative costs.  “But how do we pay for it?” Instead of sending medicare and medicaid money to the federal government that comes out of your pay check, that money goes into the state system. All employers over 25 employees would be required to pay into the system on a graduated scale based on factors such as number of employees, type of work (Dangerous or not like oilfield or mining) and property held in the state.

What about people who can’t work or don’t work? That admittedly is a little more difficult and part of the controversial part of the plan. For each state there would have to be a 2 percent surcharge on property taxes. This money is used to help mitigate the costs of covering people who are disabled, unable to work etc. When the state opens bids the amount of money from the accumulated totals of medicare. medicaid, employers, employees and property charges are what the insurance company receives for providing services to the state for ALL inhabitants. Each state would select a company based on the range of services that the company provides. Of course there are stipulations, such as.

AA. All State Inhabitants must be covered.

BB. All State Inhabitants have to be registered to receive coverage. (Meaning you have to have a drivers license or other form of state document stating that you are indeed a citizen of that state.)

CC. No exclusions for pre existing conditions.

DD. Each state is capped at no more than 2 percent for administrative costs. Administrative costs on the insurance company side are borne by the insurance company.

EE. Must have prescription drug coverage for all aliments.

FF. No age restrictions allowed

GG. Patient Co Pay is limited to 50 dollars per doctor visit.

HH. Patient Deductible is limited based on time of Hospital Stay. The longer you stay, yes the higher your deductible will be but the deductible will be capped.

Now I realize this is not perfect and the details would obviously have to worked out. Yet there are some big advantages using this process and system. 1. Medicare and Medicaid would be eliminated on a federal level as they would no longer be needed thereby reducing federal spending. 2.  It would return choices to the State Governments thereby promoting smaller government. 3. It covers all inhabitants of a state and is based on services provided. 4. It leverages regulation and free market solutions to control costs. 5. It provides for the spirit of Obamacare while eliminating the unnecessary bureaucracy that Obamacare created. 6. It tailors the choices to the individual requirements of the states will maintain a positive level of care. This is what should have been done in the first place. Provide real solutions to the very real problems we face in this country. Next up… the Federal Budget.

 

 

 

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