An excerpt from Beyond Medicare For All: Cracking the Code of the Healthcare Affordability Crisis.
If our goal is high-quality, comprehensive, affordable health care for all, we must make health care less profitable. If health systems and corporations continue to control health care and their main goal is profit, health costs will continue to rise faster than the ability of society to pay, regardless of any reform efforts.
On the other hand, if we threaten to take the profit out of health care, the major players will rebel and nothing will be accomplished. That is the most important reason why Medicare for All is impossible. Health care providers don’t want a big cut in their revenues, and insurers don’t want to be cut out. The players must be taken care of, or effective reform will not occur.
To achieve our goal, we must thoroughly restructure our health care financing and delivery system. But, on the surface, relatively little would change if the model I propose in this book were adopted. Health care would continue to be financed through a combination of individual, employer, and government funds, rather than through a single payer system financed entirely by taxes. Employees’ health insurance costs would continue to be deducted from their paychecks, just as they are today.
Insurance companies would continue to play a key role in the health care system. In fact, they would supply a limited form of health insurance to nearly everybody, including those on Medicare and Medicaid. (Medicare Advantage plans already cover more than half of beneficiaries, and 90 percent of Medicaid recipients are enrolled in private plans.) In Chapter 4, I stated that Medicare Advantage for All would simply increase the profits of big insurers. But in this model, allowing private carriers to take over public insurance for part of health care would help keep them whole. By covering a smaller set of services for a larger population, they could earn most of what they do now.
In two of the reform proposals I discussed earlier, the path to universal coverage led through a division between “basic benefits,” which would be guaranteed to all, and “top-up” coverage that more affluent people could purchase. I don’t think that’s what most Americans want from a reformed health system. What they want is high-quality care for all. So, let’s redefine basic benefits. Instead of being skimpy coverage for all health care, basic benefits should cover the basic care that most people need most of the time. This would include primary care and the lower levels of specialty care, including preventive, chronic, and minor acute care. It would encompass all the tests and drugs that primary care physicians and non-hospital specialists order (up to a certain dollar level). And it would also include dental, vision, hearing and behavioral care, all up to a certain limit. Everybody would have the same basic care benefits.
No private or public insurance would be allowed for basic care. Instead, competing, independent primary care groups of a certain size would charge subscription fees that would roll up to an annual budget for each group. Similar to insurance premiums for basic care, the subscription fees would come from individuals, employers, and the government. People would choose a basic care group based on its subscription fees and its published quality and patient experience ratings.
Everyone would have a basic care subscription, regardless of their economic status. In addition to employer contributions, the government would subsidize people’s fees on a sliding scale, based on their income, and would cover the poor entirely. The Centers for Medicare and Medicaid Services (CMS) would buy subscriptions for Medicare beneficiaries, and the federal and state governments would purchase them for Medicaid recipients.
“Major medical” redefined
Under my model, when a person was admitted to the hospital or went to an outpatient facility for surgery or complex chronic care, the financing of those services would transition from their basic care subscription to what I call “major medical insurance.” At one time, this term referred to low-cost, low-benefit health plans, but that is not what is meant here. In this approach, major medical plans would cover all inpatient and post-acute care for a designated number of months. They would also cover outpatient services above a certain cost level. That would include procedures in an ambulatory surgery center, cancer care, and other high-cost treatments. Similarly, major medical would pay for costly tests like MRIs and PET scans, as well as expensive drugs approved by the Food and Drug Administration (FDA).
Major medical insurance, like Affordable Care Act (ACA) plans, would have standardized benefits. Of course, some people would want additional benefits, so supplemental plans would be sold to those who could afford them. These plans might give people more choice of providers, pay for amenities in hospitals (a single rather than a double room, for example), or cover certain very expensive drugs or cosmetic treatments. But they wouldn’t constitute a separate tier of benefits for the well-off, as in two of the models discussed earlier.
The major medical plans, like commercial health insurance today, would have provider networks. Hospitals in each state would charge all payers the same for the same services, and most of them would have global budgets that included post-acute care but not physician services. Apart from that, the insurers would be free to negotiate rates with other providers, including specialists, and their networks would be limited to contracted providers. The government would guarantee that these networks were adequate, and none of them would be exclusive; all plan members would be able to use non-network providers for an additional cost.
Like the subscription fees for basic care, major medical insurance would be universal, funded by employers, individuals and the government on a sliding scale. Whether an individual was employed or not, they’d be able to purchase one of the health plans available in their region through a marketplace similar to those for ACA plans. They would choose a plan with the help of published cost and quality-of-care rankings.
This bifurcated health care financing system, coupled with the budgeting of providers, would help slow health cost growth; in the long run, it could decrease overall health spending. One linchpin of the model’s effectiveness would be its ability to reduce the number of people who needed hospital care. Improving basic care would lead to far fewer people being hospitalized or referred to specialists. As a result, patient outcomes would be better and costs would be lower.
Ken Terry is a veteran health care journalist and author who has written extensively on health care reform, physician leadership, and the structural causes of America’s affordability crisis. He is the author of three books on health care reform, including Beyond Medicare For All: Cracking The Code of The Healthcare Affordability Crisis, published by the American Association for Physician Leadership with a foreword by health care consultant and thought leader David W. Johnson.
Terry’s work focuses on practical, physician-led approaches to improving the U.S. health care system, with particular attention to affordability, care delivery, and policy reform. His latest book is available through Amazon and the American Association for Physician Leadership.
More information about his work is available at Physician-Led Reform, and professional updates are available on LinkedIn.
