A plan to encourage healthcare competition

Jan 29
by Daniel

Why something needs to be done

I am not in favor of regulating every problem the country has, but the healthcare issue has not been resolved and needs serious attention.  The lack of competition, no cost control, citizens without coverage, and other factors have brought us to a bad state of health.  

Most people are out of the loop on pricing because their job buys health insurance.  Doctor offices do not want to provide rates for treatment prior to being seen. This lack of information on pricing keeps people in the dark and costs out of control.  

47 million or more Americans do not have healthcare.  You may think this is an unfortunate problem for the person without healthcare, but their health is the health of our nation.  Some use emergency rooms for primary care which increase overall costs. 

If you think that only poor people do not have healthcare, then think again.  Many are small business owners and their employees.   Small business cannot afford insurance for their employees, and big business keeps moving jobs out of the country so they don’t need to provide health insurance.  One factor for GM moving its manufacturing to Canada was to save on healthcare because Canada has national health. 

The health insurance industry will tell you that they have a right to make a profit.  I am for strong and profitable businesses, but the health of our nation is too important to be based on profit motives. 

The headlines about healthcare are not encouraging.
Reported in the Oregonian February 26, 1999, p.B2, “The HMO industry’s move to raise prices, cut payments to doctors and abandon unprofitable Medicare customers is paying off in higher profits.”
Reported in Fortune Magazine, March 15, 1999, p.188, “Small companies have been flocking to join healthcare alliances…In some cases they’ve been able to drive down costs by 10% to 15%…Just as New York City launches its first purchasing group, Empire Blue Cross and Blue Shield, Oxford Health Plans, and United Healthcare have bowed out.  Those three companies would say only that the alliance didn’t fit into their plans.  Critics say the holdouts (insurance companies) think they can make more money selling to individual companies.”

This article will discuss the issues and provide a reasonable solution for each issue.

The problems

High cost of health insurance
High cost of treatment
Uninsured people being charged double to triple the price insurance companies pay
Lack of preventative treatment in insurance plans
Changing jobs usually means losing insurance, and with the new job, the new plan usually has a waiting period of up to a year on certain procedures
Lack of dental and vision coverage on many plans
47 million or more Americans without health insurance (taken from census.gov 2006 numbers)

Problems we do not deal with in this article, but worth mentioning are as follows:  
    Jobs lost to other countries because healthcare makes the product too expensive to be globally competitive.
Medicare and health insurance fraud.  
Insurance companies dropping customers because the customer is not profitable.  
Reduction of benefits for customers by insurance companies.  
Lack of willingness from healthcare professionals to share information about one's own health.
Non-profit hospitals saving large sums of cash and acting like for-profit businesses.

My solution

First, if an insurance company wants to sell health insurance in a particular state, the insurance company must offer coverage to everyone in that state on a per individual basis.  This would be similar to car insurance.  They can spread the risk across the state based only on a few approved factors like age, sex and smoking status.  The insurance company will not be spreading the risk over only 100 or 1000 employees from one company but instead the whole state. This means that anyone can call and get their best rate and also switch insurance companies anytime they please.  This helps increase competition and gets the consumer involved in the process.  When people have a vested interest in saving money, prices will go down.

Second,  companies that offer health insurance to their employees will give their employees a certain amount of money towards health insurance.  If, for example, the employer will pay $200 towards health coverage and the employee finds insurance for $185, then the employee pockets the difference creating a user driven price competition.  If the insurance cost is more then $200, let’s say $275, then the employee pays the difference.  This would be fully deductible for the employer, and the company does not have to facilitate as much insurance paperwork, which saves the company money.  Health insurance becomes more like car insurance because employees keep their insurance when they change jobs, and they become more price sensitive which in turn increases downward price pressure.

The insurance company must offer plans with dental and also offer vision.  Your teeth and eyes are a part of your total health.  It makes no sense for an insurance company not to offer this coverage.  People should have the choice to have it or not.

The insurance company must offer plans with preventative coverage.  Preventative care has been shown to reduce costs across the board.  Preventative care also helps people live happier and more productive lives.  Why do insurance companies continue to resist providing low cost preventative care to most people?

Next, all doctors, hospitals, dentists, optometrists, and medical industry professionals must post their fees and publish a fee rate sheet including costs of materials for all potential patients to acquire before treatment.  This will help create competition and force the doctor to show everyone how much they are really charging.  This will increase competition and help people choose a doctor based on more information.  Doctors must also post other competitive information such as how long a patient should usually expect to wait to get an appointment, how long someone will have to sit in the waiting room and how long a doctor will visit with a patient.

Also doctors, hospitals, and dentists must charge everyone the same fee and must stop the practice of gouging the uninsured. The reason hospitals and doctors started this is because illegals would get care and not pay.  So they decided that they could take a larger loss if they charged more to all the uninsured.  The problem is that the doctors and hospitals will charge outrageous fees and then threaten citizens that can't pay with collections.  Illegals don't have to worry because they don't have a credit history to worry about.  Most people are willing to pay a fair price, but gouging continues today.  I know because it happened to me in 2007, and it must stop!

Finally, combine the Veterans, Medicare and Medicaid into one program.  Also, combine into the program, health coverage for Americans that do not have health insurance.  This will lower the costs of running the programs individually and with the savings, provide coverage for millions of Americans that do not have insurance.  This allows the insurance companies to keep selling insurance and allow people without insurance to get the care they need.

The outcome of my solution

This article does not deal with all the issues regarding healthcare, but it does take a big step forward.  These suggestions have a chance of passing government approval because it does not force the heath insurance companies out of business.  They will still have their customers and the uninsured will have coverage.  Insurance companies might not like this proposal, but they do not want universal coverage.  This solution helps people be more aware of costs.  It will create real competition in the health insurance industry, therefore, putting pressure on lowering prices.  Everyone will be covered and coverage will be better for all of us.  

Finally, everyone should have health coverage, including dental, even if they cannot afford it.  If you have the money, you should have the right to receive the best possible care you desire.  But if one cannot afford health coverage, we owe it to our fellow Americans to help out because it helps us in the end with lower costs, greater productivity, and happier people, which is priceless.  Let’s not make the minority interest of healthcare profits dictate the health of our whole country.  Our economy must rely on healthy people and with 47 million not insured, we are not a healthy nation.  We can have everyone in the country covered with good quality healthcare and at a lower total cost than we are paying now as a nation.  We just need to act.