Naturalized-Texan
07-04-2003, 05:33 PM
Free Market Health Care Proposal
Naturalized-Texan
(Note: This article was published in a now-defunct magazine 1n 1993.)
Introduction:
The main problem with American health care is not the availability of health care, for care is available for those who need it whether they are insured or not. The real problem is the spiraling cost of health care. As usual, the increased cost of medical care is the result of the most basic law of economics: the law of supply and demand. When there is a massive increase in the demand for health care coupled with a constant or declining supply, costs are bound to increase. In order to solve the health care cost problem, both the demand side and the supply side of the cost equation must be attacked. Relief for the demand side of the equation is relatively simple, but the supply side is far more complex.
The Demand Side:
The federal government and the insurance companies are the primary causes of the spiraling increases in the demand for health care. Since much of the health care is "free" to the consumer, it generates an artificial demand for medical services. Moreover, since health care is "free" to the consumer, there is no incentive for the consumer to shop around for the best deal in medical services. Consequently there is no competition to keep health care costs down.
Because there are little or no out of pocket expenses, people often go to the doctor for minor medical needs such as a common cold or a splinter or a headache that could easily be treated at home. In addition, many people go to the hospital for treatment that could easily be done in a doctor's office because it is "free" to them. Often, people go into the hospital for minor surgery that could be performed in a doctor's office or on an outpatient basis. For example, I know people who get themselves admitted to a hospital for a tooth extraction because their insurance will cover everything, but if the extraction took place in the dentist's office, the patient would have to pay part of the cost. Many people go to an emergency room for treatment that could easily be performed in a doctor's office because more of the costs would be covered by insurance. All of this artificially created increase in demand for more expensive medical services puts tremendous pressure on an already overloaded medical care system.
There has been a lot written about how to solve the demand side of the supply and demand equation and nearly all of it states that the consumer must be involved in paying for health care. The best way to do this is to provide health care vouchers to each person not covered by an employer's medical plan. The vouchers would be issued in an amount equal to the average per-person cost of health care in the person's state. The vouchers would be distributed each year by the state or local governments using state funds with little or no federal government involvement. These health care vouchers could then be used to pay for needed health care directly or to purchase health insurance. Either way the consumer would be aware of the true cost of health care and would have the incentive to shop for the most cost effective provider. Any unused portion of the voucher could be accumulated in a Medical Savings IRA for future catastrophic illnesses. Those who are covered by an employer’s plan could also contribute to a Medical Savings IRA.
For those who are covered by an employer's plan or who use the voucher to purchase insurance, the benefit structure for insurance payments must be revised to discourage the abuses described earlier. If a person goes to a doctor for treatment of minor medical problems that could be treated at home, he or she must pay for 100% of the costs for the doctor's fees and any medicines. If a person is admitted to a hospital for treatment or surgery that could be performed in a doctor's office or on an outpatient basis, he or she will only be reimbursed for the costs that would have been incurred in the doctor's office or as an outpatient. The patient would be responsible for the balance. Such a rate structure would significantly reduce the demand for medical care and help bring down the costs.
However, relief for the supply side of the equation is not as apparent.
The Supply Side:
According to various reports, there is a shortage of some types of health care services, notably, physicians in general practice, registered nurses, and, in some areas, medical facilities such as hospitals and clinics. In many other areas, growth in the supply of health care services has not kept pace with the increased demand. The question on how to improve the quality and the quantity medical care without government involvement came up on the Close-Up Bulletin Board (BB) on the Prodigy1 Interactive Personal Service. This writer participated in an extensive brainstorming session on the Prodigy BB with XXXXXXXX2 on this subject and the following is a compilation of the ideas we generated.
There is a serious need to improve the availability of the medical care that is commonly provided by physicians in family practice or general practice. For this discussion, I will use the term general practitioners (GPs). The number of GPs has been declining recently as more and more medical school graduates decide to specialize because that is where the money is. What is needed is a means to encourage more medical students to become GPs or, at least, help to alleviate the shortage of GPs.
We propose that a nation-wide cooperative be formed among private companies, hospitals, physicians, and medical schools to provide scholarships to prospective physicians. This cooperative would be coordinated by a board made up of representatives from each entity of the cooperative. The coordination board would establish standards for scholarship eligibility, establish and maintain a list of cooperating medical schools, selects the scholarship recipients, and establish academic criteria for the continuation of the scholarship. The cooperative would be voluntary and would require no government involvement.
Private companies would provide most of the financial investment in the cooperative to pay for the scholarships. The amount of each company's investment would be determined by the number of employees and the financial condition of the company. In return for this investment the companies would receive guaranteed low-cost medical care for their employees. Since the other entities in the cooperative also have employees, they would also invest in the scholarship fund.
The hospitals, physicians, and medical schools would gather information about where the need for GPs is greatest and about which specialties are in short supply and provide it to the coordination board. The board would arrange for providing counseling to prospective physicians about the scholarship program and the areas of greatest need.
Upon graduation from medical school, the scholarship recipients would be required to spend five years in general practice to repay the value of the scholarship. This five year period would take place in an area of greatest need as determined by the coordination board.
The first year would be as an apprentice to a practicing GP. Initially, the apprentice would only provide office treatment of individuals and families in need of medical care. A major part of this individual and family medical care would be in stressing the importance of preventive medicine. That way the apprentice would learn to treat the whole patient rather than as a collection of parts to be tinkered with.
Near the end of the first year, the apprentice would begin to accompany the GP on his hospital rounds and to assist the GP in hospital treatment. During this first year the cooperative would provide the apprentice with room and board as well as a small stipend.
As part of this first year each apprentice would be required to provide a number of hours of community service. This community service would include providing free medical care to uninsured and unemployed patients and to those who are not employed by businesses that are part of the cooperative. It would also include providing education about the need for proper medical care and preventive medicine and about the necessity of pre-natal care for pregnant women.
In the next three years the new doctor would enter practice as a GP in the same area where the apprenticeship took place at the going rate for that area. The community service would continue at a reduced number of hours.
In the fifth and final year the new doctor would continue general practice and become a mentor to a new medical school graduate who is in his or her year of apprenticeship.
At the completion of those five years the new doctors would be free to specialize at their own expense or continue in general practice. If the new doctor wishes to specialize in an area that the cooperative has determined to be in short supply, he or she would receive a partial subsidy for the education required to attain that specialty.
It is hoped that the above proposal would increase the numbers of general practitioners and improve the availability of general medical care.
There are many services currently required to be provided by physicians that could be performed by specially trained nurses and lay people. For example, routine physical exams, routine pre-natal care, and well-baby care could be performed by specially trained nurses. Trained lay people could draw blood, perform simple laboratory tests, and take medical histories. The cost of medical care could be reduced significantly by such changes in providing medical services. Unfortunately, the licensing laws in each state would have to be modified to allow nurses and lay people to provide the services now provided only by physicians.
Conclusion:
When the cost of health care is considered, most of the attention has been given to the demand side of the supply and demand equation. This discussion should provide some food for thought on addressing the supply side of that equation without involving any damaging government interference.
1 Prodigy is a registered trademark of Prodigy Services Company.
2 XXXXXXXX is a nurse who also has a law degree.
Naturalized-Texan
(Note: This article was published in a now-defunct magazine 1n 1993.)
Introduction:
The main problem with American health care is not the availability of health care, for care is available for those who need it whether they are insured or not. The real problem is the spiraling cost of health care. As usual, the increased cost of medical care is the result of the most basic law of economics: the law of supply and demand. When there is a massive increase in the demand for health care coupled with a constant or declining supply, costs are bound to increase. In order to solve the health care cost problem, both the demand side and the supply side of the cost equation must be attacked. Relief for the demand side of the equation is relatively simple, but the supply side is far more complex.
The Demand Side:
The federal government and the insurance companies are the primary causes of the spiraling increases in the demand for health care. Since much of the health care is "free" to the consumer, it generates an artificial demand for medical services. Moreover, since health care is "free" to the consumer, there is no incentive for the consumer to shop around for the best deal in medical services. Consequently there is no competition to keep health care costs down.
Because there are little or no out of pocket expenses, people often go to the doctor for minor medical needs such as a common cold or a splinter or a headache that could easily be treated at home. In addition, many people go to the hospital for treatment that could easily be done in a doctor's office because it is "free" to them. Often, people go into the hospital for minor surgery that could be performed in a doctor's office or on an outpatient basis. For example, I know people who get themselves admitted to a hospital for a tooth extraction because their insurance will cover everything, but if the extraction took place in the dentist's office, the patient would have to pay part of the cost. Many people go to an emergency room for treatment that could easily be performed in a doctor's office because more of the costs would be covered by insurance. All of this artificially created increase in demand for more expensive medical services puts tremendous pressure on an already overloaded medical care system.
There has been a lot written about how to solve the demand side of the supply and demand equation and nearly all of it states that the consumer must be involved in paying for health care. The best way to do this is to provide health care vouchers to each person not covered by an employer's medical plan. The vouchers would be issued in an amount equal to the average per-person cost of health care in the person's state. The vouchers would be distributed each year by the state or local governments using state funds with little or no federal government involvement. These health care vouchers could then be used to pay for needed health care directly or to purchase health insurance. Either way the consumer would be aware of the true cost of health care and would have the incentive to shop for the most cost effective provider. Any unused portion of the voucher could be accumulated in a Medical Savings IRA for future catastrophic illnesses. Those who are covered by an employer’s plan could also contribute to a Medical Savings IRA.
For those who are covered by an employer's plan or who use the voucher to purchase insurance, the benefit structure for insurance payments must be revised to discourage the abuses described earlier. If a person goes to a doctor for treatment of minor medical problems that could be treated at home, he or she must pay for 100% of the costs for the doctor's fees and any medicines. If a person is admitted to a hospital for treatment or surgery that could be performed in a doctor's office or on an outpatient basis, he or she will only be reimbursed for the costs that would have been incurred in the doctor's office or as an outpatient. The patient would be responsible for the balance. Such a rate structure would significantly reduce the demand for medical care and help bring down the costs.
However, relief for the supply side of the equation is not as apparent.
The Supply Side:
According to various reports, there is a shortage of some types of health care services, notably, physicians in general practice, registered nurses, and, in some areas, medical facilities such as hospitals and clinics. In many other areas, growth in the supply of health care services has not kept pace with the increased demand. The question on how to improve the quality and the quantity medical care without government involvement came up on the Close-Up Bulletin Board (BB) on the Prodigy1 Interactive Personal Service. This writer participated in an extensive brainstorming session on the Prodigy BB with XXXXXXXX2 on this subject and the following is a compilation of the ideas we generated.
There is a serious need to improve the availability of the medical care that is commonly provided by physicians in family practice or general practice. For this discussion, I will use the term general practitioners (GPs). The number of GPs has been declining recently as more and more medical school graduates decide to specialize because that is where the money is. What is needed is a means to encourage more medical students to become GPs or, at least, help to alleviate the shortage of GPs.
We propose that a nation-wide cooperative be formed among private companies, hospitals, physicians, and medical schools to provide scholarships to prospective physicians. This cooperative would be coordinated by a board made up of representatives from each entity of the cooperative. The coordination board would establish standards for scholarship eligibility, establish and maintain a list of cooperating medical schools, selects the scholarship recipients, and establish academic criteria for the continuation of the scholarship. The cooperative would be voluntary and would require no government involvement.
Private companies would provide most of the financial investment in the cooperative to pay for the scholarships. The amount of each company's investment would be determined by the number of employees and the financial condition of the company. In return for this investment the companies would receive guaranteed low-cost medical care for their employees. Since the other entities in the cooperative also have employees, they would also invest in the scholarship fund.
The hospitals, physicians, and medical schools would gather information about where the need for GPs is greatest and about which specialties are in short supply and provide it to the coordination board. The board would arrange for providing counseling to prospective physicians about the scholarship program and the areas of greatest need.
Upon graduation from medical school, the scholarship recipients would be required to spend five years in general practice to repay the value of the scholarship. This five year period would take place in an area of greatest need as determined by the coordination board.
The first year would be as an apprentice to a practicing GP. Initially, the apprentice would only provide office treatment of individuals and families in need of medical care. A major part of this individual and family medical care would be in stressing the importance of preventive medicine. That way the apprentice would learn to treat the whole patient rather than as a collection of parts to be tinkered with.
Near the end of the first year, the apprentice would begin to accompany the GP on his hospital rounds and to assist the GP in hospital treatment. During this first year the cooperative would provide the apprentice with room and board as well as a small stipend.
As part of this first year each apprentice would be required to provide a number of hours of community service. This community service would include providing free medical care to uninsured and unemployed patients and to those who are not employed by businesses that are part of the cooperative. It would also include providing education about the need for proper medical care and preventive medicine and about the necessity of pre-natal care for pregnant women.
In the next three years the new doctor would enter practice as a GP in the same area where the apprenticeship took place at the going rate for that area. The community service would continue at a reduced number of hours.
In the fifth and final year the new doctor would continue general practice and become a mentor to a new medical school graduate who is in his or her year of apprenticeship.
At the completion of those five years the new doctors would be free to specialize at their own expense or continue in general practice. If the new doctor wishes to specialize in an area that the cooperative has determined to be in short supply, he or she would receive a partial subsidy for the education required to attain that specialty.
It is hoped that the above proposal would increase the numbers of general practitioners and improve the availability of general medical care.
There are many services currently required to be provided by physicians that could be performed by specially trained nurses and lay people. For example, routine physical exams, routine pre-natal care, and well-baby care could be performed by specially trained nurses. Trained lay people could draw blood, perform simple laboratory tests, and take medical histories. The cost of medical care could be reduced significantly by such changes in providing medical services. Unfortunately, the licensing laws in each state would have to be modified to allow nurses and lay people to provide the services now provided only by physicians.
Conclusion:
When the cost of health care is considered, most of the attention has been given to the demand side of the supply and demand equation. This discussion should provide some food for thought on addressing the supply side of that equation without involving any damaging government interference.
1 Prodigy is a registered trademark of Prodigy Services Company.
2 XXXXXXXX is a nurse who also has a law degree.