August 28, 2003
By Linda Gorman
Though you would never know it from the news reports, the brightest hope for health care reform lies in the consumer directed health care movement.
Pioneering physicians, like Heather Sowell and Jonathan Sheldon at the Sheldon Sowell Center for Health in Englewood, and Vern Cherewatenko of Washington State, have opened practices that protect patients and physicians from the excessive overhead costs imposed by governments and insurance companies. By requiring payment at time of service they can eliminate overhead, charge fees that are 30 to 50 percent lower, and make health care affordable for almost everyone.
Pioneering insurers like Definity and Humana have created flexible insurance plans allowing consumers to tailor their health benefits. Participants pay out-of-pocket costs in line with the costs they impose on the other members of the plan. This protects careful consumers from costs imposed by the irresponsible. Initial results show people are shopping smarter. Emergency room visits for routine care are down, generic drug purchases are up, people choose more conservative treatments. Annual increases in health care costs have been halved, and in Ohio, employee out-of-pocket and premium costs decreased by 2 percent.
Pioneering hospitals and clinics, like the Mayo Clinic and St. Lukes hospital in Jacksonville, are working to preserve patient care by pulling out of Medicares Part B assignment program. Part B covers outpatient care, and has inflicted spiraling overhead costs and shrinking payments on participating physicians. Requiring patients to be responsible for Medicare reimbursements lets Mayo reduce its costs and preserve its standard of care.
Pioneering pharmaceutical companies are working to provide lifesaving drugs to people who need them but cannot pay. Rather than arguing about Medicare doughnut holes in federal programs designed to make everyone pay for the drugs consumed by even the wealthiest senior citizens in America, the companies have a simple application form for those who need help. It assesses ability to pay and individual circumstances. People who can pay a little, do. Those who cannot pay may be given the drug they need by its manufacturer.
Unlike the consumer directed reformers seeking to empower people, the proponents of big government health care have little to offer beyond the expansion of 40 years of oppressive regulation designed to force-feed patients a one-size-fits-all medical care only a bureaucrat could love. In the name of universal coverage, they push for Medicare and Medicaid expansions that would bring everyone under the dysfunctional government umbrella in the name of universal coverage. No matter that both programs are predicted to be bankrupt early in the 2020s.
Bankrupt or not, in a Catch-22 worthy of the Soviets, all citizens who apply for Social Security benefits are automatically enrolled in the Part A Medicare hospitalization program. You can withdraw only if you give up the Social Security benefits that you earned and pay back any you have already received. Once in, you are subject to Medicare rules under which the government, not you or your physician, determines the services that will be provided to you. Medicare rules make it virtually impossible for most patients to use their own money to pay for better, more convenient, or more complete care. This is in spite of the thousands of price controls on individual services, the criminalization of simple paperwork errors, and the widespread fraud in the Medicare program distorting the way medical care is provided.
To buy votes, Medicare pays for relatively small items that most people can afford, while exposing a smaller number of seriously ill people to unlimited financial risk. In Colorado, people in Medicare pay a flat deductible of $812 for 1-60 days in the hospital. From 61-90 days the out-of-pocket cost is $203 a day. For 91-150 days the cost is $406 a day. After that, there is not coverage. Similar formulas apply to skilled nursing care.
After a deductible of just $100, Medicares Part B outpatient program pays for inexpensive things like flu shots, commode chairs, and mammograms. Otherwise, people typically pay 20 percent of the government determined fees for covered services until their assets are gone. Those in need of an expensive prescription drug on an outpatient basis, get nothing. True to form, Congress is now considering a one-size-fits-all prescription drug program that most experts say will end up increasing peoples out-of-pocket costs. It is so complicated that you need a computer to navigate it, and, at least in the Senate version, it continues the grand tradition of unlimited risk exposure by making people pay 10% of all drug costs above $3,700.
In short, basic health reform offers two choices. Either oppress patients with big government programs that tell doctors what to do and fail to provide for catastrophic expenses, or liberate those same patients by continuing the consumer directed experiments that encourage people to pay cash for routine expenses, while offering protection for catastrophic ones.
(c)2003 The Independence Institute
INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.
JON CALDARA is President of the Institute.
LINDA GORMAN is the Director of the Health Care Policy Center at the Independence Institute.
NOTHING WRITTEN here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
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