Healthcare Overhead
One of the truisms about healthcare in American is the overhead costs and staggering. Obama campaigned on reducing overhead costs with electronic records for a reason, claiming on his healthcare plan: "One-quarter of all medical spending goes to administrative and overhead costs." Whatever the percentage, it is hard to measure, the size of the overall system assures this is a large number.
I had an idea this morning that could remove problems inherent but not require creation of another entitlement program. Legislation could make it a crime to charge different rates to different customers and require all prices made available upfront. This means individuals would pay whatever private insurance gets charged for a service, which is the same as whatever Medicare pays for a service. Physicians that do not want to charge lower rates reimbursed by Medicare are free to charge higher rates, but must charge customers the same rate regardless of who signs the check paying them. This intuitively makes sense in light of individuals without healthcare get charged several times more than what an insurer could negotiate for the same service.
First pass might cause people to consider dropping health insurance, but this concept alters the role of a private insurer from negotiating rates to removing risk - you know, like insurance. Without healthcare an individual runs the risk of paying large amounts out of pocket if they need extensive treatment, whereas insured individuals pay a lesser premium and share the risk of costs. Insurance companies could get back to actuarial accounting, calculating formulas of how many people they expect to get what costs and spread them across the insured. Different insurance plans could advertise different rates they would pay for services, which enables individuals to compare plans and have the opportunity to pay for more expensive care should they elect premium coverage. The availability of pricing by the doctors and hospitals makes this easier, since it frees up insurers to calculate costs easier and allows individuals to make better comparisons.
It's an intuitive benefit that we should be able to know how much a charge costs before we receive it. This is assumed throughout capitalism. There is not much basis for comparison today because the rates charged vary by the rate negotiated by the party paying and very little of this information is freely available.
Medicare and Medicaid could still serve individuals that are elderly or poor, cutting the out of pocket costs for those populations. Insurers could still serve their role. Individuals could gain a much more active role in deciding the health care market, rather than allowing insurance companies to dominate the ability to leverage comparative analysis. As it stands today the parties negotiating rates merely pass them on to members through increase premiums (premiums rose four times the rate of inflation over the last decade). People that cannot afford insurance could benefit from the rates Medicare patients enjoy, accomplished without increasing the enrollment of Medicare. The massive incentive of catastrophic costs remains in place to compel individuals to seek out insurance. Plus one experience paying full cost is enough to seek out insurance to decrease out of pocket expenses. Dental care is perhaps an analog for this effect; one root canal bill drives that person into a dental insurance plan quickly.
It would be very hard to implement at first, as would any reforms being considered. It might seem difficult for doctors to quantify costs upfront, but the software they use today surely has the ability to distinguish service from service in order to bill insurers and Medicare. They may benefit from less negotiating over rates and enjoy being able to have clearer conversations about the actual costs a patient faces. As great as an online Healthcare Blue Book may be, it does not necessarily reflect rates any given provider may charge and may not be the accurate out of pocket costs with insurance plan coverage rates varying, in-network and out-of-network. The buzzword is transparency, but the reality is capitalism.
I have not read this notion proposed. I know there are worse ideas than these two laws:
I had an idea this morning that could remove problems inherent but not require creation of another entitlement program. Legislation could make it a crime to charge different rates to different customers and require all prices made available upfront. This means individuals would pay whatever private insurance gets charged for a service, which is the same as whatever Medicare pays for a service. Physicians that do not want to charge lower rates reimbursed by Medicare are free to charge higher rates, but must charge customers the same rate regardless of who signs the check paying them. This intuitively makes sense in light of individuals without healthcare get charged several times more than what an insurer could negotiate for the same service.
First pass might cause people to consider dropping health insurance, but this concept alters the role of a private insurer from negotiating rates to removing risk - you know, like insurance. Without healthcare an individual runs the risk of paying large amounts out of pocket if they need extensive treatment, whereas insured individuals pay a lesser premium and share the risk of costs. Insurance companies could get back to actuarial accounting, calculating formulas of how many people they expect to get what costs and spread them across the insured. Different insurance plans could advertise different rates they would pay for services, which enables individuals to compare plans and have the opportunity to pay for more expensive care should they elect premium coverage. The availability of pricing by the doctors and hospitals makes this easier, since it frees up insurers to calculate costs easier and allows individuals to make better comparisons.
It's an intuitive benefit that we should be able to know how much a charge costs before we receive it. This is assumed throughout capitalism. There is not much basis for comparison today because the rates charged vary by the rate negotiated by the party paying and very little of this information is freely available.
Medicare and Medicaid could still serve individuals that are elderly or poor, cutting the out of pocket costs for those populations. Insurers could still serve their role. Individuals could gain a much more active role in deciding the health care market, rather than allowing insurance companies to dominate the ability to leverage comparative analysis. As it stands today the parties negotiating rates merely pass them on to members through increase premiums (premiums rose four times the rate of inflation over the last decade). People that cannot afford insurance could benefit from the rates Medicare patients enjoy, accomplished without increasing the enrollment of Medicare. The massive incentive of catastrophic costs remains in place to compel individuals to seek out insurance. Plus one experience paying full cost is enough to seek out insurance to decrease out of pocket expenses. Dental care is perhaps an analog for this effect; one root canal bill drives that person into a dental insurance plan quickly.
It would be very hard to implement at first, as would any reforms being considered. It might seem difficult for doctors to quantify costs upfront, but the software they use today surely has the ability to distinguish service from service in order to bill insurers and Medicare. They may benefit from less negotiating over rates and enjoy being able to have clearer conversations about the actual costs a patient faces. As great as an online Healthcare Blue Book may be, it does not necessarily reflect rates any given provider may charge and may not be the accurate out of pocket costs with insurance plan coverage rates varying, in-network and out-of-network. The buzzword is transparency, but the reality is capitalism.
I have not read this notion proposed. I know there are worse ideas than these two laws:
- make it a crime to charge different rates to different patients
- require price lists made freely available
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