In helping to fix healthcare crisis, let’s throw away single-payer as a solution.
Deconstructing a for-profit healthcare system has many nasty side effects. Tremendous infrastructure per publicly owned companies in different sectors, necessarily interlinked; complete with shareholders, funds held by current and future retirees, and of course massive amounts of employed individuals.
How about corporate altruism? Now then – which of the players in our healthcare system are going to ‘pony up’ and cut their billables, to make healthcare more affordable for the masses? Anthem? United? Genesis? HCA? LabCorp? Merck? Pfizer? C’mon guys – you’re here to help the people, right? It’s not really all about the money is it?
Let’s say we get payer, provider and drug companies to cut their revenues. How long would it take for shareholders of these publicly-owned companies to sell their shares? What happens to employment levels? What about future financing after public confidence is lost? What happens to those retirees that own large shares of these stocks?
So let’s turn next to another fix for healthcare. What of consumer responsibility?
Statistics are clear that nearly 35% (78.6 million) of U.S. adults are obese; which often leads to heart disease, stroke, type 2 diabetes and certain types of cancer, some of the leading causes of preventable death. About half of all adults—117 million people—had one or more chronic health conditions. One of four adults had two or more chronic health conditions.
Do we honestly believe Americans are going towillingly and proactively change their poor eating and exercise habits en masse? Do we expect the majority of obese individuals will lose their excessive weight?
The reality is that we have an interconnected group of self-serving and self-centered individuals, businesses, and political leaders, none of whom are willing, in any major way, to make sizeable efforts to fix our healthcare system. Add in the massive marketing push from food and beverage companies (sodas, snack foods, and alcohol) as well as fast-food restaurants. It all spells a continuing downward spiral for our country’s healthcare costs and future affordability.
Enter the Transitions Plan
A mere 5 percent of Medicare patients die each year, constituting an astounding average of 28.5 percent of all Medicare costs. This accounts for nearly $200 Billion/yr. in outgoing payments. Add to that another $250 Billion/yr. for end-of-life care per those under Medicaid and private insurance. Nearly 15% – close to a half a trillion dollars spent in an individual’s last 12 months. It is a tremendous commodity for physician practices, hospitals, the drug companies, and medical services/products companies.
On a separate note, there is clearly deliniated wealth distribution in our county, and within our elderly population. Since 1989, the proportion of those older than age 75 with mortgage debt has quadrupled. Many seniors have large amounts of debt due to high medical bills, long-term care, and dwindling retirement savings. In addition, credit card debt for seniors is larger and rising faster than for the younger generations. Racial disparities are evident in the have’s and the have not’s.
Let’s also not forget that many ‘last year’ patients are people who are not senior citizens. Some come from the nearly 47 million Americans living in poverty, as well the working, lower-to-middle and middle-income earners. What happens when Medicare, Medicaid or private insurance doesn’t cover all the medical costs? Not every claim gets paid.
According to several studies, medical debt is the single biggest cause of consumer bankruptcy in the U.S. According to the Consumer Finance Protection Bureau, 43 million Americans are overdue on their medical bill payments. Also noteworthy is that 60 percent of those with medical bill problems say they have had difficulty paying other bills; 33 percent having difficulty paying for food, heat or housing.
Then we have extending life. Sure, it is a noble task; but ask a chronically ill person or even an elderly person what they think about living to 100. Als, did you know that Alzheimer’s is the sixth leading cause of death in the United States? Projections now state that by 2050, we could see a 300% increase in its prevalence and cost. Today, the disease also involves 10.9 million unpaid caregivers and $172 billion in annual costs.
Apart from our own selfish motives for keeping them from death, those going through the suffering recognize the importance of dying with dignity, instead of slowly wasting away through a myriad of medical appointments, drugs, therapies, surgeries and lab tests.
The Transitions Plan is a proposed option where health payers identify terminal or highly likely terminal patients, who willingly choose to forego payment for receiving related medical services. In return, they receive a guaranteed tax-free, single windfall payment. The payment derived from insurer payments (pre-hospice), which would have gone to providers, hospitals, drug companies and others associated with treatment.
Take Charles Smith, a 58-year old man, diagnosed with Stage 3B lung cancer. The average case has a 95% chance of death. Let’s estimate that between chemotherapy, radiation, lab tests, doctor visits, home health, costly medications, pulmonary therapy and several possible surgeries, a typical health payer can expect to reimburse out $350,000.
The program is voluntary, and only for those individuals deemed competent to make this decision. Naturally, the Transitions Plan could also be worked into an advanced directive, if deemed as such by the patient.
If the beneficiary does not choose to take the Transitions Plan, nothing will change with their current health coverage. If accepted, the payer will send a one-time, tax-free, non-refundable payment to Mr. Charles Smith for $150,000 upon his death. This may allow Mr. Smith the possibility of changing his mind to go off the plan and return to this normal insurance coverage.
What has just happened is a unique meeting of the minds between poor to middle class dying Americans and the health insurance industry. In giving insureds the option to be financially compensated, health payers shift payments from the medical establishment, back to individuals who are taking clear control of their lives and deaths.
Imagine Mr. Smith having less than $5,000 of total savings and no insurance. He is divorced, yet has two children who are also in the lower income class. While $150,000 of tax-free money is not millions, it could make a difference to that family and perhaps their ability to afford healthcare, a home or even a college education. It could also be left to charity
Without Transition Plan, Mr. Smith might struggle to pay his remaining debts and have no money left over for funeral expenses. Now he might send his two kids on a trip around the world, or help them in their financial woes. Perhaps he may choose to contribute to several 529 plans for the education of his grandchildren. He could also choose to give to charities, political groups, churches or even share it with his most beloved friends.
In this specific case, Medicare, Medicaid, private insurance companies or self-insured businesses receive back the $200,000 difference in cost savings. Here is where the government steps in. The payer or self-insured organization keeps a modest 8-10%. That’s profit and incentive. The additional funds would travel to a state or federal pool, set out to help the uninsured or underinsured community.
We’re taking just one case in the example provided. If the average dying Medicare patient would cost $100,000 or a non-Medicare patient $175,000, a clear decision by the patient would have to be made on the prognosis, views of death, and the payout offered.
Financial losers here? End of life medical services including chemotherapy, radiation, imaging, testing, surgeries, therapies, medical equipment sales and home health services. By these service fees already regulated by insurers, there is no opportunity for providers to charge current and future patients more because the supply of patients is decreasing.
For a large majority of Americans who don’t have the assets to leave, but recognize their value per historical healthcare payments to providers, the Transitions Plan could be a useful measure. It would effectively allow them to stake a claim toward monies normally ending up in the pockets of medical service professionals, for care cases not often resolving positively.