Routing the two-tier system: Part IV – Healthcare

Quite possibly we could have the most efficient healthcare system in the world.

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The healthcare system in the U.S. is clearly a two-tier (or multi-tier) system.  Some parts of it (the Veterans Administration, for example) are partially a single-tier system.  All active soldiers, airmen and sailors can get their health care covered under Tricare Prime and are treated alike. Active soldiers, airmen and sailors get complete coverage for free. Healthcare for the military is well handled.

What about other countries?  Switzerland has a completely private system.  The doctors and hospitals are private, and the health insurers are private.  The Swiss law requires that all citizens and permanent residents must buy health insurance.  Poor people who cannot afford health insurance have it paid by the government. Effectively, this is a universal system (an expensive one, designed for people with money).  Switzerland spends the highest percentage of GDP on healthcare (around 11.4 percent) compared to all EU countries. “Swiss healthcare combines public, subsidized private and totally private healthcare systems to create an extensive network of highly qualified doctors (many of them from elsewhere in the EU) and Swiss hospitals, the best equipped medical facilities and no waiting lists – but it all comes at a price. . . . In addition to paying monthly premiums to the insurer, you must also pay a contribution towards the cost of any medical consultations and treatments, up to a fixed amount.”

The basic insurance policies are the same regardless of insurer, but many people purchase add-ons, so it is not a “single-tier” system.  If the policies were all the same and there were no add-ons, then it would be a single-tier system, even though mostly private.

Norway has the best insurance, doctor and hospital system for mothers and children. “While top-ranked Scandinavian countries like Norway, Sweden, and Finland have a one-tier healthcare system for mothers and children,  . . . the United States is a patchwork of state-funded Medicare programs and private insurance that separates the haves and the have-nots by geographic location, income status, and even skin color. And that patchwork makes it difficult even to adequately track women’s health data on a national level, which . . . . also contributes to the United States’ poor international showing.”  The U.S. was ranked 33rd while Norway was first in healthcare for mothers and children.  “In Norway, women have a 1 in 15,000 chance of maternal death, but American women face a 1 in 1,800 chance, a statistic Save the Children called “shocking” and “the worst performance of any developed country in the world.” (Part of the problem may be that some American mothers refuse to have abortions, even when they are in danger).  Clearly, the “patchwork” U.S. system does not work as well as the single-tier Norwegian system.

I’ve been thinking about a plan to eliminate the two-tier healthcare system.  I’ve been particularly inspired by the Finnish single-tier education system.  Medicare for All, the plan of Bernie Sanders and other progressive politicians in the U.S. would do that, but I think I’ve possibly got a better one — one that right-wing voters in the U.S. might like, because it provides a place for private insurance. 

Let us suppose that the government decides to fund universal healthcare coverage.  Instead of trying to be the insurer itself, it designs a payment schedule for doctors and hospitals, based on the existing Medicare schedule.  All U.S. citizens (and maybe even illegal and legal immigrants, too; we can argue about that later) are automatically signed into the system.  The government consults with doctors, hospitals, etc., to make sure that the pricing is fair.  Then . . . 

The government asks all the insurance companies to bid a price per covered person that the government will have to pay to the insurer so that it will be responsible for paying all the doctors, hospitals, etc.  Medicare will also bid.  The winning insurer can hold the contract for a period of one year up to five years (the insurer specifies what it wants as part of the bid).  The government picks the winning bid.

Each covered person gets an electronic card with the government’s name on it (this assures continuity, regardless of which private company manages and pays out the money.)  The government advances its first monthly fee at the start of the contract (this means that the insurer doesn’t have to borrow to pay the first bills).

Doctors and hospitals in the U.S. cannot accept payment for services other than through the official insurer.  The insurer will provide coverage for all services in accordance with the schedule accepted by the winning bid.  (There will be a procedure to deal with situations in which a particular illness or treatment is not covered by the schedule).  All doctors and hospitals are required to agree to the schedule in order to obtain payment from the insurer.

NOTE: I am aware that this arrangement prevents wealthy people from negotiating separately with licensed doctors and hospitals in the U.S.  They are free to get services outside the U.S. if they want to.

If none of the private insurers want to bid, then Medicare will submit the winning bid.  Doctors, hospitals, and insurers get to participate in fixing the payment schedule.  The government doesn’t control how the doctors and hospitals work out issues with the winning insurer.  With only one insurer, this is a “single-payer” system and therefore has a lot of administrative cost savings built in.  This system provides for universal coverage, a single-payer system, and minimal governmental oversight unless Medicare has to be the insurer.

I’m sure that wealthy people won’t like the fact that doctors and hospitals in the U.S. can accept money only from the official insurer.  This means that they cannot pay for extra services out-of-pocket. This is similar to the Finnish education system, which prevents private schools from charging extra fees.  But the schedule is supposed to cover all diseases, injuries and services. And the wealthy are free to go abroad if they want to. The system is designed to discourage that.  The only thing the wealthy cannot do is pay extra money to “jump the queue.” On the other hand, if the wealthy want to import a foreign doctor and get him licensed in the U.S., I suppose they can try to do that, although the U.S. hospitals may have rules about that.  

I’m sure that the overall cost for healthcare will increase, because everyone will be insured and covered.  But politically it would make sense to charge the wealthy a higher amount for their coverage, and that would mean that the nation could afford to cover all of its people.  We would have universal coverage plus a single-payer and single-tier system. Quite possibly we would have the most efficient healthcare system in the world.

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