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"Healthcare in America-A Time for Radical Change"
Ventura Star, December 14, 2003

By Terry Paulson, PhD

Our current healthcare nightmare started with the wage and price controls after World War II. Companies who wanted to hire and reward good employees were forbidden to offer higher wages, but they could offer health insurance and call it a business expense instead of a wage. Today, as a result, most medical treatments are paid by third parties, employer-funded insurance or government insurance. The people who are paying for the care are not the people who are using it.

People are stuck in jobs they hate, because they can't afford to lose their coverage. Others have no coverage or are saddled with underwriting exclusions for the very things they need insurance for. Some workers are striking to insure their healthcare entitlement. Healthcare premiums for companies have jumped at a double-digit rate. By 2006, premiums for a family could average more than $14,000 a year. The patients aren't happy. The suppliers aren't happy, and the employers are frustrated by skyrocketing costs.

We are a rich country spending 14% of our GNP on health care, but we deserve more for that investment. It's time for a radical change in America's health care system. Americans do not want the waiting or the rationing of care that socialized medicine would bring and have soundly defeated such plans every time they have been considered. Here is an alternative:

1. Just as drivers show proof of auto insurance, require all citizens to show proof of mandatory basic healthcare coverage on their annual tax forms. If no proof is provided, citizens would be automatically enrolled in and billed for a default private plan. By having every American in a basic medical plan, group rates would decrease the risk and lower the price.

2. Employer ownership of employee policies blocks portability. Instead of being given tax subsidies for providing healthcare benefits, employers should give the money spent directly to employees as income. Employees would receive the tax deduction for their own healthcare policy choices.

3. Truly poor citizens should be subsidized through tax credits designed to cover the cost of the required basic health coverage-$1,000 for an individual or $3,000 for a family.

4. Because coverage is mandatory and the pool large, insurers would be required to accept all who apply with no limits on pre-existing conditions. Portability and lifetime coverage would be assured.

5. The mandatory coverage would be a basic, no-frills, high-deductible major medical plan. The Rand Corporation has demonstrated that high deductibles reduce health costs by 30%. After the high annual deductible amount is reached, all approved medical costs would be paid.

6. Citizens would be encouraged to have interest-bearing Medical Savings Accounts from which payments would be made as medical or prescription needs arise. Unused funds in any given year could be used for future healthcare needs. Both the MSA accounts and the medical insurance would be 100% tax deductible. To simplify, insurance companies could offer cash-value healthcare policies that would combine a medical savings account with a major medical policy component.

7. Drugs are no longer ancillary to treatment; they are often the treatment of choice. Drugs must be included in the health care coverage. The use of generic drugs reduces drug prices by 80% on average within three years on the market. Pharmaceuticals must still be allowed to make a good profit for new, innovative drugs, but the government must also hold the line on controlling drug patent protection to insure a steady supply of generic drugs.

8. With citizens paying for their own care, they will insist on more choices and less reliance on over-priced hospital ER and outpatient services. Price competition from emerging clinics and increased demand will bring websites online that will help consumers find the right quality providers for the right price. Price-fixing will be minimized to let the market operate. Patient payments will also cause consumers to use more generic drugs when they will do the job for less.

9. Provide insurance discounts for policy holders with more healthful lifestyles. By quitting smoking or successfully completing a weight loss program, people will improve their health and control costs.

10. Minimize paperwork. With over 9,000 health care plans in California alone, that means 9,000 different sets of paperwork and record-keeping requirements. The government should require standardized forms and record keeping across plans and policies.

11. Save up to $40 billion by having a centralized medical information exchange. Years ago, competing banks formed the VISA credit card collaborative and, together with merchants, created a real-time private financial information exchange at the point of service. The healthcare advantages will be evident-no separate forms for each doctor, access for information in any medical emergency and available research data to isolate best practices, minimize errors and improve quality of care. Integrated information networks would also allow better clinical decision support, bar-coding and e-prescribing.

12. Finally, excessive lawsuits are driving up health care costs for everyone and driving some doctors out of business. When awards for 'pain and suffering' are capped at less than $500,000, malpractice insurance costs are almost 25% less. We need Republicans and Democrats to work together to find a sane, fair limit.

Are you ready for a change?

Terry Paulson, Ph.D., of Agoura Hills, CA is a professional speaker on making change work and author of They Shoot Managers Don't They?

—Terry Paulson, PhD

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