Monday, July 3, 2017

An Open Letter to POTUS

To: President, Donald Trump
From: Larry Burnett
Subject:  Health Care Reform                   7/3/2017

      Mr. President, 

I have noticed that you are a man who listens.  So, I hope you are willing to listen to an idea for reforming the American health care system.  But first, please allow me to lay a bit of groundwork for this idea by outlining 3 basic realities.

The Driving Force:

1. We are really only dealing with two issues:  Cost and Coverage.
  
2. Both of these issues have only become problematic because of the tremendous inflation rate in the health care industry.

3. This hyper-inflation is caused by only one thing – the “deep pockets” of the insurance companies.  And yet, our lawmakers seem oddly unaware that this huge availability of insurance money in the system is the driving force behind the health care dilemma.

Nevertheless, here is the obvious conclusion.  To deal with the issues of both health care costs and health care coverage, you must first deal with the effect of those inflationary deep pockets.

Please know that I am no hater of insurance companies.  They are what they are; and, they certainly serve a purpose.  

But, the reality is this. As long as the insurance industry introduces those vast reserves of cash into the health care sector, the health care industry is going to gobble up as much of it as they possibly can by charging exorbitant prices for their services.  And then, insurance companies will charge more for coverage.  And then, the health care industry will charge more for services, etc. etc., etc.

The Difficult Requisite:

Obviously then, the insurance company becomes the beginning place for a solution.  But, there is a very difficult requisite which must happen before meaningful and positive change can be introduced to deal with this inflationary impact of the insurance industry.

The Insurance Lobby must be removed from the front row at the “Solution Table.”

Certainly, their interest must be considered at some level.  But, without question, what must ultimately be done will be completely unpalatable to this industry.  And, they will never agree to the viability of the required actions.    

I'm sure you already know that confronting this lobby in Washington will be a huge, huge political challenge.  The influence of this lobby is what has already been producing the disjointed, "Frankenstein" like plans which have thus far been put forward.  

Those reform plans have come out awkward and disjointed because of the hidden political agenda which force fits their mismatched parts together. And that subliminal political agenda is the congressional mind-set which says, “we must stringently protect the economic interest of the insurance companies.”

Time To Get Real:

Mr. President, it's long past time for lawmakers to get honest about the real problem in our health care industry and what's really driving that problem.  It is time to courageously go wherever the best solution leads - in spite of the insurance lobby.  

The truth is, their wealth is, indeed, the very string which begins to untie this health care knot. And, the exclusion of their interests, at least as a front row consideration, is no less necessary than it is difficult.  Then, you can do the relatively simple thing which can actually resolve the health care dilemma.

A Real and Innovative Solution:

And, that thing is this.  It is to introduce a “Super Competitor” into the insurance industry.  This would be an outside-the-industry competitor capable of simultaneously driving down both inflationary medical pricing and high cost of health insurance. 

So, the impact of this Super Competitor would be to establish bench mark, fair market values for medical services while at the same time introducing a true competition into the insurance policy marketplace to drive down coverage costs.

Obviously, this is a tall order.  And certainly, the practical reality is that you are never going to get such a competition or such a competitor from among the ranks of the players within the insurance and health care industries. 

Thus, in this very unique situation, there is really only one candidate who need apply for the job.  It is "Uncle Sam." But, it is not an Uncle Sam that is dressed in his usual entitlement garb.  

So, Here’s My Suggestion, Mr. President:

Obviously, the federal government is already in the insurance business in a limited sense with regard to seniors and Medicare.  So, it is not like that is a completely foreign idea.  Thus, I would suggest that Medicare go one small, money making, step (that’s right, “money making step) further and create what might be called, for example, “Medicare Vital.

              BUT - MEDICARE VITAL WOULD NOT BE
                      AN ENTITLEMENT PROGRAM!

Medicare Vital would be a bona fide, low cost, government generated, highly tailorable health insurance, based on real world actuaries with premiums paid to the Medicare Vital Program by the insured of any age below the normal retirement level who choose to buy a Medicare Vital policy.  So, Medicare Vital Insurance would merely be administered under the Medicare bureaucratic umbrella, but it would be bought-and-paid-for entirely by the premiums of the insured – not by the taxpayer.

And, this lower cost insurance would be made so in at least a couple of ways.   The lower cost would stem from the government’s ability to set health care service prices paid through the program (as it does with regular Medicare).  And, it would also derive from the absence of the need to pay annual dividends to stockholders.

But, the real beauty of Medicare Vital is that the net income which it generates could be invested, as is that of all other insurance policies, to produce investment income which in turn could provide, or help provide, coverage to the very poor and those with existing and high risk conditions.

And, this need to do this additional charitable funding for the disadvantaged, plus the need to attract widespread Doctor and Hospital Participation with above regular Medicare level payments  (for example: regular Medicare + 20 or 30%) ​will enable private sector insurance companies to still compete, price wise, with the Medicare Vital policy offerings. 

So, this will not create a "Single Payer System." Rather, it will simply create a stiffer competition by this potent outside-the-industry super competitor.

And certainly, it is typically that when there are large imbalances in the economy, good balance is restored through laws, bureaucratic mandates, etc.  But, the nature of the “health care beast” simply defies this more straight forward way of establishing economic balance.  And so, in the case of health care, we are really only left with real and very robust competition as the needed tool to restore and maintain good balance.

But – What About the Present Urgency?

Very obviously, the American health care crisis is happening now as Obama Care is quickly and completely imploding.  So, in the interim, to relieve the pressure between the present crisis and the time when the Medicare Vital Concept could be fully implemented, I would suggest that the federal government do the following. 

Immediately start working with private sector insurance companies to develop, as quickly as possible, two “federally sanctioned” insurance policies.  These sanctioned policies would serve as “Bridge Policies” until the Medicare Vital Concept could be implemented.  The policies would be roughly as follows:

      Policy 1:  A very basic, no frills, Standard 80 / 20 Policy w/ $1000 deductible.

      Policy 2:  A policy which would cover Existing Conditions and High Risk Clients.

The cost of these Bridge Policies, would then be somewhat subsidized by the federal government only until Medicare Vital comes on-line. This would satisfy the government’s good faith obligation to ACA clients and to severely disadvantaged citizens.

However, very obviously, the obligation involved with Policy 2 is, by far, the more expensive one.  But, this larger expense can, for that interim period, be best handled by dividing it among all of the players:  The Client, the Government, the Insurance Company, and the Health Care Provider.  And certainly, each of these entities are, indeed, somewhat morally obliged to contribute to the rescue of these most vulnerable people.  

And, this load sharing can be very simply and efficiently implemented, using the same Medicare Vital type Payment Schedule discussed above.   By simply setting up Policy 2 with, for example, a Medicare + 30 % Payment Schedule for services rendered, all involved parties are taking on part of the load for this expensive group. 

The Insurance Company takes on the risk with a relatively lower policy cost (base on the Medicare + type payment plan).  The Insurance Client pays part of the cost of the insurance policy.  The Government funds the remaining cost of the policy.  And, the Health Care Providers accept a somewhat reduced payment schedule for services rendered.   

These Bridge Policies would then allow for the immediate and entire repeal of the Affordable Care Act, effective on some reasonable date after these Federally Sanctioned Policies become available.  And, to further provide some immediate relief to all insurance purchasers in the interim, concurrent with the repeal of the ACA, Congress could also establish a single, nationwide marketplace for health insurance sales (causing insurance companies to compete across state lines - as has been long talked about).

Now, Just a Quick Recap:

1. Medicare Vital is a bona fide insurance policy generating premium inflows instead of entitlement pay outs.  And, the investment income generated by Medicare Vital could be linked to regular Medicare or Medicaid Grants to off-set, or help off-set, the cost of insuring those with an existing or high risk condition and the very poor. 

2. The Medicare Vital concept would use the same cost-controlling tactics as regular Medicare setting the acceptable price for a given procedure - but with some added value (for example, the regular Medicare Price + 30%). 

    This additional percentage is still covered by premiums.  But, it keeps the Medicare Vital business financially attractive to doctors and hospitals etc. 

3. But, the really important take-away here is that Medicare Vital is able to establish a cost benchmark - a fair market value - for both health care services and medical insurance policies across the age spectrum of the below retirement age marketplace

4. And finally, Medicare Vital would provide a stellar replacement for Obama Care, thus enabling the opportunity for the immediate repeal of the Affordable Care Act.

     Final Summary:
  
So, in summary, by being able to insert both Fair Market Medical Treatment Pricing and truly Competitive Insurance Policy Pricing at the same time, into the health care marketplace, Medicare Vital becomes a kind of “Pace Car” for the economics of both industries.  And yet, it leaves both industries reasonably dynamic, just not in such an unfettered way.

 Now, the upward inflationary pressure created by the deep pockets of the insurance companies is tempered by an opposing force.  It is countered by the downward pressure created by this new, outside-the-industry “Super Competitor,” - Medicare Vital.

Under such a system, an insurance customer would then have truly competitive policy choices. And these would include, not only the Medicare Vital Policies, but also those produced by the private sector insurance companies as they start really competing for market share against each other and this new pace setter in the industry.  And, health care professionals would be reasonablyif not exorbitantly, compensated at the end of it all.  

Thus, all of the players would once again be playing on a reality based playing field.  And, most importantly, doctors and patients would once again be in charge of health care decisions.

And, it would seem that the over-arching framework for the Medicare Vital Concept is already in place in the Medicare Structure.  You may need a few more bureaucrats, but not a whole new bureaucracy.  You would just need to add some really bright insurance guys and gals to design the policies and administer the money making program.

Mr. President, I am politically very observant.  And yet, I have not heard a single politician in Washington even mention these true dynamics behind our health care dilemma - much less offer solutions which will effectively address them.  

Please sir, challenge our lawmakers to get beyond the "rabbit hole" paradigms of Washington-think and do something really bold and thoroughly effective - not just to make a political point with a get-by health care system - but to achieve the most successful, near-universal health care system on Earth.  

Sir, if we would brag about American Exceptionalism, it is in times like these that we must demonstrate its reality. 

                       
                                                  Your very supportive friend,
                                                                 Larry Burnett