Eternal Student of Life


Want a System That Gives Everyone a Right to Health Care but Still Allows Personal Choice plus Competitive Innovation and Efficiency? Read On . . .


I decided to take up the intellectual challenge of designing a health care reform package. Yes, I finally put together an answer to the perpetual question, "what would you do?" I'll explain in a minute. But first, let me say this: when you actually try to put a health care plan together, you soon fathom just how complicated the whole thing is. There are a lot of conflicting interests; improve one thing and you potentially cause disaster regarding something else (e.g., you can make the system fairer and more accessible to the less fortunate, but you then reduce the incentives for life-saving innovations and cost-containment efficiencies). Once you start designing an answer to the health care crisis, you see that there's no way to do what President Obama says that he and the Democrats will do. Sometimes you hear people say "the health care situation is really very simple, all you have to do is . . . " (e.g., "just extend Medicare and Medicaid"; as if those programs weren't at the CORE of the overall crisis!). And their solutions sound good for a half-hour or so, until you think through what would could go wrong. The general answer is, a LOT could go wrong with any simple solution to the health care crisis in America.

The first principle of my own reform plan is HONESTY. I would tell America this about my plan: it would seek to control costs, maintain affordability, and guarantee access to health care for everyone while fostering personal freedom, a range of consumer choices, and incentives to continue developing new life-saving drugs and other treatments. But it will NOT guarantee that anyone below the $100,000 income limit will get medical coverage at least as good as they have today for not a penny more. It will not insure that everyone can keep their present insurance plan and doctor if satisfied (which around 80% of people are). For some people, perhaps many people, it might mean additional financial burdens in terms of medical care payments, insurance fees, or taxes.

I can reasonably claim that in the long term, more people in America would get better health care and that better drugs and treatments would continue to become available while cost growth would be reigned in. But I couldn't deny that in the short-run, there would be some who would be worse off financially, including many working people in the middle class. And I cannot claim that my plan will provide the less fortunate with the same access to high-tech therapies that would be available to the rich. They certainly would be better off, probably much better off, than they are now with regard to medical care. But there will still be inequities; it's just a part of an overall compromise.

(So you see why it's best that I stayed out of politics; I surely wouldn't last long in today's political environment.)

OK, here's my plan: the federal government raise taxes enough to give every adult and child with a SSN a VOUCHER good for about $7000 per year, as to go out and buy a health care policy in a competitive nationwide exchange market. There would not be a "public option"; you would buy your coverage from a for-profit insurance company or a non-profit co-op. (But maybe something better could be arranged; see PART 2 below.) If you don't use your voucher to buy a plan but show up in a hospital or other facility needing care, you would then be assigned randomly to a private carrier, so that the facility could get paid. You could NOT sell the voucher or trade it; it would only be good for you. (People over 65 would retain their Medicare plans; I wouldn't want to shock them with all this change.)

The rich, the poor, and the in-between like myself would all get the same $7000 voucher. So there's the universal-access feature, the semi-socialist aspect of my plan. However, there would be some rugged-individualism too. The rich and middle class would be allowed to buy supplemental extra coverage, as now exists for Medicare. My plan would be totally honest -- the insurance that your voucher buys is SUBJECT TO LIMITS (akin to rationing) at some point. You are NOT going to get every last thing your MD could think of to keep you alive. If you want that, you have to pay extra for it (if the government mandated too much covered by the voucher, no one at all would accept them!). In the old-fashioned capitalist tradition, people with more money will live better and longer lives. But if you're poor and presently don't have ANY insurance, you're still a lot better off; you can at least see a family doctor when you want, and have common stuff like hypertension and backaches and asthma and diabetes treated (and thus stay out of the emergency room!). Again, my plan doesn't work miracles; it tries to make most things better, but it can't satisfy every concern.

Given the community rating features, young people would generally hate my plan ("why should I pay more taxes for a health care voucher that I don't need?"). Too bad. They need to be reminded that some day they will be old and will be subsidized by healthy young people, same as with Social Security.

Obviously, I'd bring to an end the tradition of health care being provided by employers. The time for that arrangement is long past (how would you like it if you could only get a car or a cell phone from your employer, and you had to take whatever model and features your bosses pick out?). Employers currently providing health coverage would have to give every covered employee an immediate salary increase based on what they were paying per employee for coverage. But employees could now be taxed on that increased pay. And that tax would go to help cover uninsured people.

However, this clearly wouldn't be enough. Increasing taxes on the rich wouldn't fill the gap either. The middle class would feel a pinch in increased taxes. But that pinch would not become a bite; hopefully, for most taxpayers, the increased pay that you take home (since your employer has to give you what they formerly paid for your health coverage), and the value of the $7000 voucher for you and your kids, would mostly balance off the increased taxes. But admittedly, some people would be quite unhappy with the new arrangement, despite the new choices that it would allow and the security that it would bring (e.g., if you lose your job or start your own business, you don't have to worry about losing your health care; you can count on that yearly voucher from the government). Obviously, the working poor come out a good bit better, since their taxes hardly go up due to the progressive tax rate structure.

To further the interest of fairness and universal access, there would have to be community rating, so that the young and old, male and female, and sick and well would be charged the same base rate by each insurer. Obviously, pre-existing condition restrictions would also be outlawed. If you're totally healthy or have cancer or need dialysis, same rate. But, in the interest of free-market efficiency, there would still be many custom options and room for innovation by the insurance sellers, including the option to get up to 20% rebated to you if you agree to cost-limitation incentives, including bigger co-pays and health savings account arrangements.

At the same time, there would be many "minimum standards" for whatever policy an insurance company sells you. You couldn't buy "disaster only" coverage (as the hard-core conservatives demand). We want to encourage people to use basic health care, as to prevent early-stage problems from festering into expensive emergency room situations. To John Stossel's chagrin, my plan would including at least 2 free doctor visits per year, maternity benefits, well-baby care, alcoholism treatment and limited mental-health services. That's the basic public-health stuff that can probably save money, when you add in the costs of worker productivity and lost work days. However, as said above, the plan will have "cost/benefit" limitations as with the British and Canadian health care systems.

Let's say you get a rare form of liver cancer, where general treatment gives you a 1/3 chance of survival, but Sloan Kettering has a new procedure that costs millions but raises your chances to 2/3, and only Sloan Kettering knows how to use it. Well, too bad, unless you're rich enough to have bought an optional policy that allows coverage beyond what the federal cost-effectiveness regulations would allow. Those regulations are going to be written by panels of experts (e.g., the Health Benefits Advisory Committee and the Center for Comparative Effectiveness Research proposed in HR 3200), and the cost-versus-value decisions those panels make in writing those regs will have life-and-death implications. So, those federal commissions will amount to "life and death" panels, or "death panels" for short (although they won't make case-by-case decisions, as Sarah Palin imagined).

My health plan would subsume both forms of cost containment. From the GOP side: TORT REFORM. I would include severe limits on the right to sue doctors for malpractice. I'm sorry for upsetting John Edwards and the tort lawyers campaign-funding machine; but big malpractice awards clearly make doctors order too many tests and defer patients to hotshot, high-price specialists. But as I just said, there would also be the federal research panels proposed by the Democrats, to study the "value" of procedures and select authorized treatments based on cost-effectiveness. If the tort limitations work as they should, perhaps those death panels could lighten up a bit and allow a few more speculative / high-cost treatments; perhaps they could avoid doing what the British NHS recently did, i.e. restricting the use of an expensive anti-blindness medication until a patient has just about lost sight in one eye.


Thus far, I've described my scheme for health care reform, based around a federal health insurance voucher system (not unlike the idea of local governments issuing school vouchers to parents for the education of their children). Now I will discuss what could happen on the supply side, under such a scheme. To cut to the chase, I believe that a lot of good things could happen on that side.

My initial assumption was that when a citizen received their annual health voucher, good for so many thousand dollars worth of coverage as determined by Congress, that citizen would use their voucher to purchase a one-year health insurance policy, one which meets minimum federal coverage standards and regulations. I assumed that a variety of different health insurance companies would offer a number of different policies tailored to varying customer preferences. The market would be nationwide, so that the barriers in our present state-by-state system would be removed. This would provide everyone with a range of competitive choices, similar to what exists for most other kinds of insurance products (life, auto, home, business, etc.).

I hoped that the insurers would compete based on quality of customer service, degree of choice in terms of selecting doctors and care institutions, options for coverage going beyond minimum federal standards, cash-back plans for participating in cost control arrangements (such as increased deductibles, increased co-pays, and use-or-keep account systems), etc. Unlike today, when most people just take whatever insurance their employer provides (or picks from three or four pre-selected options that are mostly alike), everyone would seek to find an insurance plan that suites their circumstances best. Health care consumers would finally become involved in the procurement of their health care; the market would become more rational and efficient. Not COMPLETELY rational and efficient, as there would still be distortions due to federal regulations and minimum standards, and due to inefficiencies within the insurer bureaucracies themselves. But still, much better than today.

But then it struck me -- why not go even further! Why couldn't a “deal-direct” system evolve from a voucher market system? Why should we buy the majority of our health care from insurance companies? When you think about it, the present system of having one's health care options determined by Blue Cross or some other health carrier doesn't really make sense. David Goldhill pointed this out recently in an extremely insightful article on health care in The Atlantic. In the good old days, YOU YOURSELF managed your health care. You decided which doctors to see and when. Together with your family doctor, you decided which tests to get, which procedures to receive, which specialists to see, which hospitals to go to and for how long, etc. Today, of course, this is gone (unless you are rich enough to afford a gold-plated insurance policy). Blue Cross or Aetna or whomever decides what doctors we can see, what clinics or hospitals we can go to, what tests and procedures we receive, and how often. Unless we can afford to pay many thousands of dollars, Blue Cross directly manages our health care. (And, as I said above, we didn't even pick Blue Cross and the particular kind of coverage we get from it; our employer picked that out for us). Our doctors lobby for us and play games with the insurers (I've been asked by my doctor's staff to say that I feel tired, as it allows them to put additional “codes” on my record, and thus increase their reimbursement); but in the end, the insurer holds the bucks.

Under a voucher system, however, family doctors and specialists and clinics and hospitals could band together into fairly large health care provision networks (in effect a cross-breed between the Mayo Clinic and WalMart; incidently, both of those firms might participate as health care providers under my scheme, as WalMart is already experimenting with in-store health clinics). With the right management skills and software, these provider networks could accept the vouchers directly; Blue Cross or Aetna could be eliminated! Networks accepting vouchers could sub-contract with specialized providers as to make sure that all coverage mandated by federal regulation will be available (e.g. substance abuse treatment). They would need to learn about financial risk management; they wouldn't want to be swamped with a lot of patients who give them say a $7,000 coupon each year but on average need $12,000 worth of care (but remember, they are subject to community rating rules that prevent them from "cherry-picking" a customer base comprised entirely of the young and the healthy; any provider accepting even one health care voucher could not refuse any other customer, or give anyone less than the federally-mandated minimum standard of care). Once they gain enough customers over a range of ages and circumstances, then the $2,000 patients would balance out the $12,000 patients.

But what about the occasional disaster patient, the patient who goes to surgery with follow-up intensive care in a hospital, who runs up bills in the millions? For that, the doctor/provider networks would have to buy “secondary insurance” to cover their overall pool of customer-patients. So, insurance companies would still be needed to provide what they call “re-insurance”.

Under my plan, things have been re-arranged according to WHO DOES WHAT BEST (as David Goldhill seeks with his own personally managed health savings account scheme). Using our vouchers, we citizens would buy our annual health care coverage from an entity that actually PROVIDES health care, not from an insurance company. We would make our deals with networks owned and run by doctors, not by insurance actuaries. We would haggle directly with these doctor/clinical co-ops as to get the best deal in return for our vouchers (and whatever other money we want to put in as to extend our coverage beyond the federal standards; as I said previously, the basic care levels obtainable from a voucher would be limited by “death panels”, and would allow care to be denied once we've become expensive burdens to tax-paying society). Doctors and clinic managers are in the best position to innovate, to come up with more efficient and effective care routines as to compete for our business. As such, we might start seeing some real cost control and quality improvement! The insurance industry would be limited to what it does best, i.e. providing risk-spreading for disaster situations. The huge and wasteful cost-control bureaucracies that now exist in Blue Cross and other health insurers would no longer be needed, once Blue Cross is relieved from the responsibility to micro-manage our own health care !!!

This would all depend on the ability and willingness of we customer-patients to drop one doctor/clinic co-op and go to another if we don't like their service or hear of bad experiences that others have with it, or if we can get a better deal from a different care provider. Changing your doctor and care network will not always be easy or even possible; but with the advent of health records computerization (a key element of Obama's reform plan, and my own), it would become easier for most of us.

Insurance companies like Blue Cross would be in for some big changes under my scheme. If my dream of a market for health care dominated by a wide variety of competitive doctor/clinical cooperatives were to evolve, then Blue Cross would hardly be needed any more. It might survive to sell the “re-insurance” needed by these doctors groups, and perhaps it might still offer rich individuals the option of buying an old-fashioned “gold-plate” policy whereby they pick out their own doctors, specialists, hospitals, outpatient clinics, etc. and not have to stay within a co-op network. But for Blue X and their like, their run as keepers of the gate for most non-governmental health care would be OVER.

Given the desirability of doctor / clinic networks that would competitively accept vouchers in return for an agreement to meet the holder's health care needs for a year, my plan would provide short-run tax breaks and regulatory incentives to encourage the formation of such networks. I don't think this would be a big leap; there are already large conglomerates of doctors of many different specialties practicing under one roof, and many multi-doctor clinics where a wide range of diagnostics and lab tests are available. If some of these practices expand a bit more or merge to cover a larger geographic region, say a suburban county, they might well have the size needed to profitably manage a portfolio of patients each providing a fixed amount of revenue (the value of the voucher) each year.


Are there fundamental non-political problems with my plan? Yes, there are some. The biggest involves regional “cherry-picking” (as said above, the community rating provisions and pre-existing condition inclusion rules would insure that these networks couldn't cherry-pick the young and healthy to the excluse of those who are older or have chronic conditions). In some towns or counties, there may be a lot of unhealthy people, and for-profit co-ops might not form in those places. In these “cluster” cities or counties that are underserved, state or local governments might need to set up their own care clinics accepting vouchers. The federal government might need to provide some support for an “underserved region” public clinic option (but leave the actual management of such clinics to state or local government).

There's another side-effect that many people would lament. And that would be the passing of the local doctor operating alone in his or her own practice (frequently in their own residence). In the new scheme emphasizing regional care networks, you would have an "assigned doctor" coordinating your case, but that doctor wouldn't always see you and would probably change every now and then. Under this system, you probably wouldn't go to the same family doctor for 20 or 30 years, as in the past.

For better or for worse, though, American health care is now getting close to that. Many families now use walk-in "urgent care" centers for all of their health needs, where the medical staff changes over time. Modern America is a very mobile society, and few of us patronize the same barber, the same banker, the same grocer, the same pharmacist, etc. throughout our adult lives. Medical care seems like the last hold-out, as many people still stick with one doctor. There are obvious benefits to this, although there are downsides too (staff changes can bring new perspectives and new knowledge that could be useful in medical care). Just as supermarkets pretty much killed the corner grocery and Home Depot killed the local hardware store, the days of doctors having solo practices supported by loyal long-term patients may also be numbered. Supermarkets provide a wide variety of fresh, high quality food to us at affordable prices; but they are much more impersonal than the old neighborhood greengrocer or butcher. Health care probably needs to go the same route. Hopefully, the new care networks will work to preserve many of the benefits that a long-term relationship between a doctor and a patient can bring.

For instance, as a marketing tactic, they might advertise (and hopefully follow up on) a promise that patients are given enough time to be heard by their doctors, that their doctors want to get to know them. Today, pressures from insurers force most family doctors to rush patients through; in all, doctor-patient relationships probably wouldn't get any worse because of large doctor's networks.

On the political front, I'll bet that “the Blues”, and the other insurance companies who are now deeply involved in health insurance, would NOT like my plan. They have too much invested in the status quo. Too much equipment, too much info-tech infrastructure, too many employees, too many office buildings, too much stockholder equity. Too much POWER, real economic power. They obviously won't give this power up willingly. Were my plan to somehow get a hearing in the White House and Congress, the health insurance company lobbyists would be after it like a cloud of angry hornets.

You might argue that the current reform plans in the House and Senate do much of what I envision here. However: 1.) they don't offer serious customer choice, as the GOP reasonably wants; (The Obama PUBLIC OPTION providing real choice? A care management system cast in the same mold as the US Postal Service? Notice how hard it is these days to find a mail box on the street; because of cost pressures, USPS needs to ration its services!) 2.) they don't include serious cost controls other than via the death panel mechanism; 3.) they don't put the ultimate consumer (you and me) in touch financially with the ultimate providers (doctors, hospitals and other care firms) and don't allow us to pick our providers on a competitive basis -- as when we buy cars, computers, food, furniture, etc.; and 4.) my plan is HONEST and up-front about changes in procedures and increases in taxes; the plans now being fronted by Obama and the Dems ARE NOT. The outrage at the town meetings in recent weeks show that many Americans have become aware of this. Despite Obama's wonderful speeches, the polls show that only about one in four think they will be better off if his plan passes (about a third think things will be worse, and the balance say about the same or won't venture a guess). And thus, the President's quest for a better health care system may in the end not get too much farther down the road than my own plan will.

That's the rough outline of an Eternal Student's Health Care Reform Plan. You can poke holes in it, but that goes for ANY plan; Obama's plan is also swiss cheese. My plan gives something to both the GOP and the Dems. But of course, it would be DOA, politically. It would involve too much change in how we obtain health coverage and health care, and would thus stir the hornet's nest of special interest opposition, while not getting any shelter from the common man and woman who are afraid of such change (and its increased tax burden). Because of industry opposition, I doubt that my plan (or any other voucher plan -- see below) will see the light of political day, anytime soon. Too bad. But least I wrote it down; perhaps someday the stars might line up for it.


A Christian Science Monitor article by Economics Professor David C. Rose from the Univ. of Missouri in favor of health care vouchers funded by a national sales tax. Living in a state with an already-high sales tax, the funding side of this proposal give me pause; but at least we'd get something of value in return for it.

A Brookings Institute paper from 2007 by Drs. Emanuel and Fuchs proposing health care vouchers. There are various versions of this article at the NY Times, NE Journal of Medicine, Stanford Univ. Center for Health Policy, etc.

The U.S. AID agency designed a health voucher system now being used in India!

Senator Jim DeMint (yuck) proposed a $5000 health care voucher. So why couldn't the Dems use that as a negotiation starting point? Expand it, make it a bit kinder and gentler (as my plan does).