Physicians, Business, Professional and Information Technology Communities

 Networking to Develop the Ideal HealthPlan for the USA


HPUSA Quarterly Newsletter, January 2004

Join the Medical/Professional/Business Gatherings on MedicalTuesdays. On the extra Tuesday of each quarter, we review the Ideal HealthPlan for the USA and, by extension, for all countries.

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In this Issue:
1. First Dollar Versus Last Dollar Coverage
2. The Increased HealthCare Costs of Obesity
3. The Increased HealthCare Costs of Cigarette Smoking
4. Letter to the Editor
5. Our Quarterly Review of HealthPlanUSA
6. Affordable HealthCare: What it Means to You

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1. First Dollar Versus Last Dollar Coverage (Prepayment Vs Insurance)
Health Care is one of the most cherished benefits that governments have bestowed on their constituencies–the voters. They initially promised that all health care wants and desires will be covered based on the premise that patients, voters and non-politicians are unable to plan for their health care needs. This may be more illusion than reality inasmuch as patients are better able to plan for their own health care needs than an impersonal government. As patients’ appetites reach gluttonous proportions and they spend other people’s money (OPM), expenditures expand to the North and the amount of health care that can be covered goes South. Initially, budgets balloon beyond taxpayers resources and major surgery is placed on the waiting list. As  the gluttonous health care appetite reaches obese proportions, even routine office calls and consultations are restricted and major surgery is sometimes delayed for years.

The very reason for government control–making health care available to all–is now totally reversed with the disastrous consequence of rationing health care for all. Micro-managing threatens our very lives when we are struck with emergencies. For instance, the highest risk for death is within the first hour after the crushing chest pain radiates into the arms or neck, accompanied with profuse sweating. Cardiac monitoring should be instituted immediately. In some countries with socialized health care, patients are not even allowed to call an ambulance or go to the hospital until after their physician verifies an emergency and locates an available bed. In one country, when the bureaucrats recognized that people with chest pain could not be placed on a waiting list for a month or two, they gave an edict that all patients with chest pain had to be seen within one week–which of course meant that the highest number of deaths had already occurred and were unattended by medical personnel.

Recently, a MedicalTuesday respondee from Europe mentioned that it is widely disseminated that people die in America for lack of health insurance. That is not the case since every emergency room accepts any patient on an emergency basis, with or without insurance. So the European perception of American health care is totally the opposite of reality. It is in European and socialized countries where the highest number of deaths occur for lack of or postponement of care because the cost of government-run health care is not sustainable. Therefore, country after country is making attempts to privatize.

One of the major problems of all third-party health care (where someone beside the patient is responsible for payment)  is covering the cost of routine office calls, consultations and other items of preventive care or routine maintenance. This type of coverage may cost as much as three dollars for every dollar of health care benefits received. Patients are beginning to recognize this and are now purchasing high-deductible insurance plans rather than expensive low-deductible prepayment plans such as those that unions desire, HMOs require and governments provide. All government plans are prepayment because the government has to tax the patient in order to pay for the patient’s health care. Instead of the government being able to decrease the costs, excessive costs are frequently hidden, including the huge cost of the government bureaucracy that manages and polices the system. Governments don’t admit to these costs since many of them are placed off the ledger, similar to Enron, WorldCom and PG & E. While this is considered business as usual for government, private companies are prosecuted for this same practice.

Studies confirm that utilization responds to changes in the deductible and to co-payments paid out of pocket, showing a 30-50 percent decrease in costs over the relatively free plan covering first dollar expenditures. The more families had to pay out of pocket, the fewer medical services they used. Similarly, when Medicare beneficiaries obtain supplemental first dollar coverage through Medigap insurance, they consume about one-fourth more health care services than those who do not. When one monitors his or her own costs, many perceived wants and desires don’t translate into actual needs. This produces significant economies in health care difficult for many to even imagine. What is also difficult for some to accept is that the lower use of services does not have a negative effect on health outcomes. Hence, the only answer to our health care conundrum is consumer- or patient-controlled health care. (The new HSA plans require that patients give up their first dollar total health insurance coverage to participate. Medicare could also reduced its cost by 25 percent simply by eliminating the first dollar coverage that Medigap policies provide so that patients would have to pay the 20 percent copay. It would also restore Medicare’s viability for decades.)

Congratulations to David Gibson, MD, a national health care consultant and a consulting partner at Illumination Medical, Inc, who not only puts these issues in perspective, but was able to publish the article last month in Organized Labor. Be sure to read his entire illuminating article at http://www.sfbctc.org/. Look for the second installment in the January 2004 issue of Organized Labor.

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2. The Increased HealthCare Costs of Obesity
The government has issued many mandates that make health care insurance inordinately expensive and out of reach of many Americans. The mandate that patients should not be penalized for their own unhealthy life styles is counter productive. By protecting those  that place their health and, consequently, their lives at stake, we are adding huge costs to those with healthy life styles.

Some estimates reveal that the current obesity epidemic in the United States increases health care costs by 13 percent. Rather than everyone paying an extra 13 percent for their health insurance premium, HealthPlanUSA proposes that the 20 percent of Americans with obesity should pay for their own increase in health care risks. Hence the 20 percent of patients with a body mass index (BMI) above 35 (normal 20-25) would have a 65 percent increase in premium to cover this risk. So if HPUSA estimates a premium at $100 per month, the person with a BMI of 35 would have a premium of $165 a month.

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3. The Increased HealthCare Costs of Cigarette Smoking
Similarly, the risks for cigarette smoking increases health care costs between 100 percent to nearly 250 percent, depending on the amount and length of one’s smoking history. HealthPlanUSA also proposes that this 100 to 250 percent excess cost should be born by those causing the excessive cost, the cigarette smokers, not those with a healthy life style. Thus, if our premium estimates eventually come in at $100 per month, the cigarette smoker would have a premium of $200 to $350 per month, depending on the individual smoking exposures.

Others forms of high-risk behavior create excessive health care costs. We are beginning to assess the cost of alcohol, substance abuse and other forms of body abuse. We are continuing to work towards the goal that it will not be necessary to penalize individuals for pre-existing conditions if government allows us to assess risks to those that voluntarily indulge in risk behavior, even if they become addicted to it.

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4. Letter to the Editor
One of our readers (EB 11-25-03) writes: It's really nice that some hospitals are willing to cut your bill by 60% if you pay cash, but what if your bill is $200,000? I'd have to take out a third mortgage and pay that off over 30 years. Isn't there some way that people who make less than $100,000/year can get the health care they need without going deeply into debt? And if you work hard and get laid off from your job (a frequent occurrence in this economy), you're hit with a COBRA premium of $700 or more per month (if you have a family). This is crazy. No one gets enough unemployment insurance payments to cover that! A national health insurance plan is the only way.

EB brings up a number of important issues: excessive hospital charges, how to pay these bills, the need for health insurance, the high cost of health insurance (which goes up even more if one is laid off), and government being the answer to the problem.

She, like many of us, is overwhelmed by the hospital billing statements. A patient recently brought in a $78,000 hospital statement for his five-day cardiac stay. No wonder that many patients succumb to corporate socialized medicine (HMOs) or government socialized medicine (Medicare, VA benefits), or demand total socialized medicine in order to be shielded against such gouging. The Medicare HMO, as I recall, did reduce the charges to $10,000 or so. Last week, Dr David MacDonald, in his Liberty Health Newsletter (www.LibertyHealthGroup.com) quoted a hospital administrator who stated that they routinely charged the uninsured 400 percent of what the insured have to pay. The reason given is that the insurance carriers have negotiated such a low rate that costs are not covered and they have to make it up on the uninsured. This is why some of the uninsured, who understand the situation, are able to negotiate a reduction of hospital charges, which in few instances equal as much 60 percent. In EB’s case, this would suggest that the $200,000 hospital bill could decrease to somewhere between $20,000 to $50,000 if the hospitals were competing with each other in an open medical market environment. That is a manageable figure if the HPUSA insurance arm pays for 90 percent and the HPUSA credit arm advances the 10 percent to be paid over 12 months, at hopefully 6 percent interest.

Health insurance is extremely important to cover such costs. We have never recommended that one should not have health insurance. We discussed the types of insurance that work in a previous newsletter. (See item 5 in our April 29, 2003, Quarterly HPUSA report or select archives at www.MedicalTuesday.net or go to www.HealthPlanUSA.net.) Insurance is to help us manage the unexpected risks. In health care,  this would be such things as heart attacks, strokes, cancer, heart surgery and transplants, to name a few. We should never buy health insurance for day to day maintenance, such as basic office calls, routine laboratory tests, or chest and joint x-rays. This is best managed with a high deductible health insurance policy. The deductible portion is generally equal to the average annual maintenance cost of our bodies and on the order of $500 to $1,000 a year. The cost of such a policy is usually within the range of all workers and about half the cost of a conventional complete coverage policy that covers first dollar in health care expenditures, which is not an insurable item. The three to five hundred dollar-per month expected savings will easily cover the annual deductible, which then becomes a cost one can control.

More importantly, by placing you, the consumer/patient in charge of the cost of your body’s health maintenance program, you will save considerable money. With a conventional policy of first dollar coverage (except for the insignificant $15 to $50 co-payment at time of seeing your doctor or getting your laboratory tests or going to the pharmacy), there is a tendency to want testing that may not be of any health benefit. For example, studies have shown that a perfunctory annual exam has little medical value unless it’s focused on your individual risks. But with first dollar coverage, all patients want and many demand annual laboratory tests, x-rays, CTs, and the list goes on and on, because they feel they have the right to these studies. That is why COBRA is $700 per month; you are paying for everyone else’s excesses. These consumers maximize what they can get out of their insurance benefits.

With a high deductible major health plan, the patient judiciously manages that first $1000 of deductible and begins to realize that a repeat cholesterol when the last three were normal is not an appropriate use of his personal money. However, if you’ve had a lung cancer, then the chest x-ray every six months for several years and annually thereafter is a very appropriate examination. Many people are now realizing that they can get their health care within the $1000 annual deductible for an estimated $300 a month premium (instead of $700) which is $4,800 less in insurance premiums per year for a net savings of about $3800, even if the full $1000 deductible has been used.

On the other hand, if you propose that the government just tax you enough to pay the average benefits for the excesses that people want because it seems to be free, your tax rate will have to increase an extra $8,000 to $10,000 per year. Should this country decide on a national health insurance plan, it will be most expensive for the worker and individual taxpayer, and the costs will not be sustainable. We would then follow the lead of most countries and try to privatize. Since we are currently about half privatized, would it not be a considered and humane business and public policy decision to proceed to complete privatization, where the individual’s welfare takes precedent over public or corporate welfare?

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5. Our Quarterly Review of HealthPlanUSA
As HealthPlanUSA is evolving, a number of concepts become clear and must be incorporated into the final formula. Here are a few of the initial requirements. Feel free to respond.

 A. The patient must be in charge of his/her own health care.

 B. This can only be done if the patient physically makes the payment, whether by cash and/or credit line, and a high deductible insurance.

 C. The basic payment for the first line of health care - routine office evaluation, basic required laboratory and x-ray studies, routine medications - must be paid by the patient and should approximately equal the annual deductible projected at $500 to $1000.

 D. The costly, insurable items, such as hospitalizations, outpatient surgery and MRIs, require a small copayment without limit. This would insure that the patient be accountable for every expense at the time the service is rendered and would require the patient to sign off on the statement prior to sending the claim electronically to the insurance carrier or their credit provider.

 E. The recent expansion of the Medical Savings Accounts (MSA) to a Health Savings Account (HSA) will solve the deductible or copayment because these accounts gain funding by the individual or employer over the years, or until the government, which changes every two to four years, issues new rules.

 F. It has been shown that many individuals have difficulty in placing significant amounts into their personal retirement accounts. The number of physicians, up to one-fourth in some estimates,  who are unable to or chose not to fund their Individual Retirement Accounts (IRA), who many believe make excellent incomes and thus are in the upper middle class, is very discouraging. Will the average middle class person then be able to fund these HSAs? (This is not to malign this excellent breakthrough in the privatizing of health care.)

 G. The basic premium for HPUSA will be at least one-third less than conventional health insurance premiums, on  the basis of the deductible and copayment plan. It will be less than half the conventional health insurance premiums if allowed to underwrite on the bases of life style risks, which we feel is more equitable than underwriting on the basis of pre-existing diseases. (To prevent gouging, there will, of course, be a ninety percentile limit. So if your physician charges more than 90 percent of what all other physicians charge in a similar situation, the excess will be your personal responsibility. Or if you require a $20,000 a day hospital room because of personal or business reasons, and 90 percent of hospitals would charge $3,000 a day for a medically indicated room, the excess $17,000 per day will be your personal responsibility.) This makes health care costs cheaper than what the average person or family spends on sports, recreation, vacation and other leisure activities and thus totally affordable.

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6. Affordable Health Care and What it Means to You
Affordable Health Care will affect everyone. How will it affect you? Let’s look at some of the particulars at this time. To remain current in this area and get the latest updates, be sure to register to continue receiving the HPUSA newsletter concerning affordable health care. (Registration for HPUSA remains on the www.MedicalTuesday.net site.)

 A. Physicians:
 Physicians and surgeons will be eliminating the cost of billing, eliminating your business office staff, settling your professional fees as you complete your assessment of the patient, and getting totally paid at the moment the patient leaves the office. Medical offices that are only taking cash and credit card payments are experiencing a 30-40 percent savings in overhead and consequently have been able to reduce their professional fees by one-third and still maintain or increase their income.

 B. Hospitals and Free-Standing Surgical Centers:
 Hospitals and free-standing surgical centers will be able to reduce the cost of billing, decrease the business office staff, settle all hospital bills at the time the patient is discharged, and receive their payments with the same speed as if paid by check or credit card. Hospitals have been able to give discounts as high as 60 percent to private patients who pay in cash or credit card, and this group should expand. Surgical centers competing with each other have been able to reduce costs over hospital outpatient surgical centers by as much as 80 percent. The economies of competition, known as the Medical MarketPlace, will be able to reduce costs to unbelievably low levels.

 C. Laboratories, X-ray, Diagnostic and Treatment Centers:
 Laboratories, x-ray facilities, diagnostic or treatment centers should be able to dramatically reduce their costs of billing, eliminate the very common second, third and fourth duplicate billings, decrease their business office staff, and settle all charges at the time the patient is seen. They will receive their payments with the same speed as if paid by check or credit card. Some laboratories have been able to give a discount as high as 83 percent to cash-paying patients. X-ray facilities in Sacramento have reduced the charges for total body CT scanning by 50 percent when the patient pays with cash or credit card in order to save the insurance billing costs. The same  efficiency will occur by utilizing the HPUSA card.

 D. Corporate America and Global Businesses:
 Businesses should be able to dramatically reduce their employee health care costs because of the low monthly premiums expected when placing the patient in charge of his health care. With HPUSA, the patient will diligently seek out the most economical physicians, hospitals,  laboratories, diagnostic and treatment centers.  This will make the costs containable and sustainable.

 E. All Patients:
 If you are a patient, all of the above savings will accrue to you. With your HPUSA card, you will be able to significantly reduce the cost of your health care and settle your account at the time you receive service, with no unknowns or surprises or anxiety-producing letters coming in the mail. If you are a patient without current health insurance, you may find the premium and coverage to your liking and affordability. In addition, if you share a healthy life style, your premium may be a fraction of what others pay. If you are a Medicare, Medicaid, Military, or Veterans beneficiary, please note that we will not be participating in any government program.

 F. Remember the Hillsdale Story:
Why don’t we participate in any governmental program? Because we remember the Hillsdale story. Hillsdale College, the premier small liberal arts college in southern Michigan with about 1,200 students, was founded in 1844 with the mission of “educating for liberty.” It admitted black students from inception–19 years before the declaration of emancipation in 1863. It admitted women before the Eastern universities admitted women, who were at the time consigned to separate adjacent colleges. It was second college in America to award four year liberal arts degrees to women.  Hillsdale is proud of its principled refusal to accept any federal funds in any form. However, it did allow Veterans of our wars to attend on the basis of their GI benefits. The federal government tried to control this freedom-loving institution by maintaining that students who used federal taxpayers money represented an indirect government support. The cost of defending their independent status, as well as raising more than $100 million to replace all the funds students with government GI benefits or government scholarships were receiving, was a challenge Hillsdale met. They continue to obtain private funding to cover approximately $5 million annually to replace what taxpayers fund for federal scholarships and loans their students would otherwise be eligible to receive. The price of freedom is never cheap. You may log onto www.hillsdale.edu to read the Hillsdale story and subscribe to Imprimis, their free unique publication that reaches more than a million Americans.

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Stay Tuned to the MedicalTuesday.Network and the HealthPlanUSA.Network and have your friends do the same. To keep up with the latest in the development of HPUSA, please register at the www.MedicalTuesday.net website for this Newsletter.

If you would like to participate in the development of the affordable HealthPlan for All Americans and their employers, please send your resume or CV to Personnel@HealthPlanUSA.net.

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MedicalTuesday does not purchase spam lists. All recipients are entered by our staff These individuals are either personal contacts,  or professional contacts, or  referrals from individuals concerned about health care and friends they feel should also be concerned.

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If you use these messages in your practice or business promotion, you may want to check with your tax adviser to see if this qualifies as a business related expense and if contributions may be tax deductible. Please send your support in any amount to the address below. At this time we are unable to give any options in return. If this becomes available in the future, prior contributions may qualify.

Send all other comments and suggestions to the address on the signature card below.

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URL References for your perusal or study at leisure. You may want to Bookmark these or add to your Favorites.

HealthPlanUSA Quarterly Newsletters
Jan Newsletter: http://www.medicaltuesday.net/Dec3102.htm
April Newsletter: http://www.medicaltuesday.net/Apr2903.html
July Newsletter: http://www.medicaltuesday.net/July2903.html
October Newsletter: http://www.healthplanusa.net/October2003.htm

Single-Payer Initiatives: http://www.healthcarecom.net/EditorialNov94.html

David Gibson, MD, National Health Care Consultant: http://healthplanusa.net/DavidGibson.htm
Single Payer: http://www.healthplanusa.net/DGSinglePayer.htm
Why are the uninsured, uninsured: http://www.healthplanusa.net/DGUninsured.htm
What’s behind health care costs: http://www.healthplanusa.net/DGRisingHealthCareCosts.htm
Pharmacy costs: http://www.healthplanusa.net/DGPharmacyCosts.htm

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Tammy Bruce: The Death of Right and Wrong (Understanding the difference between the right and the left on our culture and values. http://www.townhall.com/bookclub/bruce.html
Reviewed by Courtney Rosenbladt.

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Del Meyer

Del Meyer, MD, CEO & Founder

"If you think health care is expensive now, wait until you see what it costs when it's free."
 -P.J. O'Rourke