My Solution for Healthcare in America

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Democratic presidential candidate Bernie Sanders proposes that the United States adopt universal healthcare and enact a single-payer system.

The darling of far-left liberals, Sanders idealizes the countries like Sweden and Norway as what the United States should aspire to be: free healthcare, higher taxes on the rich, free college education, free childcare, paid maternity leave, limitations and taxes on corporations.

That all sounds great, right?

Well, the problem is that all of these great things come with major costs, including: higher taxes, greater regulations of businesses and expansion of government bureaucracy. A single-payer universal healthcare system is no exception.

But what exactly would be in such a system? And if it has so many limitations, what exactly should we have instead to ensure healthcare for all?

I’m here to clarify all the media confusion and propose an alternative to Sander’s single-payer big government system.

Sanders’ Plan

Sanders’ single-payer universal healthcare proposal runs off of a simple premise: the government enrolls everyone into Medicare, essentially absorbing the entire insurance industry into the government and cutting out the middle-man. Just as how Medicare works now, the government negotiates a fee schedule with hospitals and other healthcare practices. An expanded Medicare also allows for greater negotiating power between the government and pharmaceutical companies, medical tech companies, and the healthcare industry.

Sanders plans to fund single-payer by a combination of a new healthcare income tax, an employer payroll tax, a high-income surcharge, a securities transactions tax and a few other new taxes. The plan is estimated to save roughly $600 billion per year, and turns all healthcare insurance costs into a smaller tax for each individual.

Single-payer from the surface looks like a really fantastic plan. It gets rid of the middle-man, it makes all insurance have the same cost and reduces that cost for everybody, and it guarantees coverage for everyone for any health issue that might arise.

The issue is that it doesn’t really address the core of the problem: the continually rising prices of treatment, pharmaceuticals and medical supplies themselves. Nor does it address the problems that arise when you overregulate an industry, the lack of real competition in the United States’ pharmaceutical market and a myriad of other unsustainable practices within healthcare.

 

My Solution

If single-payer doesn’t really work, and we still need to ensure better healthcare at a lower cost, what options are left?

Simple, the free market.

“Wait isn’t that a Republican thing to say? Won’t that lead to capitalist greed abusing patients?”

Well it’s more of a Libertarian thing to say, and I’m actually banking on capitalist greed to help reign in the healthcare industry. Combined with lighter industry regulations and expanded transparency, market forces can be directed in a way that drastically improves efficiency while lowering costs for all.

While there are numerous reforms that need to happen for this to work properly, I’ve condensed the major solutions into ten points.

1. Repeal the state lines restrictions on healthcare insurance companies

Current law limits healthcare insurance companies to within the borders of the state that they are founded in. This allows for insurance monopolies to form, and hands them a captive market. Removing this limitation would allow for real competition, ensuring better insurance at lower prices.

2. Make it easier for hospitals and practices to start their own insurance companies, phasing out a separate healthcare insurance industry altogether

This is a key reform. Hospitals and practices want to make more profit. Starting their own insurance companies would certainly allow that. The difference here is that where a separate healthcare insurance industry or government run single-payer system would act as a middleman, having hospitals and practices themselves take on insurance would truly eliminate the middle-man. It’d disincentivize them from jacking up medical costs, because they’d just be putting the costs on themselves rather than some middle-man.

3. Make it easier for hospitals to take over practices and labs

Some smaller hospitals and most practices have to outsource lab testing and specialty work to separate lab companies and other specialty practices. This generates dozens of middlemen and ramps up costs to patients and their healthcare insurance. Hospital systems should be allowed to absorb as many of these other companies as possible, while keeping anti-monopoly policies in place. This will cut out the middlemen, cut down extra costs, and streamline the whole treatment process for patients. In return for allowing hospitals to get massive, some regulatory laws should be put in place, such as small operating profit caps.

A recent law signed as part of the October 2015 Congress budget deal disincentivizes hospital mergers with practices by disallowing new merger practices from taking on hospitals’ higher Medicare payouts. This likely will reduce expansion into underserved areas. The regulation is in the right direction, but should be changed to having Medicare payouts be the same for everyone for each different treatment. This would reverse the negatives of the new law but keep the light regulations.

4. Make it easier for hospitals and practices to start their own pharmacies

Hospitals and practices have to buy their drugs through middlemen pharmaceutical dispensaries, dramatically increasing the final cost to patients who receive the drugs for treatments. By making it easier for hospitals and practices to start their own pharmacies, they can buy wholesale drugs for rock-bottom prices, translating into just pennies for patients.

5. Eliminate fee-by-service systems and replace them with fee-by-patient and fee-by-treatment systems

Fee-by-service means that patients are charged for each visit. This incentivizes physicians to abuse this and schedule multiple visits, many of which can be unnecessary. Fee-by-patient would change it so that physicians are compensated a flat payment for each patient they see per year, no matter how many times they see them per year. Fee-by-treatment would offer a flat payment for each whole treatment. Both of these systems would encourage physicians to provide better care, from start to finish, in order to keep patients in their network.

6. Enact transparency laws and eliminate the chargemaster system

Currently hospitals and practices do not have to tell patients upfront how much care costs, nor do they make any effort to do so. Many aren’t even sure about their own costs until after the fact. Laws need to be put in place that create a system where patients can see all costs before they enter treatment, and easily compare them across hospitals and practices. Transparency laws also need to be established for healthcare insurance. Once hospitals and practices start their own insurances, what they do and do not cover, and to what extent, needs to be made easily apparent to patients buying into their insurance. Research and data based, private insurance consumer interfaces such as HoneyInsured should be emphasized.

Furthermore, the chargemaster system, where patients are charged for each thing they receive during their treatment at hospitals (each gauze, each bag of blood, each shot, etc.), needs to be eliminated and replaced with a whole treatment cost. One patient with one price, per disease or condition. The only additional costs would be for extended hospital stay, or major complications.

7. Eliminate trade barriers against pharmaceuticals from other countries

Right now it is highly illegal to buy or sell most drugs from other countries, even if they have a proven safety record, are a derivative of existing drugs in the United States, or are exactly the same drug but with lower cost. This is not a free market. This is a pharmaceutical monopoly with a captive market. We need to get rid of these trade barriers and force pharmaceutical companies to be competitive, more efficient, and sell cheaper drugs.

8. Abolish the current pharmaceutical patent system and replace it with a prize system

Sanders actually proposed this a while back and it makes a lot of sense. The current patent system ensures a virtual monopoly for some pharmaceutical companies and stifles real innovation and drug startups. With the money saved through killing extensive patents, the federal government should set up a large fund of prize money for pay outs for new drugs. The prize covers or helps cover the costs of research and testing, leaving it up to pharmaceuticals to make their drugs the best at the lowest cost to be competitive. A prize system also makes it easier for innovative startups to enter the market and challenge large corporations.

9. Deregulate the medical supply industry

The current regulatory system has resulted in companies being forced to sell supplies in pre-packaged bulk sets, rather than a per-item, per-need manner. Hospital administrators are so dead set on fixed pricing for medical supplies they use (rather than putting change of costs on patients like a normal market should do), that they buy into the idea of pre-packaged, bulk purchases. This has resulted in supply “shortages” in hospitals and purchase of way too expensive supplies. Baseline regulations should be kept, but the current regulatory apparatus needs severe reductions.

10. Mandate expansion of medical school class sizes and contribute greater funding for the training of more doctors

By the year 2025, the United States will face a shortage of roughly 46,000 to 90,000 physicians. This shortage means that there will be a greater number of underserved individuals, and doctors already in the system will be even more overworked and overloaded with patients. Despite high tuition and fees for medical school, it is still incredibly expensive to put a medical student through a complete training from med school to residency. Med schools need to increase their class sizes, and the federal government needs to increase funds to help subsidize this.

What My Solution Means for Americans

Obamacare took great strides towards bringing healthcare coverage for all and Sander’s single-payer universal healthcare system would establish 100 percent coverage for everyone. The problem is that neither plan truly tackles the cost side of healthcare. One hundred percent coverage means nothing if costs for drugs, treatments and everything in between run rampant.

My solution addresses the rising costs, cuts out ALL of the middlemen and establishes true competitive conditions to drive up innovation while lowering costs for everyone involved. It gets rid of the monopolistic practices of the pharmaceutical industry and gets rid of a separate healthcare insurance industry altogether. It eliminates unnecessary administrative and bureaucratic regulations, while enacting the light regulations that do matter.

All of this makes healthcare cheaper, which makes healthcare insurance cheaper, which lowers the costs to our government and the costs to all patients. It will save us more than Sanders’ plan and fixes the long term problems that Sanders doesn’t. It restores individual choice, establishes real free market conditions (where before there weren’t truly any) and makes capitalism work in the favor of consumers, not big industries and corporations. Supplemented with efficiency reforms for Obamacare, healthcare in the United States will finally become affordable and available to all.

Now all I have to do is run for office.

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