OP-ED

Is it 2013 (or 2014) Yet?

By JD KLEINKE

Nope, it’s only 2010 – a new year to be sure, as evidenced by stabilizing home prices and normalizing presidential approval ratings.  But you can stop holding your organization’s breath, slow down the conversion of that emergency room to a primary care clinic, and forget coming clean with your health insurer about your actual medical conditions.  Health “reform” won’t be here until 2014, if the Senate bill – passed just as Santa Claus was loading up his own sled with presents – prevails in the legislative horse-trading that begins this week.

Or it could be here as early as 2013, if we give way to the reckless abandon of the House bill.  In either case, fear not: full implementation of The Plan does not occur until well after the end of the world, according to the Mayan calendar.  If this is a government take-over of health care, taking their sweet time may prove to be a brilliant poker strategy.

Where does The Plan stand in the first days of a New Decade?  What happened while we were back in the real world, dealing with crowded malls, crappy weather, and airport security?  Well, nothing really – except the Senate voted to pass, along predictable party lines, what amounts to the incredible shrinking health care reform bill.  Don’t be fooled by page counts, which always grow during the legislative sausage-making process to add legal precision, accommodate technical arcana, and dole out the porcine one-offs for holdout votes; if this is the slippery slope to single-payer, as some have argued, it begins brilliantly, with uphill steps.

So for those stuck in mall traffic during the big Senate vote, the resulting bill – the one with process-momentum on its side – has been so stripped of government management options and control that it is best characterized as the exact opposite of a government takeover.  Rather, the bill now on trajectory to become The Plan is – paradoxically – a privatization of the public health problem of the uninsured, a corporatization rather than nationalization of health care’s rotting safety net.  As we enter 2010, the barely passable package churned out by the Senate will amount to nothing more elaborate than a shuttling of the uninsured, via new taxes-to-subsidies, into the commercial health insurance market.

This is hardly the government going into the complicated business of providing health insurance – of collecting premiums and trying to spend less than them while meeting the bottomless medical needs of a population – something the best health insurers themselves can barely do without enraging one or more among their round-robin of conflicting stakeholder groups.  The chances of the American polity allowing the government even to attempt such a thing always approached nil, notwithstanding the perennial presence and rancor of the single-payer types.

With the exception of a marginal expansion of Medicaid, the bulk of The Plan detailed by the surviving Senate bill is the exact opposite of TARP II, ARRA, the auto industry bailout, and all those other suddenly quaint relics from 2009’s apogee of a traditionally non-interventionist government.  Instead, the likeliest reform plan at the start of 2010 signifies the government going right back to the normative practices of our national religion – market capitalism.

Why else would people like Howard Dean be howling about the plan as a sellout to corporate America?  Of course it is.  Technically, it would be a sellout – if corporate America had not been bought in from the get-go, with seats at the table this time around.  Maybe I’ve spent too much time listening to people from profitable health care organizations bash each other for bad faith, but I always thought the job of health care companies is to make money, not fix the problem of the uninsured; anyone who thinks otherwise should stop listening to what those companies say, and starting watching what they do.  That’s been my little trade secret for years.

If you’re still bearish on The Plan ever passing in some form, bear in mind that all major health care business sectors are negotiating in public about the particulars of health reform, not lobbying in private to kill it.   Business as usual, with 31 million new customers.  The same goes for AARP, which is endorsing a bill funded, in part, with Medicare cuts – normally anathema for arguably the most powerful health care consumer organization.  As one of the larger buying groups of individual insurance, perhaps the AARP sees a bigger pickup in new business for the under-65 crowd than it risks losing through one more threat to Medicare that will probably never happen.  The fruit-fly length lifespan of the Medicare expansion option – wiped out within days by a grandstanding Joseph Lieberman (I-Ct) from the Great Insurance Headquarters of Connecticut – would certainly be incentive enough for their support.

I normally avoid anecdotes and soundbites as cheap sugar substitutes for actual data and analysis, but I overheard the perfect crystallization of the whole shebang at a party Saturday night: “If the insurance companies are behind whatever it is, it just means we’ll get screwed one more time.”

Live Screwed or Die

And thus, the lofty tabula rasa idea of “health care reform” mutates before our eyes – perhaps with utter predictability, at least from the fresh perspective of these first few days of post-freakout 2010 – into mundane market reform.  This is certainly the case with a real tenet of actual reform, still in tact in both the House and Senate bills, in the form of a market fix that Americans of almost all political persuasions should realize we desperately need: the long overdue prohibition on the practice of medical underwriting by insurers, a.k.a., the systematic punishment of people for the misfortune of illness or accident.

Beyond this, the government is “taking over” health care precisely the way it has in the past.  The last time, it was Medicare itself, a publicly funded program that has been administered and served entirely by private companies since its inception.  Or the most significant expansion of Medicare – adding the long overdue drug benefit – also administered and served entirely by private companies, many of them subsidized by the government as a political nod to the right to prove the superior efficiency of the marketplace.  So now we have The Plan, projected to move 31 million people out of the public safety net and into the commercial insurance market.  The Faustian bargain that the insurance companies have made for these millions of new, subsidized customers involves a very simple thing: acceptance of the medical underwriting prohibition.  Fair enough.  And once again, this is actually a marketplace reform – one that the more enlightened in the industry itself recognize is good for its overall functioning, efficiency, and image.

The rest of what survives in The Plan on course for passage – the bulk of those legendary 2000 pages in the Senate bill – is lip-service to good ideas that have been around for years.  In some cases, they’ve been around for decades.  Quality measurement?  Pay for performance? Hospital/physician financial risk-sharing?  Let’s do a demonstration project!  Beyond that, what is left – aside from the pork barrel pages – are still more virulent endorsements of the health care status quo.  The Senate bill includes the creation of health insurance exchanges that will operate, like health insurance always has, at the state level.  This of course will make their existence limited and redundant, preserve the oligopoly structure of most local insurance markets, and squander the opportunity for true interstate competition and real choices, a bigger and bolder market reform indeed – and still included in the House bill, which would create a national exchange.  And both the Senate and House bills not only preserve the often meddling and occasionally bungling presence of employers in the system, but have set up tax-and-penalty incentives that will inevitably expand the one presence perceived – rightly or wrongly – as the greatest source of hypocrisy, mistrust, and fear in the system.

God forbid we use this historic moment to remove any of dozen or so ossified layers of our health care system, which for my tax money would constitute true reform.  The Plan, like nearly every health care law ever passed by Congress, appears at this point ready simply to pile more layers of administration on top of a system already choking on paperwork and its own mind-numbing complexity.

The Net Effect of Conflicting Ideologies Approaches Zero

The oddest lesson about last year’s very odd trip to the brink of actual health reform – versus the market reform and privatization scheme now before us at the start of the new year – is how our health care system really has proven to be the dumping ground for our most vexing social and cultural problems.  Go ahead and count them: abortion, immigration, euthanasia, fairness, responsibility for others, the hand of God versus the worship of technology, and of course a visceral, blinding hatred of anything related to the role of government.  Third rails, every one of them, as it turns out; and each runs right through the middle of the health care railyard.

All of the competing and often compelling arguments brought to bear on these intractable social issues are steeped not in health care, medicine, epidemiology, economics, practicality, or common sense.  Rather, they are broadcast to us across treacherous philosophical, emotional and spiritual terrain that will never be amenable to political compromise.  And so, in short, the ideologues on both sides of each issue pounced; the issue was squeezed altogether from The Plan or flash-frozen in its current state of impasse (abortion being the perfect example); and what we’ve ended up with is a health care “reform” bill that re-paints all the old lines in the political pavement and promises to reform almost nothing structural or profound about health care in America.

Except now some of those lines have been built into permanent fences.  The clearest example is the fate of the public option, a proxy for, if not cheap imitation of, the single-payer system that fills the dreams of some and nightmares of others.  While there has always been a large and vocal single-payer crowd – armed with some strong arguments to support at least a two-tiered system with a government payer on the first tier – what are we to make of the rejection of even a whiff of a public option not just by Senate Republicans but by centrist Democrats, in a year characterized by government economic activism unprecedented since the 1930s?  I’d say this is the coldest water yet on an idea cherished for decades by unreconstructed liberals, a surprisingly (or not?) large number of physicians, and many of medicine’s best and brightest.  The public option – still hanging on in the House bill – will most likely follow the same route of the abortion debate.  Many Democratic members of the House will eventually cave on something they believe in passionately, for a larger something they believe in even more passionately.

It is shame for them, and for their Senate colleagues who made the same calculus, that this “larger something” gets smaller with each screaming match in the media and in Congress, between people who have been using the health care reform stage to act out their bigger grievances, philosophical angst, and political frustrations.  Say what you want about health care’s myriad problems, inefficiencies, and stupidities, but something as literally critical to all of our lives as our health care system – regardless of which way an eventual bill goes (including the remote but real possibility of it just going away) – deserves better than a face full of all that other mud.

Maybe by the time The Plan is actually enacted, in 2013 or 2014, the market will have straightened itself up in such dreaded anticipation of the effects of “reform,” that by the time reform actually gets here, no one will notice – except the 31 million newly insured and those happy to sell them insurance.

J.D. Kleinke is a medical economist, author, and health information industry pioneer.  He has been instrumental in the creation of four health care information organizations; served on several public and privately-held health care information company boards; and written about health care business policy for The Wall Street Journal.  His work has also appeared in JAMA, Barron’s, the British Medical Journal, Modern Healthcare, and numerous other publications.  His books include Bleeding Edge: The Business of Health Care in the New Century (1998), Oxymorons: The Myth of a U.S. Health Care System (2001), and Catching Babies, a novel about the training of OB/GYNs, which will be published next year.

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15 replies »

  1. As a non US resident (from the UK) I find it really surprising that there could be so many failings in the health system and ultimately how the insurance companies treat someone the claimants. As someone who gets free medical treatment, I was really shocked at how the health system works over there after watching Michael Moore’s film “Sicko. Things seem difficult there,

  2. The reality of health car in America is it is the best in the world. People come to America from throughout the greater world to be treated here in the U.S.. Today anyone be it American citizen or not, with or without healthcare, can walk into an emergency room and be treated. For the Government to mandate health insurance and lifestyle change is intrusive beyond comprehension.

  3. How to buy prescription drugs? My doctor prescribed vicodin, for a while back, my back hurts, I think it is a great help, but in my country it is difficult to find, it is paramount to have my information on it and found information about findrxonline the medicine, because it provided me.

  4. For the sake of argument, let’s agree that the reforms to the delivery of care (cost and quality) are minimal to nonexistent in this bill. Give or take some movement on the edges, this bill will add 30 or so million insureds, many heavily subsidized, at about the same total health care expenditure per person as we have now. And let’s agree that from the beginning major deals were cut with the big industry lobbies to keep them on board rather than trying to destroy the bill.
    The easy and gratifying response is to get mad, and say the politicians were cowards. They could and should have forced large reforms to the delivery of care as a condition for expanding coverage.
    But I think the easy and gratifying response is also naive. As I’ve been saying for years, and it has been fully born out by this process: there is no path to reform at this time that significantly cuts into the revenue of the big lobbies, particularly the provider lobbies. The public has not at all been prepared to understand the need for this delivery system reform, and in fact still has a sense of entitlement (if I’m insured, I should get whatever care I want or my doctor says without interference) coupled with a complete lack of understanding how the fee for service system has run out of control and drives costs. Providers have a knock-down response to any serious cuts: we keep getting paid less, we’re suffering, we’ll have to stop taking patients (or patients of a certain sort). The public sides with this response, as disingenuous as it often is, every time, which is why Medicare never enacted the cuts in the Clinton balanced budget legislation, and why private payers rarely kick a hospital or health system out of a network and would rather keep paying increases of 5% to 10% a year in order to avoid public fights where they are presented as only cutting the provider out of greed.
    The latest health wonk review on this blog is a nice example of the kind of education that needs to be done, but it needs to happen over hundreds of articles and segments over the course of at least a couple years on CNN, MSNBC, FOX, 60 Minutes, NY Times, WaPo, HuffPo, etc. When Joe Sixpack and Jane who watches Oprah have an association of our medical system with waste and bloat and unnecessary procedures that come from self-dealing, then we have a good basis for deep system reforms. Sadly, I think the medical industry will have to be seen as more like the car repair industry. Everyone’s first thought is that you can’t trust a mechanic to tell you what is in your best interest, and they will often exaggerate your car’s problems or risk of problems, and thus the need for repairs/tests/improvements.
    As a nation, we are nowhere near that point of understanding about how incentives in the system screw things up for health care. And that’s why Obama’s hands were tied. I’d say it was at least two parts shrewdness to each part cowardice.
    Here is the key: passing this legislation unties the hands. Everyone, but everyone, will now be focused on reducing the total cost of the system. And more and more people will see that it can’t really be done by squeezing admin expense and profit out of insurers. It will have to be done, one way or another, by reducing utilization of the stuff that costs the most for the least return, by reducing the amount of chronic disease in the first place, and by freezing or reducing the amount paid per treatment (or better, moving from fee for service to a salaried or other payment system)
    Once universal health care passes, there will be less and less attention paid to the uninsured, less and less attention paid to insurers as evil (they won’t be rejecting applicants, won’t be experience rating, etc.) and more and more attention paid to reducing what is spent on the providers and suppliers of care. Old habits die hard, and I don’t expect overnight transformations of the public debate, but by 2013 we will be in a whole new atmosphere and given Orzag and others advising Obama, I think they will be ready to pounce on the new sentiments.
    But if I were advising Obama, I would say that isn’t enough. He and the Democrats will suffer politically if they are seen as reacting to demands to cut the cost of care, rather than leading the debate and the charge for further reform. With the very act of signing this bill, Obama, Reid and Pelosi should all say that the battle is not over and an even harder battle is ahead: the battle to reduce the cost of care.
    jd (not Kleinke)

  5. Dan, if you think a PSC can rescue North Carolina from unaffordable healthcare then explain to me how it will receive the blessing of BCBS of NC. NOTHING in healthcare happens in this state without BCBS and their well bonused execs giving local politicians the thumbs up.

  6. The solution, obviously, is to strip insurers of the ability to underwrite, and abandon the “mandates” intended to allow them to get their clutches on new victims.
    In our ideal world, where we have truly egalitarian health care provided by government, what do we suppose will be the effect on medical options and provider payments?

  7. “stabilizing home prices”
    This was an unfortunate bit to throw into the beginning of this piece. House prices will continue to slide.
    If I wanted to make very broad observations about health care reform, I’d have to make the one most cogent observation I can think of: that government is stepping in at the top of an instable price bubble (sky-high medical prices were supported by the credit bubble, which is collapsing)….
    Without government interference (COBRA extension, etc), massive bankruptcies/restructurings/layoffs would spread across the health sector from 2010-2012 resulting in…yes, resulting in a genuine lull in medical inflation.
    Instead, we have the 2nd COBRA extension, and thus providers price structures/practices are rescued, from change at the expense of our children.
    I don’t begrudge subsidizing health care at all. It’s just at this particular moment at the top of a price bubble, we have a kind of economic tragedy.
    The only redeeming economic thing that could happen here is genuine delivery reform impetus.
    Could providers step up and actively advocate delivery reform in mass?

  8. It is remarkable how cowardly and friendless both of these bills are, but to characterize the expansion of Medicaid as “marginal” is just not accurate.
    It grows by 30%, to 60 million. It will be, by a long stretch, the largest health insurer in the country, and while private managed care plans participate in it, Medicaid will dominate whole states and metro areas in terms of “purchasing power”. The expansion is temporarily federalized, and the deadline for states assuming some financial responsibilty for their share is an ominous future development for states that are drowning in their current Medicaid obligations.
    Whether there are fifty state exchanges or one national one also obscures the fact of a dramatic extension of federal authority over private health insurance business practices. While it does not take title to the funds, as Clinton proposed to do in 1994, it effectively federalizes the private health benefit.
    Agree about the cowardice of these bills in actually accomplishing health reform, but the premise of this post is debatable. This is no triumph of the private market, believe me. It is a reckless and unaffordable fiscal promise by a bankrupt and discredited federal government.

  9. The money-side of insurance and providers has such a mathematical twist on the Health industry. The ultimate pot of Gold based on statistical Demographics. How simple can it be. Placing strategic deductions and co-pays to maximize profitability. The exclusions of insurance are even more ominous than the others. The little known trap of denying service on a Host of levels. Hey,its just business!
    The ideal of the public demonizing Health Insurance and those practices that are not only unethical, but in some cases Amoral and Criminal.Leaves them unsettled,but boldly optimistic. It’s the culture of business to exploit opportunities and cut any losses by all means available to Them. When its your time,please don’t linger long and deprive Health Insurance of their profits. Its difficult to own hundreds of homes and protect their CEO’s multi-million dollar incomes.

  10. Margalit,
    You think Obama’s election is a “democratic” phenomenon, and yet you rightly wonder whether there is more than one party. But which is it?
    I call Obama’s populism shallow, and his reliance on the financial sector for campaign funding deep, and his strategy of governance in relation to Congress entirely corporatist.
    If we wanted a different health care outcome, we’d have had to deliver not just a more populist President than Obama, but about 30 Senators of an entirely different ilk. But of course Senate campaigns are expensive, and we all know who can pay for those.
    The situation is far gone in America. The only perverse openings of hope that I can see, in terms of the political gestalt, involve the kinds of economic crisis that lead people to try to see through corporate propaganda and to demand an activist government.
    But does corporatism contain the seeds of its own undoing, or is it capable of continuing to stave off government intervention and regulation, by preserving a level of misery just low enough to prevent people from demanding government protection from the brutality of the marketplace in health insurance?
    Well there’s a question for the political philosophers, eh?

  11. “But do we have corporatism forever and always? Have we reached a final steady state of corporate control of government, or is there a competing strand of democracy also at work, one that might grow stronger in tough times?”
    I think that strand of democracy is what elected the current President. However, little did the strand realize that the deep commitment to a public option and health care for every American was just another case of the “read my lips” syndrome.
    Does it really make much difference who or what the polity elects anymore? It seems that we are allowed to indulge in the sweet fantasy of elections, but the actual governing is guided by a not so invisible hand.

  12. Yep, it’s all about privatization. However, is it really true that the insurance business, collecting premiums, rationing care, meeting needs, is something that is equally enraging when the government does it and when private profit makers do it?
    “This is hardly the government going into the complicated business of providing health insurance – of collecting premiums and trying to spend less than them while meeting the bottomless medical needs of a population – something the best health insurers themselves can barely do without enraging one or more among their round-robin of conflicting stakeholder groups. The chances of the American polity allowing the government even to attempt such a thing always approached nil, notwithstanding the perennial presence and rancor of the single-payer types.”
    Isn’t that exactly what Medicare is doing (albeit through private intermediaries)? And has it not remained popular? Who hates Medicare? At most, people grumble. Who hates for profit insurance companies? Do I even need to ask?
    So on the face of it, we have seen participatory, voting citizens cared for by a government insurance system for years. If we can politically sustain Medicare year after year it’s hard to say that we couldn’t do the same trick with lower utilizing younger persons.
    In other words, the polity already does happily support single payer government insurance for some. Or were you including corporations in the polity?
    The question is “why have we not yet done the sensible thing and create a single payer system for all?” and you provide many of the answers.
    But I’d sharpen it and point out that what we have is out-and-out corporatism – private ownership of the means of legislation, the very opposite of government ownership of the means of production. There are also other names for that form of government.
    But do we have corporatism forever and always? Have we reached a final steady state of corporate control of government, or is there a competing strand of democracy also at work, one that might grow stronger in tough times?
    It is the high voting participation of elders that maintains a minimal governmental toe hold in health insurance via Medicare at all. Might broad based progressive political change lead to support for candidates who acted independently of the insurance lobby? Well, of course, we don’t know, since that clearly didn’t happen in 2008 when we elected the go along get along Obama folks. But who is to say that the consequence of delayed implementation of reforms and continuing economic stagnation may not push the polity just a little further in favor of governmental action in the coming cycles?
    If it does so, I think the evidence suggests that were we can easily sustain single payer insurance politically once it is enacted, since we already do for the most articulate and politically active part of our population, the elderly. The rancor against such a system is largely manufactured by those who prefer private ownership of the government… that’s not rancor, that’s “rancor”(tm), and it can be purchased in bulk on K Street.
    I say that without rancor.

  13. Very good article. But the author misses one extremely important point. A single-payer system can be set-up at the state level and then the state’s private insurers made to pay the single-payer rates resulting in a greater pot of money available for state healthcare. The role of the Federal Government then becomes to enact laws to end insurance discrimination and funnel additional money to the states to help the states subsidize the disadvantaged. It appears that this is the path we are now on.
    Now how can the states set-up their single payer system? Check out the following brilliant solution:
    A journey of a thousand miles begins with one step. Let’s talk about the first step. This first step should address healthcare costs which are pushing us over the abyss. Why has the concept of state Medical Public Service Commissions (PSC’s) not surfaced? History has shown that when essential services have been priced beyond the reach of the average citizen that PSC’s can bring these high prices down to an affordable level. Let’s turn the problem of healthcare costs over to state PSC’s.
    In so doing there are numerous hidden benefits that make this approach unique and worth much closer analysis by those truly interested in bending the healthcare cost curve. Those state politicians who will dismiss this idea out of hand are not really interested in solving the medical inflation problem, but want only to give the appearance of concern while their inaction supports the status quo and the ill-gotten gain they derive from the current system. This is the only idea that has the potential to fix our system and correct its course without a full government take-over of healthcare. Let’s look at how state Medical PSC’s would work:
    1. Starting with healthcare costs, the PSC’s will have the resources to determine the basic cost of each Medical Charge Code used by providers to bill insurance. If the current medical charge code manual is not specific enough for some procedures, new medical charge codes can be added to help refine these costs. Annually these PSC derived costs will be adjusted for inflation until the next cost review cycle updates the underlying cost basis for the selected Medical Charge Codes. (Each year a sub-set of codes will be reviewed.) In addition, the PSC will calculate a mark-up percent for fair and reasonable provider profits for the coming year. The provider mark-up percentage will be determined by a new market ‘check and balance’ mechanism only available in a PSC environment. More on this later.
    2. Because some Zip Codes have inherently higher costs than rural areas, the co-pays may vary by Zip Codes to offset these cost differentials so the Medical Charge Code cost basis can be leveled across the state. These office visit co-pays would be standard across all providers in a Zip Code and paid by the patient. These co-pays should be minimal and not deter patients from seeing their doctor.
    3. The PSC eliminates provider networks and provider service contracts. Thus, competition between providers is increased because insurance no longer delivers a pool of patients. Patients can go anywhere in the state and use their insurance because all insurers pay the same for identical services as set by the PSC.
    Note: Since the PSC sets claim rates paid by private sector healthcare insurers, increased competition does not affect these rates, however, increased competition does affect the retail rate charged by providers to those without insurance and rates charged to all government plans resulting in some tax write-offs. Therefore, increasing competition to keep retail rates reasonable is still important.
    4. Insurers now compete solely on the price of their policies because the doctors/hospitals are no longer tied to their networks. All insurance is accepted by the doctors/hospitals because they all pay the same PSC rates. This increased price competition forces the insurers to reduce premiums and focus on gaining state market share as the method to increase profits.
    5. The PSC environment gives added flexibility to the elected State Insurance Commissioners. The commissioners may quickly increase insurer competition, if needed, by licensing new insurers to compete in the state. There are no network or provider service contract requirements. Also insurers may be extricated from the state without affecting patient access and quality of care since patients are not tied to the insurer’s network.
    6. The PSC can greatly reduce the over prescribing of medical services by the way the provider mark-up (profit) percentage is determined. It can tie the profitability of the providers to the profitability of the insurers. If the profitability of the insurers decline because of the overuse of medical services, then the mark-up percentage for the providers is reduced on every Medical Charge Code. The providers will then think twice about how they prescribe healthcare because it now directly affects their profits. This one feature alone will cut healthcare costs significantly.
    7. Tying the provider mark-up to the net profit (percent of premiums retained after insurer costs are subtracted) that insurers keep creates a healthy ‘check and balance ‘ mechanism. If provider costs go up, profits of both go down. If profits go up above what the average state business earns, the State Insurance Commissioner can intervene and license new state insurers to increase competition, if necessary. But both the insurers and providers have a right to earn a reasonable profit, so the elected State Insurance Commissioner will monitor insurer profits and take appropriate action if and when these profits noticeably exceed what other state businesses earn.
    8. If insurer profits surge due to the more efficient delivery of healthcare, then the insurer has the option to reduce gross profits with offsetting insurance policy premium rebates. This insurer action results in a two-fold benefit: 1) lowers net profit gain for the insurers which the PSC will use to determine the provider mark-up percentage for the coming year; thereby, directly reducing claim costs over the coming year and 2) lowers policy premiums which will attract new customers and position the participating insurer to increase state market share. This adjustment feature allows the insurers and providers to earn fair and reasonable profits and policyholders to pay lower premiums. The PSC will set a minimum mark-up percentage as a provider safety-net.
    9. The PSC will post the annual net profit margins for each state insurer and list prices for similar products. Policyholders can judge for themselves if their premium rates are fair. If not, some policyholders may react by dropping their insurer for a new one during the end-of-year sign-up period while retaining their same doctors/hospitals.
    10. The PSC does not make healthcare decisions and does not affect the doctor-patient relationship. The full time job of the state Medical PSC is determining the cost of Medical Charge Codes. The PSC will standardize these codes to make filing claims easier for doctors/hospitals.
    11. The above discussion on computing the provider mark-up percentage eliminates the current adversarial relationship between providers and insurers and lets market forces determine the common profit. Another more simple but less ideal approach would be for the PSC to set the mark-up percentage based on some other criteria. The choice of method would be up to each state.
    12. As you will note, the previous discussion portrays the Medical PSC as more a state Price Commission than a regulatory body. The role that this PSC plays in each state would be up to the state legislature and could evolve over time. The states will learn from each other.
    The state Medical PSC concept has amazing potential. Not only does it break the current dysfunctional bond between doctors/hospitals and insurance companies, but it offers a ‘check and balance‘ system to mutually benefit all participants: providers, insurers and policyholders. Medical PSC’s will eliminate any cost shifting from underpaying government plans to the state private sector plans. Without a doubt, this unique approach will position the American Healthcare system to control costs as healthcare is expanded by Washington. Please write/call your state representatives and tell them that you want a state Medical PSC.

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