A Swedish Country Doctor’s Proposal for Health Insurance Reform

flying cadeuciiIn the forty years since I started medical school, I have worked in socialized medicine, student health, a cash-only practice and a traditional fee for service small group practice. The bulk of my experience has been in a government-sponsored rural health clinic, working for an underserved, underinsured rural population.

Today, I will pull together the threads from my previous posts in the series “How Should Doctors Get Paid?” I will make a couple of concrete suggestions, borrowing from all the places I have worked and from the latest trends among the doctors who are revolting against the insurance companies by starting Concierge Medicine and Direct Primary Care practices.

Because I am a primary care physician, I will mostly speak of how I think primary care physicians should be paid.

I will expand on these concepts below, but here are the main points:

1) Have the insurance company provide a flat rate in the $500/year range to patients’ freely chosen Primary Care Provider, similar to membership fees in Direct Care Medical Practices.

2) Provide a prepaid card for basic healthcare, free from billing expenses and administration.

3) Unused balances can be rolled over to the following years, letting patients “save” money to cover copays for future elective procedures.

4) Keep prior authorizations for big-ticket items, both testing and procedures, if necessary for the health of the system.

5) Keep specialty care fee-for-service.

6) Have a national debate about where health care ends and life enhancement begins and who should pay for what.

Health insurance needs to be simple to understand and administer. It needs to promote wellness, and it needs to remove barriers from seeking advice or care early in the course of disease. It needs to empower patients to use health care services wisely by aligning patients’ and providers’ incentives.

Health insurance should not be deceptive. It should not promise to pay for screenings (colonoscopies and mammograms) and stop paying if the screening reveals a problem (colon polyps or breast cancer). It should offer patients the right to set their own priorities for their health while demanding concern for our fellow citizens’ right to also receive care.

Health insurance is not like anything else we call insurance; all other insurance products cover the unexpected and not the expected. Most people never collect on their homeowners’ insurance, and most people never total their car. Health insurance, on the other hand, is expected by many to be like a bumper-to-bumper warranty that insulates us from every misfortune or inconvenience by covering everything from the smallest and most mundane to the most catastrophic or esoteric.

What would it look like if Johnny or Fido puts mud prints on the living room wallpaper and Dad makes a claim on his homeowner’s policy? Or if Sally spills chocolate ice cream on the beige upholstery of Mommy’s new car and the auto insurance has to pay to have the seats recovered?

In today’s healthcare, everything is potentially a covered service, and there are no incentives to limit one’s claims against the insurance companies. I believe we need to make patients view healthcare spending as their business, and the money as their money.

My proposal for payment reform in healthcare can work in a single-payer system or with multiple payers, both public and private insurers:

Have the insurance company provide a flat rate to patients’ freely chosen Primary Care Provider, not the $3 per member per month we used to get from the HMOs of yore but real money. Something in the order of $500/year would be more reasonable for the primary care physician to manage a patient’s health care.

This would cover maintenance of a patient-focused and updated medical record, care coordination, management of medication and communication issues, access to medical triage and treatment capacity and one yearly visit for personalized screenings and care planning. For a panel of 1,500 to 2,000 patients, this would bring in $750,000 to $1,000,000.

Keeping in mind that the annual per capita health expenditure in this country is $8,500, that would gobble up a mere 5.9% of the pie.

The billing for this would be very simple; just a head count multiplied by the monthly fee. For comparison, physician practices in the United States now spend $82,975 per physician per year interacting with payers, according to the Commonwealth Fund.

Roughly speaking, that means doctors spend more than one hour every day working to pay the billing department and to do the free work we perform for the insurance companies. Imagine the improvements in patient service an extra hour a day per physician would make possible.

The advantage with this kind of system is that it would promote shared resource stewardship between doctors and patients. Primary care doctors would be incentivized to maintain large enough panels of patients to get the basic funding, but they would need to maintain patient satisfaction with their service in order to keep that funding.

Like cash-only Direct Primary Care practices, with a financial foundation covering basic operating costs and with elimination of billing expenses, practices receiving insurance money up front can keep the total visit costs low. With overhead already covered, per-visit cost could be almost in line with today’s patient copayments.

I believe that under this model, primary care could do a much better job being responsive to patients’ needs than in today’s $7 per minute hamster-wheel race for the insurance money.

Provide a prepaid card, similar to EBT cards for food stamps, or department store gift cards, that patients can use for the average number of annual visits (3-4) with their primary care physician and a basic amount for laboratory tests as well as “blanket approved” ancillary services like initial visits with counselors, dietitians and physical therapists.

Again, no billing, so we could do much more for less money.

Beyond the basic level of primary care, higher copayments and prior authorizations could indeed have a role. Money from the basic allotment not spent in a given year could be rolled over to cover future copays, such as for elective surgeries.

This would help reduce the tendency to spend down the account every year with a “use it or lose it” mentality.

Specialty providers should not be paid by capitation, as some people have suggested, because the market forces that would make it necessary for primary care doctors to maintain a satisfied (and healthy) patient population would not work as patients often wouldn’t know how to rate their specialist until they needed the care.

By that time it may be too late to “vote with your feet” and go elsewhere. Who would sign up with a brain surgeon, just in case he needed one?

At the risk of offending my specialist colleagues, the hassles of insurance billing and prior authorizations must seem at least a little easier to bear when you make your living doing fifteen minute cataract surgeries for $3,000 each than when you treat complicated diabetes, hypertension and heart disease in fifteen minute intervals for less than $100.

For catastrophic illnesses, like cancer, eliminate copayments altogetherand provide monies to reduce barriers to care, like transportation to daily radiation treatments, which can be burdensome on patients and families.

This may be controversial, but we as the country that spends twice what other countries spend on health care need to talk openly about setting priorities. Going back to the example of homeowners’ insurance above, if all my neighbors make insurance claims to essentially pay for redecorating their homes, and my premium goes up, do I have the right, or even the obligation, to speak up and say that they are hurting their neighbors when their claims increase all our premiums?

Some of the difficult conversations we need to have concern the shifting definition of disease in our culture. Things that used to be seen as normal aging or just life in general have gradually become diseases, especially when new and expensive drugs are marketed directly to consumers.

This is why I propose that diseases like cancer should be better covered than runner’s knee, benign enlargement of the prostate (and this is a sixty year old male talking) or restless leg syndrome (even though it was described by a Swede from my Alma Mater).

Even temper tantrums are a disease now, and I can think of several $200/month drugs doctors prescribe for them. And, by the way, most newer brand-name drugs seem to cost at least $200-250/month. We all need to be aware of what tests and treatments cost, so we can assess their value.

As a Swedish American, I can honestly say that health care with no market forces is not an ideal system, but for market forces to have a chance to work, consumers (patients) must think of the money they spend as theirs, not someone else’s. Before that money landed in the insurance companies’ or Government coffers, it was on the top line of each of our pay stubs.

We need a healthcare system that keeps us thinking of our nation’s healthcare budget as our own.

Hans Duvefelt, MD is a Swedish-born family physician in a small town in rural Maine. He blogs regularly at A Country Doctor Writes where this piece originally appeared.

7 replies »

  1. The suggestion to keep pre-authorization is missing an key part of the problem, at least with respect to imaging. Imaging needs pre-authorization arguably because it is over-utilized. Over-utilization occurs because of bad doctoring and/or because the patient wants to look “just to be sure.” Nowadays a MR or CT study isn’t that expensive. Let the patient pay. Let physicians who don’t know how to take an appropriate history, perform an adequate exam, or formulate a cost-effective workup earn a reputation for being a doc who “knows how to run up a bill, often never to find anything.” Very analogous to mechanics. If your engine in misfiring, a good mechanic finds the cause and adjusts or replaces only one part. A bad mechanic replaces many parts before fixing the problem. Mechanics earn bad reputations for wasting client money, so too should physicians. Otherwise, where insurance is involved, administrative cost bloat is involved on both ends. The cost to the system for a physician on one end plus 3-4 admin types (including in the radiology center) handling the insurance issue on a $300 CT doesn’t make sense anymore.

  2. Employer cost for employee health care is no more fair than my $8,500 figure. The sickest people aren’t likely to be workers covered by such insurance.
    I agree prices should be posted. That way patients would think before whipping out their card, assess the potential benefit and cost for value.
    Bundling or a la carte – same thing. I was just saying capitation isn’t a good idea for specialist care.

  3. ” But prices are becoming the bête noir of reform because they can stop everything from happening …if folks can’t pay deductibles, co’s, and premiums…a watershed we approach rapidly…”, then real reform begins…and not a moment before.

  4. Indemnity causes insurance payments to flow through patients who in-turn pay their doctors. No one likes this because the patients can keep the dough. This causes the docs to be solicitous and it allows patients to see prices. It also causes prices to come down because patients can shop a little more effectively… as they learn a few prices. Prices are killing us and indemnity might be worth it once again.

    Fantasy prices have occurred because no one cares about prices, except for a few weeks when someone is running for office. But prices are becoming the bête noir of reform because they can stop everything from happening …if folks can’t pay deductibles, co’s, and premiums…a watershed we approach rapidly…
    all reform stops.

    Insurers and providers all want to grow. This means they want to see more revenue. No one cares if health care is approaching unaffordability until it arrives. You will begin to see this when 60% actuarial value plans–the bronze plans–demand so much out of pocket expense–that premiums are dropped and not paid. Stay tuned.

  5. U.S. healthcare spending per capita of $8,500 is highly misleading in the context that you present it. Most large self-funded employers spend about $5,000 per covered life on healthcare services and administrative costs with some as low as $4,000 and a few at close to $6,000. The millions of children covered by Medicaid cost the system about $1,500-$2,000 each. Medicare spending is about $11,000 per capita including beneficiary premiums and the healthiest 50% of Medicare enrollees account for only 4% of the program’s costs in any given year. Spending by private insurers, Medicare and Medicaid does not include public health initiatives, medical research and hospital construction. Much of dental care and long term custodial care is paid for out-of-pocket.

    The main reason that healthcare spending is higher in the U.S. than elsewhere is not administrative costs or utilization; it’s prices per service, test, procedure drug or device. In the most recent example, Gilead Sciences priced a 12 week course of treatment with its new drug, Sovaldi, to treat hepatitis C at $84,000 in the U.S. vs. $66,000 in Germany and $57,000 in the UK. Its rationale is that GDP per capita is 30% higher in the U.S. than in Germany so we should pay 30% more. At the same time, they’re willing to sell it for $2,000 in India and a mere $840 in Egypt. We should just fly to India and pick up the pills there.

    As a patient, I don’t expect to sign up with a brain surgeon until I need one. I expect my PCP to be tied into a network of specialists or at least know who is good in the area and who isn’t so he can make an appropriate referral. Who would he go to if he needed the procedure himself?

    Regarding the prepaid card, no billing sounds great but what price will I be charged for services that are to be paid for with the card? To what extent do those prices vary from one provider to the next and can I discover the price in advance before services are rendered? Price transparency is important whether insurers are billed directly or not if we want to direct care to the most cost-effective high quality providers.

    Finally, I think bundled prices for surgical procedures that also cover pre-admission testing and post-acute follow-up care is a better approach than fee for service especially as more and more large health systems that control the entire continuum of care dominate many regional markets.

    In the end, I think the real issues for primary care doctors are (1) how much do we need to pay them to attract a sufficient supply of qualified people, and (2) how can we best simplify the system to mitigate their administrative burden?