United States Health Care Reform – An Alternative Approach

August 1, 2009

Overview

The health care system in the United States is in disarray. The quality of health care is declining while costs keep rising. In addition, there are nearly 50 million Americans that are either not insured or underinsured. This plan outlines a strategy to provide revenue neutral universal health care to all Americans at a reasonable cost. This plan described below was developed to be revenue neutral for the federal government.

Reduce Health Care Costs Using Technology

Under this plan, the following technology-based initiatives would be deployed to reduce legacy health care costs:

-    Create a secured online platform that would enable virtual doctor’s visits. This platform would allow patients to consult with their doctors and get routine checkups via the internet. For more complex diagnosis, nurses could be sent to the home, while doctors observe their patients via the internet. All hospitals, doctors and insurance companies would receive free access to this platform.

-    Create a secured medical records platform that links medical records and doctors to an appointment setting network. To improve efficiencies, patients’ medical records would be transferred electronically at the time of the appointment. All hospitals, doctors and insurance companies would receive free access to this platform.

-    Create a text a doctor/nurse network that provides a vehicle where Americans can text a doctors/nurses and get medical questions answered quickly.

-    Increase federal grants for medical and cost reduction technological research projects.

Other Cost Control Measures

Under this plan, the federal government would cap prices for the top 1,000 major medical procedures. However, the federal government would pay health royalties of up to 10% to doctors (split between primary care physicians and doctors performing the procedure) if the patient does not require any additional major medical procedures over the next two years. These prices would be set by a medical oversight board appointed by the President of the United States. In addition, all medical procedures costing $30,000 or more would require a second doctor’s opinion by federal law before the procedure is performed.

The federal government would also cap prices for the top 1,000 drugs sold within the United States and offer generic drugs only (unless generic drugs were not available) through the federal health care plan.

Finally, the federal government would cap malpractice lawsuits on all cases at $750,000 per procedure at the district court level (with higher awards considered by a judge through the appeals process in only the most egregious cases) and cap annual doctor’s malpractice insurance at $40,000 per year.

Tax Credits

Under this plan, the following tax incentives would be deployed in order to drive down the cost of health care:

Individuals

-    Provide a $1,500 individual annual tax credit for fitness center memberships. Taxpayers would have to sign an affidavit that they have used the fitness facilities a minimal of 100 times during the applicable tax year.

-    Provide tax deductions for fitness equipment and preventive medical equipment purchased for the home (e.g., purchasing a device to check blood pressure).

-    Provide a $500 tax credit for all citizens that have a non-smoker status with their insurance companies.

Corporations

-    Provide medical technology and pharmaceutical companies a tax credit for all products developed that significantly reduces the cost of health care. The tax credit would equate to 5% of product sales for the first 10 years of the product being in the marketplace.

-    Insurance companies that do not increase insurance premiums for 95% or more of their customers within a given tax period would be subject to a 7% reduction in their corporate tax rate. Insurance companies that reduce the costs of services for 95% of their patients would receive a 14% reduction in their corporate tax rate. In order to receive this tax credit, insurance companies would have to eliminate the preexisting condition requirement for all patients.

-    Hospitals that do not increase services for 95% or more of their patients within a given tax period would be subject to a 7% reduction in their corporate tax rate. Hospitals that reduce the costs of their services for 95% of their patients would receive a 14% reduction in their corporate tax rate.

New Taxes

Under this plan, a modest .25% increase in sales taxes would be assessed at the national level to support the national health plan. This tax strategy is the most sensible method of generating revenue to support health care. A tax of .25% equates to $.25 on a $100 purchase.

The Fit America Program

The President of the United States would create a Fitness Czar that would be responsible for managing a nationwide ongoing daily fitness and nutrition program. This fitness program would allow United States citizens to signup online, get daily workout programs and nutrition information, track fitness results and earn a United States Presidential Fitness Certificate. The goal would be to have 65% of Americans on this program by 2018. Individuals that receive a United States Presidential Fitness Certificate would receive a $500 annual tax credit for as long as they maintain their certification.

Just In Time Medicine

Doctors would be able to issue prescriptions to patient online through the national virtual office doctor’s visit system (see above). Doctors would be encouraged to limit the amount of medicine prescribed to patients to the amount of medicine needed by the patient for a two week period. With automatic reorders enabled within the system as determined by the doctors. These medicines ordered via the virtual office system would be delivered via the United States Post Office free of charge or the patient would be able to fill their prescription at their local pharmacy. Moving to a just in time process would significantly reduce the cost of some medicines over time by reducing the carrying cost of medicines by the pharmaceutical companies and pharmacies.

Employer Provided Plans

Under this plan, companies with over 1,000 employees would be required to provide health care coverage to its employees. These companies would be required to cover a minimum of 65% of the cost of their employee health care plan.

Employees with household incomes of less than $100,000 would be able to buy into the government’s health care plan at a fair market rate.

Employees of companies that do not provide health coverage (small businesses) would have 1.5% of their salary deducted as a health care credit that would be allocated for their health care coverage. These employees would then be covered by a federal health care plan. Employees can opt-out of the federal health care plan if they are insured by another plan. This plan would not have a financial impact on small businesses.

Contractor (1099) and other temporary employees would be allowed to purchase insurance via the federal health care plan at the market rate.

Unemployed

Unemployed Americans and members of their families would receive free access to the government health plan for as long as they are unemployed. Since both the employed and unemployed are covered through this plan, there would be no penalties for the uninsured Americans.

The Federal Health Care Plan

The federal health care plan should consist of the following:

-    Six free virtual doctor’s office visits a plan period (see virtual visits above).

-    Three free in-office doctor’s visits within a plan period.

-    Additional doctor’s office visits would be accessed at a rate of $60.

-    Medical coverage deductibles and co-payments would mirrors deductibles and co-payments provided to the United States Congress in their health care plan.

Revenue Neutral

This plan should be revenue neutral for the next 20 years. The plan provides revenue neutrality by using technology, tax incentives and price caps on the top 1,000 medical procedures to reduce health care costs. In addition, new revenue is generated by a 1.5% health care credit accessed on all small business employees and a modest .25% national sales tax. Below is a breakdown of the revenue sources over 10 years:

-    Health Care Credit - $400 billion
-    Sales Tax - $250 billion
-    Saving Based On Improved Overall Health - $50 billion
-    Top 1,000 Medical Procedures Cap - $100 billion
-    Medicare/Medicaid Efficiencies - $200 billion
-    Drug Caps/Just In Time Medicine/Generics - $50 billion
-    Medical Technology Advancements - $50 billion
-    Efficiencies from broader coverage/malpractice limits - $50 billion
-    Tax credits offset – ($150 billion)
-    Net Proposal Benefit – $1 billion

Total health care costs based on this structure is estimated to be $1 billion over 10 years.

Conclusion

This plan brief has outlined an alternative health care proposal that should provide health care to 90% or more of the over 50 million people that are currently without health care. The plan focuses on reducing costs by increasing medical technological advancements and by making routine medical activities easier. The plan also focuses on getting Americans healthier by making it easier to get medical checkups, providing tax cuts for Americans to get in shape and by creating a national daily fitness program.