Reforming Health Insurance
How to cut 40%+ from your premium
In 2016 I read an article by Shane Snow titled “Trickle-Down Health Care: How we could actually fix the US Health System.” His basic assertion is that nobody is minding the store. Nobody really knows or cares what health care costs, because they aren’t paying. He further asserts that on average, only 53% of your health insurance premiums get returned to you as benefits. Yes, I know that the Affordable Care Act of 2010 mandated the health insurance companies can only keep to 20% of your premium and has to return the other 80% as benefits. However the ACA states:
“…an insurance company must assign 80% of their premiums to activities that develop the healthcare sector.”
‘Developing the healthcare sector’ doesn’t sound like ‘paying for your colonoscopy’ to me. Further, if you go looking for this information today, Google and Bing tell you about this 80%, not what the actual premium to benefit ratio is today. Originally, this information came from the Insurance Information Institute. Not only can I not find this on their site any longer, I reached out to them and they proclaimed they don’t provide this information.
What do we do about this? If we accept Shane’s assertion that nobody is watchful of rising medical costs, and his assertion that 47% of your health insurance is wasted, what is the solution? Let’s enumerate the actual functions of an insurance company. Basically, insurance is a bank that only pays certain people. You can’t use health insurance to buy a car or a house, but they will pay for your colonoscopy. Maybe. Sure, there are rules about what procedures get paid for and who can have some procedures, but generally, it seems like insurance could be replaced with a high school kid with a PayPal account.
I am going to suggest that this society has the means to automate this entire process. If the insurance company provides the electronic medical records system (EMR) the practitioner uses to document patent encounters, then they know what procedures are performed. Then, they can pay for procedures performed in real time, short circuiting the entire coding and adjudication process. You don’t need big buildings, chairs, desks, PCs and most importantly people gumming up the process. All that is expensive and time consuming. Once again for the people in the cheap seats: We can automate health insurance and cut out 47% of the costs.
How does this new company make its money though? Just like Netflix above, you charge the patient the actual costs of the risk, plus a finance fee to break the yearly premium into month sized chunks, plus a data management fee of say, $10/month. That leaves 46% plus in savings.
Why would doctors go along with this? Don’t you have to have networks and contracts with negotiated rates and attorneys and all that stuff? There goes your savings, right? Not so much. Instead of all that monkey motion, that the patient (YOU) pays for, this new company could offer 125% of the Medical Consumer Price Index (MCPI) for any given procedure. The practitioners would jump at the opportunity for a raise without having to sit in a boardroom with a bunch of attorneys wondering not IF they are getting screwed but HOW HARD.
What about regulatory hurdles, you ask? I talked to Layna Cook Rush of Baker Donelson’s Insurance Regulatory Practice, and she stated that outside of the reserve fund mandated by the state, there should be no regulatory hurdles at this time.
What about that regulatory money? A large existing insurance company should have no difficulty in coming up with the regulatory reserve amount. A new, smaller company can take out a line of credit with a lender. When the new, small insurance company sell a policy they can pull the regulatory money from the line of credit. That is where the finance fee came from earlier.
‘An EMR is really hard to write,’ you say. Yes, yes it is. Most of the reasoning behind that is that the doctors think they need a special program for their specialty and legacy insurance companies mandate doctors speak International Classification of Diseases (ICD, currently in version 10 or ICD10) and Current Procedural Terminology (CPT). These two code sets are NOT adequate to document a patient encounter. That is where the smart people at CAP and NHS come in. They came up with a nomenclature suitable for documenting the entire patient encounter. This nomenclature includes well over 350,000 concepts. Even better, the National Institutes of Health (NIH) combined SNOMED_CT, RxNorm, the national drug database, and the Value Set Authority Center (VSAC) into the Unified Medical Language System (UMLS) that not only combines these three but translates them into a self-referencing and self-documenting schema where the same programmatic techniques can access any of a large number of medical nomenclatures. The UMLS has over 14 million concepts. That means we can translate back and forth from ICD and CPT to deal with those pesky, inefficient (I’d go so far as evil) legacy insurance companies. Combine that with some fairly standard status monitoring, like heart rate, blood pressure, etc., and something detailing the appointment place and time and there is your EMR.
I can hear you thinking ‘Certainly there is more to it than that.’ Well, sure. We talked about the rules earlier. There are any number of rules engines suitable for typing your rules into. Personally, I use Microsoft’s NuGet package RulesEngine. There are several other features that should be considered
Patient Portal suitable for showing to the doc taking care of your broken leg skiing in Switzerland
Secure ‘Email’ since you can’t email personally identifiable medical data.
SMS/Text messaging to inform patients of changes in their records or patient responsibility
Estimator: NOBODY provides a comprehensive cost estimation tool. (Epic gives you the amount paid and your deductible, but does NOT include any additional facility fee/staff/matériel/anesthesia…)
Imaging. Everyone needs to see x-rays and MRIs and be able to share them appropriately instead of retaking them
Telemedicine: consulting with each other or the patient without Zoom and while viewing the above-mentioned x-ray or MRI
Health and wellness: preventing disease in the first place is paramount to getting this up and running. Show the patient what is abnormal, by how much and what to do to fix it. Everyone’s costs will go down
Configurable questionnaires. Nobody wants to sit in a waiting room with sick people with a ream of paper and a pen filling out name address and phone on EVERY SHEET
E-Prescriptions
Packages and Bundles: An appendectomy isn’t just removing the appendix. Anesthesia, pre- and post-care and all things will be included and accounted for with a package. Frequently an upper and lower endoscopy are done together to save costs. This savings can be passed on to the patient in a bundle.
· Research: Since we are using SNOMED we have structured data for symptoms associated with structured data not only for procedures but for outcomes as well. This is a first in the world.
Online scheduling
Security and privacy
Since these are all solvable problems, now I can hear you thinking ‘What are we waiting for?’ Well, there are several hurdles:
A team suitable to bring home the project. Members have to be conversant with a number of fields including medicine and programming AND be able to look past what is and see what should be. Tall order.
Resistance to change.
Getting the word out. We wouldn’t want to sell a bunch of policies only to fail at the practice’s reception with “We don’t take that insurance.” This could probably be solved with a big advertising campaign.
Slim margins require near immediate adoption. Luckily, with a 40%+ savings instant adoption should be easy
My research (with Mrs. Rush at Baker Donelson) shows that it costs about a million buckaroonies PER STATE to be licensed to sell health insurance. However, with a couple/few successful ‘deployments,’ we should be able to bypass a lot of that on subsequent ‘installations’
Fraud. Anyone with an NPI number can sign up for payments. We need a data science department to weed these fraudulent payments out. The FBI is also tasked with combating fraud, so they can do the investigation.
The real answer to ‘What are we waiting for?’ is ‘the will of this society.’ Luckily, we have a few other things going for us
The ACA, Obamacare, has a site to publish these new policies on. A little bit of actuarial calculations to assign procedure payments and premium costs and a few keystrokes and you are published to healthcare.gov.
Practices will no longer need medical coders
Practices will no longer need to pay for an EMR
Practices will gain 25% on payments for procedures overnight
40%+ reduction in cost for the patient
No insurance networks: no lawyers, no negotiations, no contracts. Just a 25% payment increase with the knowledge of take-it-or-leave-it. At those rates every practitioner will take it.
In conclusion, I have shown a way to save at least 40% over the cost of legacy health insurance. There are all kinds of ancillary consequences too. If you as an employee go to your HR department and find out the total cost you are paying for your health insurance (spoiler alert, it is probably close to $1000 per month) including what your employer pays, you could drop that policy and get a $1000/month raise and buy your own insurance for under $600 per month and pocket the $400/month difference. That’s a nice used BMW, or amortized college tuition for your kids. It wouldn’t cost your employer a dime either.
There you have it, a complete plan to save 300,000,000 insured people in the U. S. hundreds of dollars per month, each, complete with risks, benefits and a complete execution plan. No reason why this won’t work for billions around the world too. I can’t see why we wouldn’t do this. Don’t let anyone convince you that it can’t be done either.
As an aside, my dear old mum got a letter from her health insurance company last week stating that they could not come to terms on a new contract with her practitioner/hospital/provider. She lives in a small North Texas town and there aren’t a lot of choices to begin with. Probably what is going to happen is that this 79-year-old woman is going to have a get in her car and drive to the nearest large city, an hour away, to get her medical care. There is still a perfectly good ‘medical city’ five minutes away from her home, but she can’t go there and have her care covered. THIS is the evil of having finance put their nasty, greedy little fingers in healthcare.
See the video version of this article below