Health Care Reform: Essential Steps for Success

Health Care Coverage in US Needs to be Based on Sound Principles

© Nelson Acquilano

Nov 2, 2009

Health Care in America is a broken system. It is often characterized as a fragmented and haphazard system, inefficient, too expensive, and one which rewards insurance providers for denial of necessary coverage. Data released by the Census Bureau shows that the number of uninsured Americans stood at a record 46.6 million in 2005 - 15.9 percent of Americans lack health coverage (Center on Budget and Policy Priorities.) Tens of millions more find that their coverage is incomplete or denied and insufficient to the need. A price tag of one trillion dollars has been suggested to pay for the overhaul of the American system of health care in the present reform proposals.

Fixing a Broken Health Care System

Many fear that the politics involved will create even greater fragmentation rather than fix a broken system. Here are several recommendations that have been made that can help to truly reform a national health care program:

• Value Added Tax: To pay for heath care, the US should implement a national “value added tax.” A value added tax is the way many European nations pay for health care. It is an “invisible” tax, paid by many manufacturers upon the materials they purchase to process into consumer products. The tax is levied upon the additional value of the item over the original cost of the raw materials. While causing somewhat higher prices at retail, the value added tax seems to be tolerated by most with a minimum of complaint. According to “Once Considered Unthinkable, U.S. Sales Tax Gets Fresh Look” (Lori Montgomery, Washington Post, May 27, 2009), the VAT is one of the world's most popular taxes and is in use in more than 130 countries. Among industrialized nations, rates range from five percent in Japan to 25 percent in Hungary and in parts of Scandinavia. The VAT also takes much fiscal pressure off employers, and facilitates business growth and investment. A 21 percent VAT has permitted Ireland to attract investment by lowering its corporate tax rate.
• Tort Reform: Everyone agrees that liability insurance is a major inflationary cost for health care. One physician said that she made $100,000 per year, but her malpractice insurance actually cost $300,000. She quit her practice. Any health care reform package must include significant accompanying tort reform legislation.
• Prescription Drugs: A major cost of health care is prescription drugs. New controls on prescription drugs and rendering all drugs to generic status within a five year period would be fair and would save many billions of dollars each year.
• Controls on Medical Fees: While the average income of many doctors is under $200,000 per year, many specialty clinics and specialists reap millions off both private insurance and taxpayer programs such as Medicaid and Medicare. Controls on caps for medical fees would both contain inflation and lend to a more realistic cost basis of care.
• Administrative Relief: Health care providers all agreed that outrageous demands and duplication force the cost of health care even higher. A singer system of care should strive to reduce unnecessary and duplicative administrative costs.
• Reasonable Co-pay Schedules: All health insurance should have co-pay deductables, which legitimately act as an inhibitor for unnecessary health care utilization. All future programs should continue to allow for a co-pay formula, but must assure that it is appropriate and not discriminatory or prohibitive.
• Fraud Recovery: According to Medicare, individuals who abuse or defraud Medicare cheat the program out of millions of dollars annually. This removes money every year from the Medicare program, and also results in higher premiums. A new system of reform would institute controls and levels of civil and criminal punishment for fraud recovery.
• Preventive Medicine: Most experts acknowledge that prevention is much more cost efficient than treatment. Any new health care system should build in incentives and rewards for pro-active preventative options.
• Expand the Medicare System: The US currently has an effective health care system: Medicare. One simple approach would be to expand Medicare to cover everyone in need, beyond just the elderly and disabled.
• Public Option: The US should have a public coverage option to compete with the private sector. There is no doubt that the previous great experiment of “competition to control costs” has failed. The most efficient means for both cost containment (especially by removing the profit margin) and consistency across the country is for the government to assume the role of single payer status for basic coverage. Citizens would still have the option of purchasing additional coverage or specialty coverage from other health insurance providers.
• National Centers: Another recommendation is to design a comprehensive national teleconference diagnostic center through the National Institute of Health for especially complicated and challenging diseases or disorders. This would be staffed by experts from throughout the nation, funded in full by the NIH, and would be provided as a free service to all hospitals for special needs patients.
• Eliminate Unnecessary Care: Several bills proposed to Congress were looking to expand coverage, for instance to include “end-of-life counseling.” Many of these new proposals are unnecessary and would inflate the cost of health care, or are already being provided through churches and other organizations. A true reform package would need to cover basic health care while eliminating unnecessary or extravagant coverage including unnecessary diagnostic tests and other unneeded treatments.

The Health Care industry is currently guided not by consumer needs but by profit, lobbying and politics. Removing these variables and taking appropriate action steps on behalf of the needs of citizens is paramount for the long term success of any significant health care reform plan.

Health Care is Critical

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