Population Health Management: The Next Frontier for Healthcare

As a nurse, allow me to sum up the traditional medical model driving the healthcare industry, as follows: We sit and wait for the phone to ring. Of course, the "we" is the healthcare provider – physicians, nurses, hospitals, etc. – and the person at the other end of that phone is you, a typical patient whose symptoms have progressed to the point of being self-evident or intolerable. In other words, the traditional medical model represents 'reactive medicine,' which is so 20th century! And, now, here's the problem: Our 21st-century budget cannot afford 20th-century medicine. Particularly, with the added burden of an aging population coupled with a struggling economy. Something (or, more precisely – someone) has got to give.

The 20th-century medical model had three primary characteristics: 1) It was 'disease-based,' as we learned how to diagnose and treat disease and trauma (and we did that very well); 2) It was 'consumer-based,' as we focused on treating one patient at a time (after they brought their symptoms to our attention); and, 3) It was 'volume-based,' as healthcare providers were reimbursed on a fee-for-service basis (so, more disease meant more money).

Let's contrast that with the 21st-century medical model: 1) It is 'health-based,' so we must learn how to prevent, detect, anticipate and mitigate both disease and trauma; 2) It is 'population-based,' so we must learn how to provide health-based services on a pro-active basis to an entire 'covered population' (e.g., Medicare patients, Blue Cross patients, etc); and, 3) It is 'outcome-based,' as healthcare providers are rewarded for quality, not volume, so we must learn how to make money by keeping people healthy.

Compensation plays a crucial role in the healthcare industry, as the type of reimbursement determines the type of incentive. On one end of the reimbursement spectrum is traditional fee-for-service, which only rewards for volume, so the financial incentive is to treat disease and trauma – and lots of it. Next on the spectrum is 'Pay for Performance' (P4P), which rewards for quality, as well as for volume, so the incentive is to treat disease and trauma, but do it better than the competition, in order to receive additional payment. On the other end of the spectrum is 'risk-sharing' (or salaried compensation), which rewards for prevention, detection and mitigation of disease. Only risk/salaried reimbursement is entirely health-based, where healthcare providers achieve their greatest financial rewards when they keep their patients healthy.

The ancient Chinese were experts at aligning the incentives between provider compensation and patient outcome. A physician would receive ongoing payment from their patients in the form of food, services or money for as long as the patient remained healthy. When the patient became sick or injured, all payment would cease, as the patient could no longer grow food, perform services or generate income. However, the ancient Chinese probably took it a little too far. If the patient was a wealthy merchant or powerful warlord and died as the result of their disease or trauma, the physician was beheaded! You have to admit, though, this was certainly a strong incentive to keep patients healthy!

Now, let's ask ourselves a very important question: What is the root cause of rising healthcare costs? Is it caused by physician fees? Or hospital charges? Maybe it's due to insurance company premiums? Or, how about new technology? Well, one thing I am certain of it's not the result of nursing wages! OK, here's my answer: Sick people. (I'll give you a moment to ponder that one.) So, if sick people are the root cause of rising healthcare costs, then the best solution, the only solution is to reduce the incidence and burden of disease (as well as trauma, i.e., falls, motor-vehicle accidents, gunshot wounds, etc.).

Speaking of sick people, I believe I'm fairly safe in making this generalization: Everyone wants to be healthy. But, unfortunately, four obstacles stand in their way: 1) Knowledge, 2) Motivation, 3) Resources, and/or 4) Social Support. These obstacles, however, can also be inverted to represent the 'Four Attributes of Good Health,' which now become part of the new 'job description' for 21st-century medicine. Healthcare providers must learn how to help their patients turn these obstacles into attributes, in order to prevent disease and optimize health. (OK, 'genetics' can certainly be considered a major obstacle to good health, but even its influence can be greatly mitigated through appropriate lifestyle choices.)

Staying on this topic of 'sick people,' it is easy for healthcare providers to just throw up their hands and exclaim, "People won't change!" And, they'd be right most of the time. But, that doesn't mean they should not try. This paradigm shift from a sickness-based healthcare system to one that is wellness-based will take 50 years – so we've got to get started sometime. The reason we must do it is to attack the root cause of rising healthcare costs, and the reason we should do it is to create the type of healthcare system we want for our children and our grandchildren.

Population health management (PHM) can be described as a proactive, coordinated and comprehensive approach to healthcare delivery for a covered patient population, and is comprised of seven components: Screening, educating, motivating, navigating, monitoring, intervening and reporting. The most challenging, as well as the single most important key to PHM success is generating and maintaining patient motivation. A newly-created position to help achieve this goal is the 'Nurse Coach.' But, healthcare providers cannot control the lifestyle choices of their patients on a 24/7/365 basis, so they must find effective and efficient ways to help them control themselves. They must help them develop the capacity for both Self-Efficacy ("I can make a positive impact on my level of health and wellbeing!") and Self-Discipline ("I can implement and maintain the lifestyle regimen my Nurse Coach has prescribed for me!"). Indeed, if we are truly serious, health-behavior modification requires the social support of all society, e.g., Mandatory vaccinations for school children; Banning smoking in public places; Nutritional labeling on food and menus; Mandatory seatbelt and helmet use; and so on.

This aphorism from ancient India shows how their physicians tackled this great challenge of health-behavior modification: A mediocre physician will simply prescribe a medication. A good physician will both prescribe and dispense a medication. But, a great physician will prescribe and dispense a medication, as well as jam it down the patient's throat!

PHM requires a new paradigm in all aspects of our healthcare delivery strategy: Prevention vs. intervention; pre-symptomatic vs. post-symptomatic; multi-disciplinary teams vs. individual physicians; and outreach programs vs. intake facilities. The outreach program represents a second key requirement to PHM success – healthcare providers must go to patients, rather than relying on patients to come to them. Healthcare providers can no longer sit and wait for the phone to ring. They must reach out to their covered population in a manner that is comprehensive, targeted and cost-effective.

To implement this proactive strategy, a new organizational entity, the 'Outreach Program,' must become an integral component of 21st-century healthcare infrastructure. Outreach Programs may be owned and operated by healthcare providers, insurance companies, governmental entities, self-insured employers or free-standing vendors, and will have three basic elements in common: 1) A dedicated staff, 2) A defined patient population, and 3) A funding source.

The dedicated staff includes nurses, dieticians, social workers, fitness trainers and pharmacists, among others. The defined population will include all patients covered under a risk-sharing arrangement, such as members covered under a particular insurance company or beneficiaries covered under Medicare or employees covered under their employer's self-insured health plan. And the funding source may be built into the risk-sharing arrangement, or paid separately on a per-member-per-month basis.

Also essential to the success of a PHM Outreach Program is its Health Information Technology (HIT) system, along with its ability to electronically access all medical record and insurance billing data on a real-time basis. This information is used by the Outreach Program staff to develop and maintain a comprehensive, ongoing health-status biography for each and every member. Predictive modeling software is then applied to help identify high-risk, high-cost patients with modifiable medical conditions, in order to target resources in the most timely and cost-effective manner.

The Outreach Program's service menu should include health coaching, behavior modification, home-based telemonitoring, patient navigation, social support programs, informational workshops and health fairs. Services are delivered on an individual or group basis via face-to-face sessions, telephone or internet (e.g., email, texting, skype, telemedicine, etc.). Service settings include the member's home, the Outreach Program's learning laboratory, an employer's conference room, a skilled nursing facility or a local hospital, among others.

Members are provided with an individualized and regularly updated "Healthy Living Prescription," which includes disease, lifestyle, clinical, pharmaceutical and physician-generated information that is delivered in a multi-media format designed to help patients manage their particular medical condition(s), as well as improve their overall level of health. Members are also encouraged to complete a daily, internet-based "Self-Tracking Log," which documents their personal compliance with their Healthy Living Prescription.

To help address the challenge of health-behavior modification, Nurse Coaches will be trained in utilizing the latest, most effective techniques and resources, such as Motivational Interviewing, Shared Decision-Making, Informational Therapy and Ottawa Personal Decision Guides. Patients will be offered the opportunity to serve on various 'Client Advisory Committees' and participate in a 'Health Buddy' program, where they volunteer to be a telephone buddy to another patient with a similar medical condition or health improvement goal.

Patients will also be offered the opportunity to sign an annual 'Health Improvement Contract,' under which they agree to 'try their best' to comply with their Healthy Living Prescription, with various rewards and recognitions based on performance. Additionally, to inject a degree of competitive zeal into the health-improvement process, patients will be 'ranked' against their peers within various demographic- and disease-adjusted groupings on such comparative healthcare measures as blood pressure, body mass index, cholesterol level, etc., and such resource-consumption measures as medication cost, emergency room visits, hospital expenditures, etc.

Based on figures from Blue Cross Blue Shield of Maryland, a typical patient population has 30% of patients accounting for 85% of costs, which underscores the dual goals of PHM: 1) Mitigate the burden of disease on the 30%, and 2) Prevent the 70% from becoming part of the 30%. Towards this end, an Outreach Program's mission statement might read: The mission of HealthCheck, Inc. is to actively engage, educate and encourage our covered population through a continuous, aggressive and unrelenting delivery of health improvement services.

The Affordable Care Act of 2010 (famously known as "Obamacare") goes a long way towards encouraging the development of both PHM and Outreach Programs through the creation of the Accountable Care Organization (ACO), along with federal recognition of a relatively-new concept called the 'Patient-Centered Medical Home' (PCMH).

An ACO can be defined as: A group of healthcare providers who agree to provide medical care and share clinical and financial accountability for a defined patient population. Under Medicare rules, the ACO requires a formal legal structure, a minimum of 5,000 Medicare members and a 3-year commitment. It must have an appropriate HIT system and demonstrate coordinated, patient-centered care based on evidence-based protocols. The Outreach Program may be an internal component of an ACO's infrastructure, or a third-party vendor providing services to the ACO on a contractual basis.

The purpose of the PCMH is to ensure that each patient has a strong, ongoing relationship with a Primary Care Provider (PCP), which might be a physician or a nurse practitioner, who assumes responsibility for providing or coordinating all healthcare services for his or her covered membership. The PCMH should be the first point of contact for all patients, and provide continuous, comprehensive and coordinated care focused on improving health, encouraging self-management and teaching health literacy.

The PCP also assumes responsibility for arranging and managing referral services when care by a specialist (e.g., general surgeon, cardiologist, gastroenterologist, etc.) is needed. The PCMH contracts with the ACO for administrative, marketing and financial services, and works closely with the Outreach Program staff in improving the health and wellbeing of its patient population.

Clearly, Population Health Management holds great promise for enhancing our nation's level of health, happiness and productivity, while moderating the escalating price tag for delivering and accessing medical care services. For healthcare providers, it offers a vast, uncharted landscape for the development and provision of new skill-sets that will play a crucial role in transforming the healthcare industry from a 20th-century model based on sickness, consumer passivity and provider dominance, and toward a 21st-century model based on prevention, wellness and personal responsibility.

Midlands Voices: ACO starts new era of care

The expansion of health care coverage to millions of American families is one exciting component of the recent health reform legislation, also known as “ObamaCare” or, more precisely, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010. The other exciting component is the birth of the Accountable Care Organization (ACO).

This insightful legislation recognizes the essential importance of health care providers, including hospitals, physicians and community health centers, in leading and driving the changes necessary to improve quality and control costs. As with all births, the ACO will require several years or decades to develop, innovate and mature into its optimal and final form.

In general, the ACO is a legal structure allowing independent providers within a given community or region to band together into a single organization to provide preventive, educational, interventional and rehabilitative services to a defined patient population.

Using a “patient-centered medical home” approach, a comprehensive network of providers becomes interconnected via a shared electronic health information network; a common set of clinical guidelines and performance measures; a shared financial risk-reward compensation system; and a redesigned care-delivery process that coordinates the provision of appropriate medical services from cradle to grave for its covered population.

As determined by each ACO’s level of readiness, the traditional fee-for-service system that is based solely on the volume of services rendered is transitioned to a risk-reward sharing system that is based primarily on the quality of patient outcomes.

For the first time, the incentives for both patients and providers are aligned, so that positive clinical outcomes for patients mean positive financial outcomes for providers.

Therefore, the ACO cannot view its patients as passive recipients of medical services, but instead they become vital partners in the prevention and management of disease and injury. Toward this end, ACOs must design their practices to facilitate the transfer of medical knowledge and skills, in order to continuously improve the ability of patients and families to become well-informed, self-motivated health care consumers.

This requires ACOs to innovate their delivery systems to ensure convenient, meaningful and appropriate access to services. These include same-day, evening and weekend appointments; “e-visits” with doctors, nurses, pharmacists and other health care professionals; group meetings for individuals with similar conditions; disease self-management programs; patient mentoring programs; telephonic nurse monitoring initiatives; and sharing of diagnostic and interventional information, including quality outcomes, clinical errors and cohort comparisons.

Health care reform does not force providers to form ACOs, but the end game for health care providers is now becoming more clear, leaving two viable options:
(1) Begin the process of becoming an ACO by developing the capacity to provide comprehensive care for a covered patient population. (2) Do nothing and eventually become a contracted provider for an ACO that is owned and operated by an insurance company or the federal government.

In other words, providers have the choice of being a passenger -- or a driver -- on this new journey into the brave new world of health care delivery.

In either event, the longstanding fee-for-service era will soon have run its course. In addition to the benefit of aligned financial incentives between patient and provider, the reason for its demise is quite simple: We can no longer afford it.

This costly approach to financing the delivery of medical services only works in a country where health care is viewed as a commodity that is bought and sold based on each consumer’s financial capacity -- and not in an enlightened, 21st-century nation that views health care coverage as a basic right of citizenship.

The ACO is designed precisely to work in this bold new environment. The ACO is much more than a building or an MRI or a list of specialists. It’s a financial and wellness partnership, wherein patients and providers are members of the same team and share in each other’s failure or success.

The bottom line for healthcare providers in this exciting new era, to paraphrase Steppenwolf (the band, not the book): "Get your motors running, head out on the highway. Looking for adventure, in whatever comes our way . . . because we're born to be ACOs!" Yes, the time for opposition is over. Hospitals, physicians and community health centers you are now born to be an ACO, so get your organizational motors running and head out on that highway – because it's the only road you've got.

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Midlands Voices: Main ingredients for health reform

The stars are aligned, the people are supportive, the president is cheerleading, the lobbyists are lobbying and Congress is even working on Fridays — but our once-in-a-lifetime opportunity for health care reform still faces an uncertain prognosis. Once again, ideology is overpowering evidence in our political discourse.

While I greatly admire President Obama’s intrepid foray into this political minefield, I believe he erred in being too vague in his guiding principles. Successful reform must be built on top of a small number of essential, unambiguous components:

— Access. Setting both ideology and evidence aside, it only makes common sense to bring the best of both the public and private sectors to bear on a national crisis. Health care reform without a public plan option would merely prolong our current, failed approach.

Only a public health plan has operational transparency (which ensures that the true cost of providing health care coverage is a known commodity) while creating a new and powerful marketplace dynamic, stimulating competition, innovation and quality.

— Affordability. This term is relative and therefore should be defined into law for both individuals and small businesses. For individuals, total out-of-pocket expenses, including premiums and copays, should be limited to a percentage of a family’s, adjusted annual income; my recommendation is 8 to 10 percent.
A similar affordability ratio needs to be developed for small businesses.

— Mandate. Once affordability is equitably defined, it becomes necessary and appropriate to establish a national coverage mandate for all citizens and employers in order to optimize the “law of large numbers” (that is, the larger the group of units insured, the more accurate the predictions of loss will be) in the protection of our national risk pool.

— Coverage. Another vague term demanding specificity, via a defined “national benefit package” outlining a minimum set of benefits, limitations and exclusions.

— Reimbursement. Health care is perversely unique in our economy in that the supplier dictates demand and then rewards that supplier, i.e., the physician, for increased volume rather than increased quality. Physician compensation therefore should not be production-based but salary-based, with bonuses for extraordinary outcomes.

— Quality. The single greatest cost factor is also the greatest quality factor: the goods and services each physician decides to provide or withhold from each patient. To control this variable, we should transition medicine by ensuring that physicians make decisions based solely on clinical evidence rather than on supposition, memory, habit or fear of liability.

This means that “comparative effectiveness research” must become the law of the land. Specifically, we need an “Apollo Project” to develop clinical guidelines for the top 100 diagnoses within a 5-year time frame.

The public plan could lead the way in their implementation by reimbursing physicians and hospitals only for those goods and services that adhere to guidelines, with no payment for guideline deviation unless a valid cause is documented in the patient’s medical record.

To solve the “malpractice crisis,” physicians could be held harmless from civil liability when they correctly perform the appropriate guidelines, even in the case of an untoward outcome.

— Wellness. All external cost controls pale in comparison to the internal self-control mechanism when a consumer makes the commitment to improve their level of health and wellbeing. This internal control switch cannot be activated by legislation, but it can be encouraged and educated.

Consumers would be asked to sign an annual, voluntary social contract, agreeing to comply with the rights and responsibilities of the universal coverage program.

Among other rewards, signers would receive a red, white and blue ID card from their chosen health plan, versus black and white for non-signers. All consumers would receive an annual “Health Care Activity Report” outlining resource usage and key clinical indices (e.g., height, weight, blood pressure, hospital days, drug usage, etc.) along with an analysis comparing their activity and cost profile with the average consumer in their specific age/disease cohort.

Health care coverage is necessary for an equal opportunity in “life, liberty and pursuit of happiness.” Universal coverage and a reformed health care system will create a happier, healthier and more productive society.

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Copyright ©2009 Omaha World-Herald®. All rights reserved. This material may not be published, broadcast, rewritten, displayed or redistributed for any purpose without permission from the Omaha World-Herald.

Go and Do Likewise –
Healthcare as if People Mattered
Seven Guiding Principles for Health System Redesign

A Handbook for Change
by
Brad Stephan


About the Author:
Brad Stephan R.N., B.S.N., B.A., is the former, founding Executive Director of Pioneer Health Plan (1996-01), a provider-sponsored HMO in Kearney, Nebraska, and Health Partners of Kansas (1989-96), a Physician-Hospital Organization in Wichita, Kansas. In August, 2006, Brad graduated from the Accelerated Nursing Program at Creighton University in Omaha, Nebraska, and is now a surgical/trauma nurse at Creighton University Medical Center.

Table of Contents

Acknowledgements

Forward

Introduction

Section One: A Foundation for Universal Coverage

Section Two: A Foundation for Affordability

Section Three: A Foundation for Quality

Section Four: A Call to Action

End Notes



Acknowledgements
I would like to thank E.F. Schumacher’s classic work, small is beautiful: Economics as if People Mattered for inspiration in developing the title for this handbook. I acknowledge and appreciate the parallels between his call for “Technology with a human face,” defined by technology in harmony with human nature, the natural environment and renewable resources, and my call for a “Health system with a human soul,” defined by healthcare based on universal access, income-based affordability and national quality standards.


Forward
Here we are, some twenty-five years after the ‘managed care movement,’ i.e., HMOs and PPOs, began in full earnest to revolutionize the way healthcare services are delivered, financed and reimbursed in this country. Additionally, we are some dozen years after the ‘Hillary Commission’ made a grand and good-hearted, if politically misfired attempt to reform our nation’s healthcare system. While the reform proposal failed to pass congressional muster, the resulting ‘Hillary Effect,’ in conjunction with the underlying HMO/PPO phenomenon, did invigorate the marketplace in the early 1990’s, achieving some impressive outcomes and innovations during this short-lived ‘Golden Age’ of managed care. These included: A significant decrease in medical price inflation for several years running; An expansion in the number and scope of managed care organizations; An acceleration in the consolidation of hospital ownership; A movement toward outpatient care; The launch of specialty hospitals; and, The consolidation and acquisition of physician practices by various business entities. All of these dynamics had a positive impact on healthcare cost (if not access and quality) – but only for the short term.(1)

(1) Employers certainly share the blame for the failure of managed care to realize its full potential and achieve the ‘Holy Grail’ of healthcare reform, i.e., maintain healthcare inflation at or below the Consumer Price Index, by their unwillingness to embrace the more ‘onerous’ cost-control strategies, such as restricted provider networks.


So, where are we today? The picture is painfully apparent: escalating health insurance premiums, a growing number of Americans without healthcare coverage, an increasing inability among Americans with healthcare coverage to afford all the services they need, the irony of Americans looking to Canada or Mexico and elsewhere for affordable medical procedures and products, widespread evidence of avoidable medical error, an unknowable percentage of healthcare dollars wasted due to the provision of unnecessary, inappropriate and duplicated medical services, and skyrocketing medical liability premiums for certain physician specialties. Clearly, the time is again ripe for calls to reform and redesign our system of financing and delivering healthcare services.


As a player in the managed care industry since 1985, I have had a front-row seat, along with the marination of time, to observe and reflect on these complex problems, which are generally consolidated into three primary issues: the uninsured, affordability and quality. For many years, I was a strong advocate of market-based solutions, but can no longer support that line of reasoning. With respect to the issues of the uninsured and affordability, the mechanics of supply and demand simply fail us in an industry underscored by the vast gulf between a consumer’s medical need and their financial ability to fulfill that need. Therefore, a purely free-market solution does not exist. This is due to the basic fact that healthcare spans the divide between the public and private sectors. Medical services cannot be categorized as either a commodity or a utility – as they are both, depending upon the financial wherewithal of the consumer. An individual’s need for a particular medical service does not go away, simply because he or she is unable to afford it. This underlying reality of the human condition, along with the failure of the private sector to control inflation in what has been a largely unregulated, as well as certainly dynamic and innovative marketplace points to the necessity of a ‘two-sector solution.’

As a Christian, I will disclose that this primer on health system redesign has, by necessity, been written from a Christian perspective – as the title clearly reflects. However, it is my hope that it may also be enjoyed by readers of any faith. An all-encompassing review of the subject matter contained in this topic, covering one of the most basic needs of the human condition, must eventually transcend the ability to use solely objective measures and scientific evidence, requiring the use of moral arguments. This means I could not leave my spiritual beliefs lying in a ‘pile of pixels’ at the foot of my laptop, but had to call upon them to defend, persuade and justify. Regardless, the purpose and content of this ‘re-imagination’ handbook is quite simple and straightforward:

1) Identify the root causes of our health system failures,

2) Provide guiding principles for health system redesign,

3) Propose operational solutions for each guiding principle, and

4) Offer a means for interested and motivated consumers and organizations to play a proactive role in achieving a nation-wide goal of affordable access to a comprehensive set of evidence-based and quality-driven healthcare services for all citizens.


Introduction

The parable of the Good Samaritan (Luke 10:30-37) is an appropriate place for us to begin our discussion on the diagnosis, proposed treatment and expected prognosis of our country’s healthcare delivery system – a system that finds itself in the paradox of benefiting most, while failing many. By failure, I refer not to the effectiveness of medical technology, or to the skill and commitment of healthcare providers and researchers, or even to our system of public and private health insurance. I refer to the millions of American citizens who do not have health insurance, to the thousands of patients harmed by medical error, to the millions of wasted healthcare dollars spent each year due to the lack of uniform quality standards, and to the soaring prices that adversely impact every individual, every business and every level of government in our society today.

Now, most of us would quickly agree that if we are in need of treatment for a complex disease or a serious injury, we are relieved to be living in the USA. But, do we experience that same level of relief when our need is medical insurance? Or, if our need is affordable out-of-pocket costs for healthcare premiums, deductibles and copayments? Increasingly, the average healthcare consumer is being priced-out of the American healthcare marketplace. Each day millions of individuals and families must make a choice between paying for a medical premium, a surgical procedure, a prescription medication, a piece of medical equipment - or paying for the basic necessities of everyday life. What is the value of a healthcare system that has grown beyond the financial reach of its consumers?

Whether you are a Christian or otherwise, the parable of the Good Samaritan as told by Jesus of Nazareth is very instructive in helping us sort through our present-day healthcare dilemma. It sheds light on the morality behind our process of allocating, delivering and financing healthcare services in our country. In this tale, Jesus shares the plight of an unnamed man traveling the 17 miles of rocky and winding mountain roadway between Jerusalem and Jericho. Suddenly, he is attacked and robbed of his possessions, beaten and left for dead. As he lies bleeding, broken and helpless along the roadside, his pitiful condition is completely ignored on two occasions by fellow travelers. Fellow travelers who happen to be important members of the religious community, who simply cross over to the other side of the road from their fellow citizen, in order to continue their journey without interruption. Presumably, if the injured man had been wealthy (or, at least had a Blue Cross card sticking out of this pocket!), he would have been aided by one or both of these fellow citizens. Instead, it was a despised foreigner, a Samaritan who demonstrated compassion for his ‘neighbor’ (in the Christian sense) by comforting the man, then transporting him to a nearby inn where he financed his extended stay of recovery. Jesus concludes his parable by instructing the religious scholar who had been questioning him with the simple admonition: “Go and do likewise.”

How does this story relate to our situation today? I could leave it to each reader to fill in the various players – and I’m sure they would do very well. However, for me, the key players from the parable are not the Good Samaritan or the injured man, but the community leaders who ignored their neighbor during his time of need. Some may see them as representing the pharmaceutical industry, insurance companies, large hospital systems or, possibly, the fraternity (in a non-gender sense) of well-to-do physicians. Certainly, these players dominate the healthcare industry, but I would disagree with that conclusion. Each of them is simply playing their appropriate role in a market-based economy – and playing it well. (Never fear, concerned reader, we will soon have a thorough discussion of the vital role the ‘visible hand’ of public policy should play in the healthcare industry by way of regulating, stimulating and optimizing the “invisible hand” of market forces.) Instead, I view the uncaring religious leaders as representing every elected politician who has not promoted or supported efforts to pass legislation expanding healthcare coverage. This, of course, begs the question, “Who elected these people?” As we are blessed to live in a representative democracy, the sweet justice of the parable is that those cold-hearted community members are none other than ourselves! Each time we vote for (or fail to vote at all) a candidate or incumbent who has not made healthcare reform a top priority in his or her platform – we “cross over” to the other side of the road and ignore the medical condition of the neighbor lying at our feet.

OK, so now that we accept responsibility for initiating change – what do we do? One thing we do not do, as I would often tell my sales staff, is: “Sit and wait for the phone to ring.” Positive change seldom occurs on its own accord. Instead, we must: “Make something happen!” In this case, we cannot sit and wait for pro-healthcare candidates or proposed solutions to bubble up that we would like to vote for – we must each do our part to: Make something happen! However, I have saved that topic for our concluding discussion, in Section Four, entitled: The Call to Action. Before we can act, we must first seek agreement on what it is we want to accomplish. In other words, we need to determine our collective vision for a 21st Century healthcare system. To successfully craft that vision we first need to map-out our general ‘destination,’ before we can select our specific mode of ‘transport.’

Therefore, our starting point for health system change should begin with a set of desired outcomes or guiding principles – against which proposed reforms or operational solutions can be measured. To complete the analogy, the guiding principles represent our destination, while the operational solutions represent our means of transportation. Towards this end, the following three sections will contain different guiding principles for health system redesign, along with the root causes behind key, health system failures. For each root cause will be one or more specific, operational solutions I believe will be corrective, while achieving the spirit and intent of the guiding principle. As you read and ponder this handbook for systemic change, please bear in mind the guiding principles are the ‘foundational endpoints’ of healthcare redesign that we must agree upon – while there may be more than one way to reach that objective. However, I do believe any operational solution must meet the following, five measures of success, in order to ensure a safe and sound journey to our chosen destination:

1) Effective: As obvious as it may seem, every successful solution must be designed to reach into the core of the three issues of the uninsured, affordability and quality and address the root cause(s) of failure. This requires an honest and in-depth analysis of program, system and/or market performance. Did it perform the way we expect and in the way we need? Needs and expectations must be in alignment. A program, system or market may achieve its expected outcome in accordance with its design and objective, but that outcome may not be what is currently needed in an environment of changing resources, technologies and values. This analysis will then determine whether the required solution is one of targeted modification or complete replacement.

It is important to realize that root-cause analysis, alone, may not uncover the optimal solutions for these issues, as innovation and creativity are not limited to knowledge derived from the study of existing markets, programs and systems. “We can’t solve problems by using the same kind of thinking we used when we created them,” quoting Albert Einstein, to help me reinforce this point. However, root-cause analysis will expose solutions that merely enable and perpetuate current market, program or system failures. The most important process in this undertaking, though, is open-minded thinking. Will our primary focus be on finding solutions to improve consumer access, security and outcome, or will we be driven by economic and political ideology? Part of the intransigency of these issues has been due to the historical entrenchment of ideas and players that dominate health industry decision-making, i.e., the "medical-industrial complex” of insurers, manufacturers and providers. Successful redesign of our healthcare system must be driven by the question, “What needs to be accomplished?” rather than “Who will be pleased or pained?”

Working in the favor of healthcare consumers is the American public, itself. It has acquired a considerable degree of media-based education, political insight and, certainly, personal interest in healthcare economics and decision-making over the past 5-10 years. This will introduce a powerful new player in the political process: knowledgeable and motivated voters. They will intuitively, if not intellectually recognize when a health system redesign proposal is not sufficiently bold, far-reaching and fair-minded in its scope, design and promise to meet the demands of these great national issues.

2) Equitable: A topic such as the one presented in this handbook contains both objective, evidence-supported views, as well as subjective, faith-based positions. Equitability as a measure of success falls into both camps. The objective case for operational solutions that are equitable can be argued based on the following, self-evident logic: An individual’s medical need for healthcare services does not change based on their state of residence, category of employment, level of income, choice of physician or type of insurance. This fact refutes any solutions that are state-based. Indeed, when it comes to healthcare – human rights should always trump states’ rights. Clearly, the issues of the uninsured, affordability and quality are national in impact – requiring solutions that are national in scope.

This objective logic also refutes any segmented solutions. Medical need transcends socioeconomic categories, industrial sectors, regional treatment variations and political jurisdictions. It is economically and clinically inefficient to have a given medical event acted upon in different ways by different players in different regions within the same so-called ‘system.’ Instead, equitable solutions would ensure a consistent, coordinated and cohesive set of medical and administrative policies and procedures. For example, a ‘hernia surgery’ remains the same, and should be treated the same(2), regardless of the insurance company, job title of the patient, geographic location of the hospital or medical training of the surgeon. In similar fashion, the information generated from the hernia surgery (i.e., medical records, invoices, benefit summaries, outcome data, etc.) should be administered in a consistent manner. This degree of continuity increases both efficiency and quality, underscoring the requirement for reform proposals to be equitable, which means they must encompass all players, public and private, including consumers, providers, employers, insurers, manufacturers, administrators and regulators.

(2) The only variables should be: a. The amount of the consumer’s copayment, as based on level of income, and b. The provision of medical care, as based on the consumer’s symptoms, clinical findings and medical history – and not based on variation in physician practice pattern or hospital administrative policy.


The subjective aspect of equitability deals with the legitimate question of: “So what if healthcare consumers are treated differently based on their state of residence, choice of employer, level of income and so on – that’s just how life works!” The case for or against this point-of-view can only be made using subjective logic. One compelling subjective argument is based on religious belief, which can be summarized as follows: We should treat others as we would have others treat us. A version of this spiritual maxim is found in many world religions, including Christianity, Hinduism and Buddhism. Presumably, to meet this religious admonition, most Americans would opt for universal healthcare coverage, in order to avoid being on the losing side of the credo, in the case of a disequilibrium. Additionally, it is important for Christian readers to bear in mind that Jesus Christ went even further than the ‘Golden Rule,’ by exacting an even higher order of human interdependence, as found in his 2nd greatest commandment (Matthew 22:39): “Love your neighbor as you love yourself.”

A second compelling, but subjective argument is based on the political belief that: Access to healthcare services is necessary to ensure an equal opportunity in “life, liberty and the pursuit of happiness.” Equality of opportunity is not expressly codified in our constitution, but it has long been considered a hallmark of our democracy. Conceptually, it is imbedded in the constitution via the right of one person, one vote. In any event, the brilliance of this concept is that it optimizes the potential and prosperity of both the individual and the community. When society provides an equal opportunity for each and every citizen to excel, their individual success will usually result in a positive impact on all other individuals within their sphere of influence. In essence, individual success reaps societal success. For example, if an individual is successful at business, others are benefited with employment; if an individual is successful at drug research, others are benefited with cures for their disease; if an individual is successful at athletics, others are benefited with entertainment, and so on.

As a result of the win-win nature of this political philosophy, I assume “equality of opportunity” would receive a favorable vote by the overwhelming majority of Americans as being an essential and defining attribute of our political system. Where the friction sets in, however, is when the concept of “equality” has to be defined or quantified. In 1896, the Supreme Court told us that “separate but equal” resulted in equality of opportunity for black Americans in the Plessey vs. Ferguson decision. Fortunately, the 1954 Supreme Court found that not to be true, in either concept or practice, and struck it down in the Brown vs. Board of Education decision. For many, the debate over the definition of equality continues today. For me, the lack of equal opportunity, particularly in higher education, wealth accumulation and healthcare is quite apparent throughout our society – and the differential appears to be worsening.

I would offer a compromise concept, which could be called “baseline equality” and defined as the societal commitment to guarantee all citizens a generally-accepted ‘baseline’ level of opportunity in the three critical areas of life, i.e., education, healthcare and income. (Note: Later in this essay I will substitute "income" with "freedom," as freedom has an even greater impact on social development, on par with education and healthcare. However, income is more illustrative at this point in our discussion.) The most well-known example of baseline equality is the minimum wage – which, unfortunately, could also be referred to as the ‘poverty wage.’ To further democratize this concept of baseline equality, I would have all baselines set by a national plebiscite on a biennial basis. It would be very interesting to see the impact on the baseline for the minimum wage if the responsibility for establishing the dollar amount was transferred from elected officials to rank and file voters. It would also be enlightening to view the impact on voter turnout in a nation founded upon this highest of democratic ideals, yet plagued by anemic levels of voter participation.

I have a vision for our society where each individual who has the ability to put in a 40-hour work-week would be ensured a decent and secure standard of living (relative to education, income and healthcare). I wonder if we would come closer to or further from this vision if these "equality baselines" were set by the electorate. In any event, I wonder what impact such a responsibility transfer would have on our society. Would socioeconomic indicators be vastly different? How would quality of life rankings compare? What would happen to our national debt or balance of trade? Would it have a favorable or adverse impact on job creation, market innovation and technological advancement? I believe asking such “I wonder?” questions is always a healthy exercise – but let us now return to the sole focus of this handbook: re-imagining our nation’s healthcare system.

3. Comprehensive: The healthcare industry, which includes consumers, providers, researchers, employers, administrators, insurers and regulators, is often referred to as a ‘system.’ Even though it does not meet that definition in the most scientific sense of the term, the linkage between its various parts does constitute a functional, if not unified whole. A simple test of this interconnectivity can be seen if we imagine the removal of any one of the constituents listed above and then envision the resulting impact on the remaining whole. For example: Who would perform services without the provider? What services would the provider perform without the researcher? Who would process information without the administrator? Who would assume risk without the insurer? Who would pay for insurance premiums without the employer? And, of course, who would receive services without the consumer? These market-based relationships may not diagram into a coherent, systemic flow chart or even be chartable by statistical process control methods, but it clearly demonstrates the high degree of interconnectivity and interdependence within the industry.

This nexus means the ‘Law of Unintended (and, usually, unforeseen and unfavorable) Consequences’ is now in play. Therefore, an incremental approach to health system redesign – while politically expedient – may do more harm than good. An incremental change in one constituency or in one functional area within the system may result in unintended consequences in another. One example might be the call for tort reform – which certainly holds political resonance within some special interest groups – which includes placing dollar limits on non-economic damages (e.g., pain and suffering awards) resulting from medical error or omission, in order to lower physicians’ malpractice insurance premiums. If this is implemented in isolation, without addressing the issue of healthcare quality, then nothing has been done to decrease the number of medical errors or omissions that caused the pain and suffering in the first place. Indeed, a logical unintended consequence would be an increase in the incidence of medical error, as caregivers no longer have a financial disincentive to improve quality. On the other hand, if tort reform and quality improvement were implemented concomitantly, as part of a comprehensive reform package, then the ‘Law of Synergistic Consequences’ would most likely be invoked – decreasing both medical error and malpractice premiums, among other beneficial outcomes. In summary, successful operational solutions must be designed for and implemented on a planned, system-wide basis.

4. Accountable: Healthcare is too important to rely solely upon the wise counsel and good intentions of the private sector, or to subject it to the stifling and counterproductive burden of unnecessary regulation of the public sector. Instead, our healthcare system should take full advantage of the dynamic tension that is generated when both sectors are fully engaged and equally balanced. A ‘two-sector solution’ ensures that private sector innovation, competition and investment can join forces with public policy, prerogative and funding to secure our best hope for achieving our collective vision for a 21st Century healthcare system. A two-sector solution will also ensure that all players within the industry are stimulated by and responsive to a national, calibrated system of public policies and market forces.

5. Sustainable: Without a doubt, significant political capital will be expended in the enactment of any health system redesign proposal – and, hopefully, dear reader, you will be part of that valuable capital. Such political capital requires years to accumulate. Therefore, successful operational solutions must be able to maintain their viability and meet their objectives over a 30- to 50-year projection period. This requirement also highlights the importance of a two-sector solution, where private sector players may come and go over the years, while public sector organizations remain under the direct control the voting populace.

The operational solutions in this handbook meet these five standards, even though they may ignore a sixth: Political Feasibility. I would contend there is never a politically feasible moment in time for brave new ideas – those moments must be created on-the-fly by courageous and visionary souls (or coalitions) as they herald their new ideas into the social consciousness of their nation. They are agents for change, who are blessed with passion, perseverance and patience, and include such extraordinary individuals and coalitions as Franklin Roosevelt and his idea of Social Security; Mahatma Gandhi and his idea of passive resistance; John Kennedy and his idea of walking on the moon; Ralph Nader and his idea of automobile safety; Martin Luther King and his idea of civil rights; Richard Nixon and his idea of free trade with China; E.F. Schumacher and his idea of appropriate technology; Mothers Against Drunk Drivers and their idea of national, drunk driving laws; Ronald Reagan and his idea of a democratic Soviet Union; and Eliot Spitzer and his idea of corporate accountability. None of these individuals waited for the “telephone to ring,” but, instead, “made something happen” by pro-actively and persistently declaring their ground-breaking ideas and agendas to the hearts and minds of all who would listen.

Health system redesign may not be the idea of one individual, nor will it ever reach fruition through the declarations of a single voice. Successful redesign will only be achieved through the force and passion of a social movement, a ‘bottom up’ phenomenon of everyday Americans transformed into an ever-growing coalition of consumer activists by their shared experience and personal stories, and fueled by their deeply held commitment to the goal of healthcare equality for all Americans.

Section One: A Foundation for Universal Coverage

Guiding Principle #1
In a modern, democratic and largely Christian society – access to comprehensive, affordable and quality-driven healthcare services should be a basic human right for all Citizens.

Comment: Upon this principle rests the crux of our country’s healthcare delivery system. No other principle or operational solution described in this handbook will have a greater impact on the healthcare industry, or on the very fabric of who we are as a people and as a nation. No better ‘test’ of our humanity and our faith is whether we make the choice to ensure healthcare access to “the least of these brothers of mine” (Matthew 25:40). We either elevate healthcare coverage from an earned privilege to a basic right of citizenship, or expect a large and ever-growing percentage of our population to be uninsured. I can imagine no middle course. Unless and until a vaccine or cure is found for heart disease, cancer, diabetes and the other major and costly diseases, medical research and technological advancement, coupled with an aging population, will only continue to drive the inflation spiral upward. And, as prices climb, so will the number of our fellow citizens who are priced out of the system. It is a sad irony that, at a time when the science of medicine can offer the most benefit, we find ourselves least able to take advantage of it. It is also a sad commentary that, as a modern, democratic and largely Christian society, we accept this as the normal state of affairs.

The primary arguments for and against this guiding principle are subjective in nature, whether expressed in moral truisms, economic formulas or otherwise. This characteristic of the debate may create a more challenging platform for securing agreement, consensus or compromise, but the result is a very robust, introspective and, therefore, vital process. Indeed, all of the great political decisions of our maturing democracy have revolved around the subjective, unscientific question of, “What is the right thing to do?” These moral questions have allowed us as individuals and as a society to dispute, define and codify our national values. Our common experience has included such soul-searching questions as slavery, child labor laws, monopoly regulation, progressive taxation, Social Security, civil rights, Medicare & Medicaid, abortion rights, disability laws, stem cell research and preemptive war. These have all been questions we cannot and should not avoid – as our collective response has made our country a shining example of democracy, human rights and social responsibility for the entire world to see and strive toward.

Without a doubt, many of these questions were not settled by the electorate with 100% agreement. Some questions even create controversy to this day. That is an expected and exciting component of the human condition – we are each blessed with an intellect, a conscience, imagination and freewill with which we may use to come to our own conclusions. Then, as a democracy, the majority conclusion becomes the law of the land – but usually with a degree of compromise, due to our respect for minority rights, as expressed through both the organizational structure and decision-making process of our local, state and federal governmental bodies. In truth, the debate is as essential as the resolution. In the end, it is good to know where your fellow citizens stand on an issue, what information they used to come to their conclusion and what measures of success or failure are expected from its implementation. For the majority, this information will help allay the concerns of the minority. For the minority, this information can help target efforts to change minds in attempt to transform the minority into the majority. It is also comforting to know that political decisions or laws are not absolute, but dynamic. They forever remain open to reconsideration, re-argument and revision. As our individual and societal intellect, conscience and imagination mature and grow through shared experience, our national values and federal laws mature and grow, as well. For many, this evokes the question, “Are we growing in the right direction?” While important, this is but another moral question which can only be answered on a subjective, individualized basis.

One method to help find a common answer to these subjective, morally-based questions is to use the “I wonder?” technique. I find this tool particularly useful for reviewing questions which have been previously settled, either by way of ratification or nullification (e.g., President Clinton’s proposed universal healthcare legislation). For example:

• “I wonder what our nation would be like today if we had not passed legislation abolishing slavery?”

• “I wonder what our economy would be like today if we had not passed legislation regulating corporate monopolies?”

• “I wonder what our society would be like today if we had not passed Social Security legislation?”

And, relating to the topic of this handbook:

• “I wonder what our country would be like today if we had not passed Medicare & Medicaid legislation?”

While certainly not definitive, tangible or measurable, contemplating these questions invokes powerful, thought-provoking visions of an alternate reality. An honest, wide-eyed view into that alternate world can help bring common ground and closure to open questions. When it comes to imagining a society without Medicare and Medicaid, for me that alternate reality shows a very cold and cruel picture – one I would not care to be part of. However, I can understand how a sincere and good-hearted person might envision an entirely different scenario, wherein concerned citizens blossom and rise up throughout the nation to create and fund a network of ‘Good Samaritan Risk Pools,’ with all monies earmarked for the medical care of the poor and the aged. I am a firm supporter of the valuable concept behind President Bush, Sr.’s, “Thousand Points of Light” speech of the early 1990’s. However, I have not seen evidence leading me to believe that we would ever have a sufficient number of ‘points’ or an adequate amount of ‘light’ to provide the level of funding we see today as being required to provide for the healthcare needs of the poor and aged that is accomplished through the Medicare and Medicaid programs. Therefore, I would have to ask my sincere and good-hearted fellow citizen whether his look into that imaginary scenario was, indeed, honest and wide-eyed.

If I could choose, I would rather live in a society where the Medicare and Medicaid programs were unnecessary, due to a nation of compassionate souls who put their beliefs into action by transforming the written words of their faith, e.g., “Good Samaritan,” “Golden Rule” and “Love your neighbor as you love yourself” – into the living reality of their everyday life. But, unfortunately, that is not the case. In our country, the ‘written words’ of faith have always been trumped by the ‘printed notes’ of commerce. For the vast majority of us, whether people of faith or otherwise, financial gain holds priority over spiritual growth. If, again, my sincere and good-hearted fellow citizen were to take issue with that assessment, I would ask him to quantify how much of his own life revolves around the mundane, versus the divine. I believe the measures of time, effort and resources represent an honest assessment of where our true priorities lie. Indeed, if we all decided to obediently adhere to Christ’s teaching, e.g., “Go, sell everything you have and give to the poor, and you will have treasure in heaven. Then come, follow me.” (Mark 10:21) Or, “If anyone would come after me, he must deny himself and take up his cross and follow me.” (Matthew 16:24) Or, “Do not store up for yourselves treasures on earth” (Matthew 6:19) – our economy, as we now know it, would collapse! (A fascinating subject for an entirely different handbook!)

Our society, like most other secular states, has long existed and thrived within the interesting juxtaposition of faith alongside reason, material alongside spiritual and temporal alongside eternal. This is appropriate, as I see no way we could ever completely segregate the two, even if we wanted to. But, we must always understand and respect the important distinction between these two, diametrically-opposed forces – one is focused on earthly treasures, the other on heavenly rewards. As a nation, we have made the agreement, via our constitution, to focus our efforts, our resources and our political system on the pursuit of worldly objectives, while allowing each individual the freedom to pursue his or her spiritual goals in any manner they see fit, just so long as it’s on their own time, and using their own dime. In a democracy comprised of multiple faiths and denominations, this is not just the constitutional thing to do – it is the only thing to do.

Another variation of the “I wonder?” method we can and should use in our largely Christian nation to try and find common ground on subjective, morally-based issues is to ask each other: “I wonder what Jesus would say?” With respect to democracy, I am confident Jesus would happily and wholeheartedly endorse it. But, I do not think that is the case with capitalism. Pure democracy certainly provides the personal freedom for Christians to pursue spiritual growth and to follow their Lord’s two great commandments (see Matthew 22:37-39). On the other hand, pure capitalism may not infringe upon that freedom, but it squarely places it sole raison d’etre on loving worldly goods, rather than on loving God. And, it bases its modus operandi on competing with one’s ‘neighbor,’ rather than on love and cooperation. I believe Jesus would desire to see a highly modified form of capitalism, filled with individual ‘points of light,’ in conjunction with community-based programs ensuring the basic needs of life were provided for, such as Social Security, Medicare, Medicaid and, yes, universal healthcare coverage. Actually, from my own “I wonder?” analysis, I am pleased to report that we are traveling on the correct path, but still have a ways to go. I believe Jesus would want to see two additional modifications before we could receive His full endorsement: Technology that functions in harmony with nature, and measures of success for our society changed from Gross Domestic Product, Corporate Profits, Common Stock Yields, etc., to the amount of time, effort and resources expended each day loving God with all our heart, mind and soul, while loving our neighbor as we love ourselves.

This ‘re-imagining’ of our world based on Christ’s teachings transports me to a society where every member is ensured a generally-accepted baseline of healthcare coverage, with premium and out-of-pocket costs varying according to each individual’s or family’s level of income. Some of us would pay more and some would pay less for the same service, similar in concept to the progressive income tax system we have today. Individual and corporate charity would be expected and encouraged from all people of faith, calibrated to their financial ability to contribute. They would be partners in maintaining the safety-net of healthcare security for disadvantaged citizens in tandem with the corporate world. No person of Christian faith in this society would lament either their voluntary contribution or their tax payment, nor begrudge the subsidy received by those less fortunate. Their spiritual belief would cause them to feel that giving to their neighbors was of equal blessing and joy as was giving to themselves and their loved ones.

Meanwhile, back to reality. For people of faith in America, we must be honest with ourselves, with our family, with our fellow citizens, with our world and with our God when our desire for wealth overshadows our desire to help our neighbor ‘lying on the road to Jericho.’ We must be honest with ourselves when we hide behind the declaration that healthcare is not a constitutional right; when we say that citizens without coverage can always receive care from a hospital emergency room; when we blame someone’s inability to purchase coverage, afford their premiums or pay their deductible as being their own fault, and therefore their own responsibility. We must be honest with ourselves that such positions are from the world and not from the soul, and are merely a means to justify the ascension of personal consumption over social compassion; the accumulation of possessions over the expansion of spirit; and the triumph of a bank statement over the inspiration of Holy Scripture.

Interestingly, capitalism is very similar to the theory of evolution – both are ‘games’ with winners and losers, and both are dominated by a single rule: Survival of the fittest, either through competition in the marketplace or in nature. This is certainly not a negative process, in and of itself. In fact, competition can be very beneficial for advancing technology, lowering costs and improving the quality of products and services. However, where capitalism and evolution diverge is in the endgame. The purpose of evolution is to remove the less fit from the game altogether through extinction, while the purpose of capitalism is to enable the more fit to move ahead of the less fit through wealth accumulation. Capitalism, however, has two shortcomings, from both a spiritual and a political point-of-view. First, at the front end of the game, not all of the new entrants have an equal opportunity to ‘survive,’ i.e., move ahead. Even if we give the benefit of the doubt that the ‘playing field’ of the game is ‘level,’ some players enter the game from a greater vantage point than others. Some entrants are from privileged backgrounds, while others are not. Some are born with special talents, while others are not. Some are raised in families where skills, attributes and ethics for success are taught, while others are not. The main downside to this shortcoming is the potential for creating ‘classes’ of players, who are caught in a cycle of unequal opportunity, generation upon generation. From a political standpoint, this ‘structural underclass’ limits the advancement of society as a whole, while sowing the seeds of social discontent, crime and political unrest. From a faith-based perspective, life within a structural underclass is filled with struggle and hopelessness, diminishing the favorable conditions of time, curiosity and opportunity necessary in the pursuit of spiritual growth.

A second and more egregious shortcoming of capitalism occurs at the back end of the game. Some players are unable to not only move ahead, but even ‘survive,’ i.e., earn a baseline of income for their family’s needs. This may be due to the opportunity disparity that occurred at the front end of the game, or to various difficulties that arose along the way. In any event, capitalism provides no allowance for these disadvantaged players. From both political and spiritual standpoints, the only appropriate solution is to ask all the players who do survive to share a portion of their winnings (e.g., a pro-rata share in the case of our progressive taxation system) with those who are unable to provide for themselves. To continue with our metaphor, I see taxation as an ‘ante’ or ‘cover charge’ to enter the game. (Of course, taxation provides for more than income transfer programs, e.g., defense, highways, research, etc.) Taxation is the price of admission for gaining access to the highest-rated playing field (i.e., U.S. marketplace) on the planet. And, it is certainly equitable for the amount of ante to be based on the amount of winnings (whether via a progressive, flat or sales tax). Indeed, what other playing field in the world provides such human resources, such infrastructure, such opportunity and such quality of life? Undeniably, taxation is a small price to pay for access to the American marketplace – the best game in town.

Now, let me try to make five objective (or non-moral) arguments in support of this guiding principle currently under discussion, i.e., access to comprehensive, affordable and quality-driven healthcare services as a basic human right for all citizens. First, universal coverage means the end of charity care and bad debt for hospitals, physicians and other healthcare providers. Both bad debt and charity care have long resulted in a hidden ‘cost shift’ from those who cannot pay to those who can. Providers have simply increased their fee structures, in order to compensate for this lost reimbursement. With insurance coverage for all consumers, this add-on cost could be removed, resulting in an immediate, one-time price reduction for all.

Second, it is both a scientific and a common-sense fact that the earlier a medical condition is diagnosed and treated, the better the chances are for a more favorable and lower-cost outcome. When a condition is allowed to go untreated, due to ignorance, indifference, lack of insurance or inability to afford the deductible or copayment (which I will refer to as being ‘underinsured’), it usually worsens, requiring an even higher intensity of medical services when the condition is finally brought to the attention of a healthcare professional. This is often the case with the uninsured and underinsured, where hospital emergency departments have become their “primary care” provider. We can only surmise the financial impact of this situation today, multiplied by the 45+ million uninsured and the millions of underinsured, who avoid early intervention due to burdensome out-of-pocket costs.

A corollary to this situation is the avoidance of preventive medical care, i.e., care provided before a medical condition develops, which is also due to similar financial constraints. Through ongoing advancement in medical genetics, disease etiology and diagnostic science, healthcare professionals are learning how to efficiently and effectively target the use of preventive medical services, such as colonoscopies, mammograms, PSA tests, diet, nutrient intake, exercise, etc., to either prevent disease or detect it in its earliest possible stages. This rapidly developing discipline of preventive medicine is patient specific, performing diagnostic assessments and providing health improvement plans based on the family history, genetic makeup, disease history, diagnostic findings and lifestyle patterns of individual consumers. Preventive medicine can achieve an untold level of benefit for our country, by improving quality of life and reducing healthcare expenditures – but only if it is made affordable for all Americans.

My third objective argument is based on the enhanced personal economic productivity engendered by universal coverage. Individuals and families who enjoy the physical wellbeing and financial security of continuous and comprehensive healthcare coverage, have lives that are more fruitful, whether at the workplace or during times of leisure. When individuals and families are armed with the ability to prevent or combat disease and injury through affordable access to quality healthcare services, they are better able to secure and maintain an optimal level of health, happiness and overall wellbeing. More time, effort and activity can then be devoted to leading productive personal and professional lives. Without the constant worry, despair and stress originating from the physical and financial impact of chronic disease and medical expense, more mental energy can be directed toward creativity, love and faith – the hallmarks of humanity.

A clear, present and persistent predicament for many American workers is ‘job lock,’ where the fear of losing health insurance inhibits workers from advancing or altering their career path. Even though the protection of the federal COBRA law is available, few are able to afford the entire monthly premium, which was previously shared with the employer. New job possibilities may offer enhanced personal and career potential, but lower levels of healthcare coverage, higher cost-sharing or simply no coverage at all at the new job prohibits many from pursing such life-changing opportunities. Potential entrepreneurs with an innovative product, service or business model are forced to forgo their dream and seek or retain employment, in order to hang on to affordable insurance coverage for their family. Whenever an American worker is unable to create, contribute or produce at their full potential, not just one individual or family is harmed, but society as a whole. Universal coverage founded upon a comprehensive benefit plan and income-based cost-sharing will correct this uneconomic state of affairs.

A fourth objective argument confirming this guiding principle is the creation of high-wage jobs in the healthcare and information technology industries, as the direct result of universal coverage. An indirect result will be a significant ripple effect of job growth ensuing in various supplier industries. For information technology, a sizable increase in staffing would occur in all job categories, in order to service the long overdue transition of the healthcare industry from information and transaction systems based on paper, to systems based on binary code. For healthcare, significant growth in professional staffing for the provision of preventive, diagnostic, disease management, palliative and e-health services would occur. As the value of preventive and diagnostic services has been previously discussed, let me take a moment to address the others. Disease management is a new medical discipline designed to empower the consumer with education, resources and a professional support structure, so they may take direct control over their own health and experience the positive impact their own actions and decisions can make in the management of their disease process. The sense of power, ability and gratification a consumer derives from this experience is referred to as “self-efficacy,” and is a very potent form of physical, emotional and spiritual healing. Chronic disease management is currently a growing science, but its expansion would be markedly enhanced as a covered benefit under universal healthcare. Nurses and other professional caregivers would begin to specialize in the new discipline, taking advantage of newly-created professional opportunities, as well as training and accreditation curriculums developed by the academic industry. The excitement that would grow around this new field is based on the simple, yet challenging realization that the single best defense against rising healthcare costs is an informed, motivated and professionally-supported healthcare consumer.

Palliative care, or the relief of symptoms in progressive or terminal disease, has also experienced a growth trend in recent years and would certainly flourish under universal coverage – which, to be successful, must be founded upon the empowerment of consumers to be the primary decision-maker for their own medical care. When a consumer comes to terms with an intractable disease, fully informed of the realistic alternatives, a personal or family-based decision can be made to forego heroic surgical or chemotherapeutic intervention and, instead, use the resources of the healthcare system to maximize the quality of their remaining time on earth. The outcome: healthcare dollars not wasted on hopeless and, often, debilitating modalities – but a human life lived to its fullest potential. For some consumers, the last 6 months of life can be the most intensive period of healthcare resource consumption for their entire life, filled with medical interventions that merely result in pain, ill-health and stress, rather than in a time of peace, comfort and closure. For many of these consumers this intensive service utilization was not consistent with either their personal wishes or their Advance Directive document. Therefore, the Advance Directive would be a mandatory component of every consumer’s electronic health record under universal coverage, to be completed when they reach the age of 50 or when diagnosed with a life-threatening illness. In this way, consumers will be assured they receive only the level of care they desire, whether they choose palliative or otherwise.

E-health services will open a digital doorway into a brave, new world of medicine. As a covered modality under universal coverage, a quantum increase in private research and development would ensue, bringing with it untold clinical and administrative innovations and applications, resulting in reduced costs, improved quality and enhanced consumer and provider convenience. How many office visits could be obviated through screen-to-screen examinations? How much information could be shared through email? How many transactions could be performed over the internet? How many lives could be saved and outcomes improved through remote testing and monitoring, and instantaneous retrieval of medical records and clinical guidelines? How much time and how many resources could be saved through off-site consultation and diagnostic evaluation? We are just breaking the surface of this exciting, new arena of electronic medicine.

A fifth and final objective argument for universal coverage is its beneficial impact on homeland security. Virtually all Americans would eagerly enroll in a new, universal healthcare program, either through their employer or, if unemployed or retired, directly with the public health plan or a private health plan of their choice. Each consumer’s personal information and medical record would be stored in a centralized and retrievable databank, with all changes and updates occurring on a real-time basis. On a right to know and need to know basis, this information could be accessed 24/7 by healthcare professionals or homeland security authorities. As necessary, this information could be interfaced with other governmental databanks, e.g., Social Security, FBI, State Department, etc., to help verify the identity, location and status of all citizens and non-citizens within our borders at any given point in time. Of course, appropriate privacy protections would first need to be legislated and codified into law. Another related, if less-objective argument regarding homeland security is the impact a universal coverage program would have on the global community, as they bear witness to how America treats the “least” of her citizens. Our cradle-to-grave healthcare system would set another shining example of the compassion and ingenuity centered in the heart of our nation and our people – a nation and people not to be feared or hated, but to be admired and emulated.

Clearly, universal coverage will have a stimulating and catalyzing influence on the healthcare industry and, indeed, throughout every sector of our economy and within every constituency of our society. We should all keenly look forward to that day when the national discussion and debate has been concluded, the grand, social commitment has been agreed upon, funding mechanisms have been put into place, the various cost-control and redesign strategies have been implemented, the many new positions have been filled, financial budgets and revenue sources have been activated, citizens of our great nation have been enrolled, and consumers have begun to seek needed healthcare services. Across our country individuals and organizations will reverberate with hope, compassion, creativity and activity, as every American appreciates and respects the enormity and the profundity of the undertaking before them. Each citizen will know the value, the responsibilities and the accountabilities of their new role, whether as a healthcare consumer or otherwise. For this great national endeavor to be successful and sustainable, the financial incentives for all players, including consumers, providers, employers, insurers, administrators, manufacturers, suppliers, taxpayers and regulators must be in alignment, with the primary focus being the identification, development and utilization of the most cost- and quality-effective preventive, diagnostic, interventional and disease-management services available. Whether high tech or low, traditional or avant-garde, public or private, localized or centralized, the operative question will be: “What is the least costly method to prevent or manage this problem, while achieving the best consumer outcome?” These momentous issues of financial incentive, appropriate care, organizational accountability and individual commitment will be examined more fully throughout this handbook.

Before I can begin the process of identifying root causes and operational solutions, I will need to introduce two additional guiding principles. This is due to the high degree of overlap existing in these issues of the uninsured, affordability and quality, relative to both their cause and their cure.


Guiding Principle #2
The Employer-based coverage model is the most efficient and cost-effective vehicle for health insurance access by employed Citizens and their families.

Comment: Outside of Medicare, most Americans secure their family’s healthcare coverage from their employer, through an employer-sponsored health plan. This means the employer selects, negotiates and contracts directly with a Private Health Plan(s), and pays a portion (or the entire amount) of the monthly insurance premium on behalf of the employee. This is the case whether the employee works in the private sector, for a school district, for the federal government or for the military. Subsequently, most health insurance business in our country is conducted between employers and Private Health Plans, with a small number of insurers offering policies directly to individuals, who are typically self-employed or retired. Large and medium-sized employers usually offer several competing health plan options for their employees to choose from, including one self-insured option, which the employer has developed and administers on its own behalf. Small employers, if they can afford to offer health coverage at all, usually offer their employees a single health plan option. In summary, there has been a longstanding, well-established, widely-accepted and efficient business relationship between employers and Private Health Plans – a relationship and a function that should not be terminated or reinvented, but continued under universal coverage, as outlined in this redesign handbook.

Guiding Principle #3
A strong and viable Public Health Plan is required to ensure safety-net coverage for uninsured Citizens -- and to stimulate competition in the healthcare marketplace.

Comment: Each of our personal experiences with the healthcare industry, whether with hospitals, physicians or insurance companies, should provide us with sufficient rationale for the necessity and value of this guiding principle. When Jesus told us how we may inherit the kingdom with these words: “I was sick and you looked after me” (Matthew 25:36), I don’t believe He meant that afterwards it would be OK to issue Him a denial for non-covered services or hound Him with collection agencies for unpaid bills! No, there is clearly an important role for government – where all of us, as a single community, with a single mission come together to “look after” the needs of our fellow citizens in the way Christ has asked of us. Here is a listing of how we, American taxpayers, currently “look after” the healthcare needs of our neighbors: Seven, different healthcare programs are currently operated by our federal government, providing for the medical needs of seven different population groups, including Medicare (for the aged), Medicaid (for the poor), S-CHIP (for uninsured children), Veteran’s Administration (for military veterans), TRICARE (for active military and their families), Public Health Service (for various populations) and the Indian Health Service (for Native Americans). All of these constituencies are well-served by each of us, as we work together, with a single heart through our federal government. Surely, these are living examples of Christ’s teaching from Matthew 25:36.

Now that we have established three guiding principles to point the way to our desired destination, our next task is to identify the source or root cause(s) of our issues, so we may begin piecing together our mode of transportation – the interlocking matrix of operational solutions that will carry us to our 21st Century health system.

Root Cause #1: The Uninsured

The market-based delivery of medical insurance has failed to distribute coverage to all Citizens. Instead, healthcare access varies, based on each Consumer’s economic circumstance, geographic location and employment status.

Comment: Nothing mysterious here: providers and insurers cannot offer services or coverage free-of-charge, and consumers and small employers of unfavorable economic circumstance cannot purchase services or coverage without financial assistance. Obviously, the law of supply and demand did not work for this crucial commodity. In essence and in truth, the invisible hand of market forces has done a disappearing act! The result: 45+ million Americans without coverage, with millions more underinsured. Accordingly, this single root cause is the only one needed to explain our growing crisis of the uninsured – a painful fact of everyday life for so many or our fellow citizens across our country today.

Root Cause #2: Affordability

Insufficient or ineffective market dynamics in the healthcare industry to maintain affordable pricing.

Comment: This root cause is the first of eight (the other seven are found in Section Two) for this issue of rising healthcare costs that we will identify and then attack through our growing armory of operative solutions. A thoughtful study of this root cause should demonstrate that its brevity is appropriate, as no more needs to be said. Either the marketplace is able to deliver goods and services that consumers demand in sufficient quantity, causing the economics of large numbers to produce an affordable supply – or it does not. The demand is there, the supply is there, the affordability is not. Therefore, something is either wrong with the dynamics of supply and demand in this industry – or, the free market is simply an impractical allocator of healthcare services and coverage. I believe it is a combination of both, requiring a two-sector solution to correct the deficiency. In essence, we need the private sector to create the ‘backbone of innovation,’ and the public sector to legislate a ‘baseline of coverage.’ The private sector, in combination with significant funding from the public sector for basic research, has brought our level of medical advancement to unsurpassed heights. The public sector, in combination with significant input from the private sector, has developed cost-effective programs providing medical services to millions of Americans, such as veterans, the aged, the poor and federal employees. In summary, effective health system redesign can only be accomplished by both sectors working together to identify what has worked and re-imagine what has not. We are now ready to begin the exciting, constructive and virtuous undertaking of redesigning our 21st Century health system – a system to be built upon the rock of our proven successes, and revitalized through an honest examination of our proven failures.

Operational Solution #1:
Expand Medicare to become the safety-net insurer for all uninsured individuals and families, with the amount of cost-sharing for premiums and copayments based on level of household income and family size. (Note: Expanded Medicare would replace most other state and federal healthcare programs, e.g., Medicaid, S-Chip, Veteran’s Administration, etc., excluding active military, in order to consolidate and focus governmental resources into a single, ‘Public Health Plan.’)

Comment: This solution responds to Root Cause #1, the failure of the free market to distribute healthcare coverage or services to all citizens. Before I comment further, let me introduce our next solution.


Operational Solution #2:

Re-engineer Medicare to meet its new role as the Public Health Plan for our 21st Century health system.

Comment: So, I’m not referring to your grandparents’ Medicare – but to a new, improved ‘Public Health Plan’! (Note: I will refer to expanded and re-engineered Medicare as the Public Health Plan.) Why should we throw out the baby, just because we need to refresh the bathwater? Our reconstruction goal is to build on top of proven success, wherever possible. And, Medicare certainly has been a success – just ask 60 million American seniors. Therefore, the wheel does not need to be re-invented, just re-engineered, in order to provide a national solution to a national problem. This re-engineering of Medicare into the Public Health Plan will include:

• Retire the name ‘Medicare’ and create a new, cabinet-level department called the “Healthcare Security Administration” (HSA). In essence, ‘carve’ the Centers for Medicare and Medicaid Services out of the Department of Health and Human Services to create the HSA. The HSA will have five distinct, but interrelated responsibilities: 1) Management of the Public Health Plan, 2) Regulation of Private Health Plans, 3) Administration of the “National Benefit Plan” and “Financial Assessment” committees (described below), 4) Case-by-case negotiation with non-participating healthcare providers for healthcare products and services, i.e., those providers not agreeing to participate in universal coverage, and 5) Management of “Health Improvement Tax” (HIT) revenues (see Operational Solution #6).

• Create a new, defined benefit package providing a minimum level of healthcare coverage for all citizens (i.e., “National Benefit Plan,” described below).

• Create the new “Financial Assessment Committee,” a non-partisan, constituency-based committee responsible for recommending the premium and copayment subsidy structure for eligible consumers and employers. Based on an economic eligibility analysis, employers may be eligible for premium subsidies, discussed under Operational Solution #3. Based on annual household income, consumers may be eligible for premium and copayment subsidies, discussed under Operational Solution #5.

• Create the new “National Benefit Plan Committee,” a non-partisan, constituency-based committee responsible for recommending the covered benefit structure under the National Benefit Plan.

• Separate HSA’s regulatory function (i.e., regulation of Private Health Plans) from its management function (i.e., operation of the Public Health Plan). The creation of an ‘operational firewall’ between HSA’s regulatory function and staff, and its Public Health Plan management function and staff will be essential under the marketplace changes proposed under Operational Solution #3, i.e., competition between the Public Health Plan and Private Health Plans, described below.

• Conduct a comprehensive review of current regulatory policies and procedures by multiple, constituency-based committees to ensure cost-effective, quality-appropriate and value-driven regulation. Governmental regulation can often be excessive and of little benefit, except to the regulating body itself (e.g., through increased budgets, staff, prestige, etc.). Therefore, each of HSA’s regulatory policies and procedures for Private Health Plans and participating healthcare providers must have a direct impact on or play a supporting role in the improvement of consumer outcome or healthcare value – or be modified or terminated. This streamlining of federal regulation will have a dramatic and positive impact, financially and clinically on Private Health Plans, participating health care providers and consumers.

• Conduct a comprehensive review of the appropriateness, completeness and competitiveness of current compensation schedules and methodologies for healthcare providers and manufacturers by a multi-constituency committee. The Public Health Plan staff will utilize the findings from this review process to establish an HSA provider fee schedule and an HSA manufacturer reimbursement schedule that represent a balance between national budgetary goals of the public sector and corporate profit-making goals of private industry.

• Change the Public Health Plan’s governance structure so that its executive officers report to a Governing Board comprised of all the various constituencies its serves, including consumers, providers, employers, suppliers, legislators, scholars and executive branch liaison. The Governing Board’s goal is to ensure the Public Health Plan is in philosophic and operational compliance with its expanded new mission. Ultimate authority and accountability for the Public Health Plan would reside with the Healthcare Security Administration, Congress and voters. Supporting the Governing Board would be independent, public-private Operational Review Committees (ORC), responsible for different operational areas within the Public Health Plan (e.g., Provider fee schedule development, provider contracting, accounting, consumer grievance resolution, etc.). The ORCs would provide expert analysis and opinion to the Public Health Plan staff and Governing Board. Additionally, annual financial and operational audits would be conducted by private-sector organizations, with all reports made available to the Governing Board, Congress, and the public.

• Re-commission the Public Health Plan to be market-oriented, partnership-based and mission-driven. I will expand upon these re-engineering goals under Operational Solution #3.

A universal coverage program without a defined, national benefit package covering all medically-necessary, cost-effective services, products and regimens, or without a defined, income-based schedule of consumer cost-sharing requirements for premiums and copayments would be little more than ‘smoke and mirrors.’ A large and confusing influx of market-based programs and policies would spring up overnight filling the void, with great variation from city to city, region to region and state to state in both the level of cost and coverage. One likely result would be insufficient coverage for the most vulnerable Americans – and insufficient coverage most often equates to no coverage at all when a medical condition is not appropriately diagnosed and treated in a timely manner. Clearly, our national healthcare crisis demands solutions that are national in scope and substance.

The driving criterion for benefit plan design will be consumer outcome, with coverage for those services and products determined necessary to achieve and maintain a generally-accepted baseline of good physical and mental health – and which, in their absence, could result in a long-term worsening of a consumer’s health status. Competing products, services and regimens for a given medical condition would be selected based on their comparative efficacy, safety and cost profile, cumulatively referred to as their ‘value quotient,’ which will be discussed in Section Two. Additionally, products and services will be limited or excluded for low priority medical conditions, based on their self-limiting nature or their ease of self-management, e.g., non-pathologic headache, heartburn, stomach ache, etc. Also, 24/7 telephonic and email medical advice lines will be available to all consumers through certified, private-sector organizations. Liability protection legislation will enable a more in-depth and effective level of information sharing between healthcare professional and consumer during these non-personal encounters than is currently allowed.

The driving criterion for consumer access to products and services will be affordability, with the out-of-pocket cost for medically-appropriate products and services based on level of household income. Copayments for medical services and monthly premium contributions for coverage will vary from consumer-to-consumer, based on annual income, and on family size in the case of premiums. The most brilliantly-designed benefit package will go for naught if an individual cannot afford to access necessary services. An annual, out-of-pocket maximum will also be established for all consumers capping the amount paid toward premiums and copayments over the course of a calendar year at 5% of household income, up to a maximum of $12,500 per year. Deductibles will not be used as they inhibit a consumer’s willingness to access medically-necessary preventive and early detection services. Also, coinsurance will not be used as it is unnecessarily complex by requiring the consumer to research the question, “Percentage of what?” Additionally, coinsurance is regressive in that it cannot be calibrated to vary according to a consumer’s level of income. Reasonable copayments that are tied to income level are sufficient to involve and engage the consumer in the financial impact of his or her healthcare decisions, as well as to provide a ‘hesitation factor’ to guard against inappropriate usage. When a consumer has too large of a financial stake in the healthcare decision, such as with deductibles, Health Savings Accounts or a large copayment, there exists a perverse incentive not to purchase medically-needed services.

I will refer to the benefit package under the universal coverage program outlined in this handbook as the “National Benefit Plan.” The benefit design, along with the fee structure for the cost-sharing components, will be set and reviewed on an annual basis by two committees, the National Benefit Plan Committee and the Financial Assessment Committee, which are administered by the HSA and are comprised of representatives from key health system constituencies, including consumers, providers, employers, insurers, administrators, manufacturers, suppliers, taxpayers and regulators. Committee memberships will be for 3-year terms, with appointments made on a non-partisan basis by a mix of elected officials, including Governors, Representatives, Senators and the President. The committees’ recommendations will be presented to Congress and the President each year for approval and codification into law. This political decision-making structure is designed to facilitate a periodic national discourse and secure an evolving consensus on what constitutes a generally-accepted baseline of healthcare cost and coverage.

Under universal coverage there exists a distinct potential for over-utilization of services by consumers. In particular, excessive or inappropriate utilization by low-income consumers with minimal cost-sharing requirements can be problematic. For these consumers, the selection and designation of a “Primary Care Technician” (PCT), discussed in Section Two, will be required. The PCT will act as their primary care provider. For all non-emergency care, these consumers must first visit or contact their PCT, who is responsible for authorizing referrals to physicians or other healthcare providers for non-PCT services. This PCT requirement is only in place for these consumers during their years of economic productivity, and is not a requirement for retired or disabled citizens, regardless of annual income. For all consumers, inappropriate use of hospital emergency rooms must be controlled. The EMTALA legislation for hospitals will be modified, so that hospitals are obligated to channel consumers without emergency conditions away from the emergency department and to their primary care provider. (Note: The “Emergency Medical Treatment and Active Labor Act” {EMTALA} is a federal law requiring hospitals to medically screen all patients presenting to their emergency department, and either stabilize or transfer the patient to another facility, if medically appropriate.) Continued abuse of emergency room services would result in an increase in a consumer’s emergency services copayment. Also, consumers who habitually misuse office-visit, prescription drug or other medical services would see their copayments for those services or products increased. Additionally, all healthcare providers will be legally authorized and financially incentivized to deny services that are not medically necessary, as defined by the appropriate clinical practice guideline (discussed in Section Three). (Note: Clinical practice guidelines, discussed in Section Three, plus mandatory Advance Directives provide an evidence-based means for ensuring the appropriate delivery of medical services by healthcare providers.)

Operational Solution #3:

Expand the Public Health Plan into the commercial insurance marketplace to stimulate competition by allowing Employers the choice of purchasing coverage from either a Private Health Plan, or from the Public Health Plan using a payroll-tax ‘premium’ methodology.


Comment: This solution responds to Root Cause #2, the failure of market dynamics to maintain affordable pricing. The entrée of the Public Health Plan into the commercial marketplace will add a beneficial, dynamic tension due to the opposing perspectives, strategies and objectives between the Public Health Plan and its Private Health Plan competition. Analogous to the “collision model” of chemistry, where atoms must collide – due to opposing polarities – before they are able to locate the proper bonding sites necessary for the formation of molecules, including life, itself; these organizational polarities will serve to stimulate and innovate market forces, bringing new ideas, new solutions and new life to our broken, health insurance marketplace. Theses organizational polarities between the Public Health Plan and Private Health Plans include: voter control vs. shareholder control; budgetary goals vs. profit goals; public policy vs. proprietary innovation; income-based strategies vs. price-based strategies; consumer equality vs. consumer choice; and product uniformity vs. product variety. The interplay of these polarities will ensure the marketplace reaps the best that both the public and private worlds can bring to this challenging issue of universal coverage. Clearly, the private sector, alone, has been unable to achieve the marketplace goal of allocating this essential public good of healthcare to all citizens using its only resource, the dynamic of supply and demand. The presence of the Public Health Plan in the healthcare marketplace brings several, unique attributes to the playing field, augmenting and re-energizing this dynamic:

• The Public Health Plan possesses the national stature and political leverage to be an initiator of change in the marketplace through the early adoption of innovation (albeit, private sector innovation), and to stimulate cost-control innovations by negotiating favorable terms with providers, suppliers, manufacturers and administrators.

• The Public Health Plan brings new cost-efficiencies, due to the fact that all of its revenues are devoted to healthcare services and administration, rather than to marketing, lobbying, excessive management compensation and profit.

• The Public Health Plan represents a new baseline or benchmark in the health insurance marketplace, for such product features as premium pricing, administrative cost ratios, disease management initiatives and consumer satisfaction scores – against which Private Health Plans will be measured.

• As a community servant, the management and expenditures of the Public Health Plan will be subject to intense operational scrutiny, which will set new standards for health plan efficiency, accountability and transparency – transparency that can be exploited by its Private Health Plan competitors for their own, self-improvement initiatives.

The beneficial impact of our macroeconomic “collision model”: motivated Private Health Plans, fully cognizant of their new economic and operational parameters, striving to differentiate their products and services based on innovation, quality and continuously building a better product for the changing needs of our 21st Century health system – driven, in large part, by the desire to meet or exceed the new marketplace standards established by a powerful new competitor, the Public Health Plan. Alternatively, marginally performing Private Health Plans unable or unwilling to rise to the challenge – will be forced to consolidate or liquidate.

Under this ‘Two-Sector Solution’ (when capitalized, this is the proprietary term I use to describe the overall proposal outlined in this redesign handbook), the Public Health Plan will have two primary tasks:

1) Provide coverage for unemployed and retired consumers and their families in the non-commercial, health insurance marketplace, and

2) Stimulate innovation, quality improvement and cost-control in the commercial, health insurance marketplace, through: a. Competition with Private Health Plans for product design, administrative and clinical performance, and employer clientele, and b. Development of cost-effective contractual partnerships with providers, manufacturers, suppliers and administrators.

To meet its first objective, the Public Health Plan will call upon the strengths, capacities and infrastructure it has developed under the Medicare program over the past 40 years. As a component of a two-sector solution, the Public Health Plan will be an equal partner with Contracting Health Plans in meeting the healthcare needs of the unemployed and retired through a modified form of competition in the non-commercial marketplace. To meet its second objective, the Public Health Plan will also partner on an equal basis with all Private Health Plans in meeting the needs of employed consumers through open competition in the commercial marketplace. For both objectives, the Public Health Plan will develop contractual partnerships with private sector entities for many operational functions. For all consumer population groups, the Public Health Plan will be designed and held accountable to living up to the following mission statement:

“The Public Health Plan works in partnership with private-sector Providers, Manufacturers, Suppliers and Administrators. Our Mission is to coordinate, manage and continuously improve the cost-effective administration and delivery of healthcare services for our Members to ensure quality of information, advocacy and outcomes.”

The introduction of the Public Health Plan into the commercial marketplace will represent monumental change, but the essential public nature of healthcare demands the best effort of both the public and private sectors. Healthcare is too important, too fundamental and too pervasive in scope and in effect to rely upon one sector alone. For such a dramatic innovation to be successful, the Public Health Plan must function in a manner that will not hinder, but instead stimulate, enhance and optimize market forces and desired outcomes. Toward this end, the Public Health Plan will be re-engineered to ensure it is operated in a market-oriented, mission-driven and partnership-based manner, subject to the same regulations, ethics and market forces as Private Health Plans. As a public-private consortium, the Public Health Plan will be managed with full recognition of its interconnected and interdependent relationship with its participating providers who provide all of the healthcare services, with its manufacturers and suppliers who provide all of the drugs, medical devices and other medical products, and with its administrative partners who provide a majority of the health plan’s operational functions. This shared distribution of responsibility between public and private organizations is a cornerstone in the ‘self-identity’ of the Public Health Plan – the understanding that it would have no success, indeed, no existence without its private sector partners. As a two-sector solution, to accomplish its mission of setting new marketplace benchmarks for premium affordability, operational efficiency and consumer outcome, certain operational functions within the Public Health Plan will require the flexible dynamics and innovation of private enterprise, while others will require the constraint and uniformity of a public bureaucracy.

As a ‘mixed-model’ health plan acting in the best, long-term interest of all populations groups (i.e., employed, unemployed and retired), public sector entities will be utilized for operational functions necessitating equality, uniformity, prerogative and/or accountability. For example: risk assumption, fee schedule development, provider contracting, benefit plan design, accounting services and consumer grievance resolution will be performed by federal employees under the purview of the Healthcare Security Administration and the Public Health Plan. All other functions will be performed by private sector entities (profit or nonprofit), where market forces achieve a greater level of innovation, effectiveness and efficiency. For example: claims administration, enrollment processing, consumer support services, data collection and reporting, etc., will all be performed by the Public Health Plan’s administrative partners. (Note: All services provided by private-sector partners are transparent, in that they are performed in the name of the Public Health Plan.)

To ensure the Public Health Plan’s market-driven and partnership-based self-identity remains on track, another essential re-engineering component is the new Governing Board. A broad range of public and private constituencies will sit on the board, representing a wide variety of disciplines, perspectives and ideologies. However, all will come with the common goal of guiding the Public Health Plan towards the fulfillment of its critical and challenging mission. Assisting the board will be independent, public-private Operational Review Committees, chartered around the various functional areas of the health plan. These committees will help the board develop and monitor key measures of success, including consumer and partner satisfaction levels, healthcare and operational budgetary targets, partner performance reports and consumer health outcomes. The board will also be responsible for the impact of the Public Health Plan on the commercial marketplace, monitoring the neutrality of market conditions, the burden of regulation and the movement of sentinel economic variables. Indeed, a salient measure of Public Health Plan success will be the state of robustness of Private Health Plans – as both sectors are critical for the long-term viability of universal coverage. All of the board’s observations, findings and recommendations will be presented to Congress, the President and the voting public, where the ultimate authority and accountability for the Public Health Plan will reside.

In the non-commercial insurance marketplace of unemployed and retired consumers, the need for cost-control outweighs the value of free-market competition. It does not meet any test of political or economic logic to encourage competitors to freely spend financial resources attracting and persuading a customer base that is mostly unable to afford the product without governmental subsidy. Therefore, competition between and among the Public Health Plan and Contracting Health Plans for the unemployed and for retirees will be ‘regulated,’ by limiting marketing expenses to the provision of written materials upon request (e.g., brochures, pamphlets, etc.), small group presentations and e-marketing (e.g., interactive websites, blogs, email, etc.). The HSA will act as a centralized, information clearinghouse service for all health plans on an equal, non-preferential basis, informing consumers about the Contracting Health Plans operating in their area, as well as about the Public Health Plan, using a national telephone line, direct mailings and a website.

Under the Two-Sector Solution, all Private Health Plans will participate at one or two levels. The first level is mandatory and includes the following requirements:

a. Offer a National Benefit Plan (or better) option to employer clientele. Private Health Plans will have to reconfigure their systems and print new materials to comply with this requirement, which would impose a modest, one-time outlay. The objective, of course, is to ensure that all Americans have a secure baseline of a generally-accepted level of healthcare benefits, which the National Benefit Plan will represent.

b. Accept the premium subsidy payment for eligible employers and consumers (paid by HSA to Private Health Plans on a quarterly basis), plus the employer’s actual premium amounts (as negotiated between the health plan and employer) as payment-in-full for a National Benefit Plan policy. The cost structure of the Public Health Plan (i.e., the actual amount it needs to cover its medical and administrative expenses) sets the funding structure for these premium subsidy payments. This means Private Health Plans will receive the same premium subsidy amount as the Public Health Plan for National Benefit Plan policies. This component of the Two-Sector Solution will represent an ongoing challenge to the cost structures of Private Health Plans. However, the very objective of this feature is to establish aggressive, but achievable cost targets, forcing all health plans to weed-out inefficiency, waste, error, duplication and extravagance, in order to optimize each of our country’s, finite healthcare dollars. This requirement will also equalize the playing field between the Public and Private Health Plans, ensuring a fair and spirited level of competition.

c. Stop the use of ‘medical underwriting’ of employer clients by Private Health Plans, i.e., analyzing the medical conditions of employees and their family members. Instead, ‘community rating’ procedures must be utilized, requiring health plans to establish a base rate for a given community, which is then adjusted up or down only by the age and gender mix of a given employer group. This will have a net neutral effect on competitive dynamics, as all health plans will be playing under this rule. This requirement also equalizes the playing field between Private Health Plans and the Public Health Plan, which calculates its premiums solely on a flat percentage of an employer’s total payroll, with no adjustment for ‘medical risk.’ It also removes a huge, anti-competitive and prejudicial incentive from the marketplace, i.e., the avoidance of risk wherever possible – which will only grow worse as the science of genetic screening advances, allowing insurers to identify those individuals most likely to develop a high-cost disease sometime during their lifetime.

d. Utilize the HSA provider fee schedule and HSA manufacturer reimbursement schedule for the compensation of Participating Healthcare Providers and the reimbursement of drug and medical device manufacturers. (Note: Health plans may separately negotiate their own financial arrangements with providers and manufacturers, but it must be as competitive as the HSA schedules.) This means health plans will expend a modest, one-time outlay to reconfigure their provider and manufacturer payment systems. This also means Private Health Plans can take advantage of these highly competitive reimbursement schedules negotiated by the HSA, further serving to equalize the playing field between the Public and Private Health Plans.

e. Track and invoice the HSA for the difference between the full copayment amount for a particular healthcare product or service, and the reduced copayment amount actually paid by its health plan members who are eligible for copayment subsidies. This will require a modest, one-time, reconfiguration expense. (Note: Copayment subsidy payments are paid quarterly by the HSA to health plans).

The second level of participation for Private Health Plans is voluntary: the choice to contract with the Healthcare Security Administration to provide National Benefit Plan coverage to the most vulnerable population groups in our society, i.e., unemployed and retired consumers, as a Contracting Health Plan. This choice demonstrates a high degree of social responsibility on the part of a Private Health Plan, as revenues, margins and risks for these population groups are not as favorable as those with the younger, more active and more healthful employee population. However, due to the quantity comprised in these population groups, currently at over 100 million (i.e., the combination of Medicare, Medicaid and the uninsured), the law of large numbers is a definite incentive for entering this market. Once again, consumer premium amounts and HSA premium subsidy payments are tied to the cost structure of the Public Health Plan, so Contracting Health Plans must be able to meet or beat that level of cost efficiency. As discussed, competition is regulated with limitations on the type and extent of marketing activities. A centralized source of information on all health plans is available to consumers via websites and toll-free phone lines operated by the HSA. The purpose of regulating competition in the non-commercial marketplace is to help optimize our nation’s, finite healthcare budget – i.e., the less that is spent on healthcare marketing, the more that can be spent on healthcare services.

This concept of a “national healthcare budget” warrants some discussion. Undoubtedly, the need or desire for healthcare services is potentially, if not essentially greater than our financial capacity as a society to pay for it. This is certainly the case today with the impressive array of advanced technology ready to diagnose and treat our every symptom. Consider an imaginary case of a suspected brain tumor, where a typical x-ray ($150) provides us with a 92% level of confidence that the symptoms are those of a simple headache, while a CT scan ($450) raises that confidence level to 95%, but an MR image ($875) will provide us with a 97% level of confidence, and a PET scan ($1500) will push our confidence level to over 98%. What is the appropriate level of care for this consumer? The answer must rely upon the rigors of medical science, leavened with a cost-benefit analysis conducted by the HSA – and then applied uniformly via the National Benefit Plan. Under our present system, however, the answer is not determined by evidence-based science or by a national cost-benefit analysis, but rather by multiple, non-scientific factors, including: Whether or not the consumer has health insurance; The type of health insurance the consumer is covered under; The consumer’s level of income and education; The consumer’s state of residence; The practice-pattern of the consumer’s physician; and, the mix of diagnostic services available at the physician’s preferred hospital. Therefore, using the imaginary headache case above, our national healthcare budget is not determined by any rational logic or design, but is completely haphazard, comprised of healthcare bills derived from consumers representing every possible scenario across the spectrum – from those lacking access to any medical services, to those whose headache symptoms resulted in multiple PET scans. In other words, from underutilization, where the opportunity for early detection and intervention was lost, to overutilization, where healthcare services were used without a sound medical rationale. In both cases, healthcare dollars were potentially or needlessly wasted. In a society founded upon democracy, equal opportunity and Judeo-Christian values, it meets no test of political ideology or moral theology to allow or enable waste, duplication or indiscrimination in the allocation of scarce healthcare dollars, while suffering from our national healthcare crisis of unmet medical need, undue morbidity, unnecessary mortality and growing financial hardship is a cause of great suffering to individuals and families every day all around us.

Clearly, the only effective approach to this great national challenge is to view it from a unified national perspective, i.e., 1) A single population of healthcare consumers, 2) With an indeterminate level of healthcare need, and 3) A finite, national healthcare budget with which to pay for it. (Note: This “finite national budget” includes federal, state, corporate and individual assets.) This holistic perspective compels us to move toward a proactive strategy of population-based management, rather than our current non-strategy of reacting to problems after they arise. Population-based management makes resource allocation decisions with a single goal in mind – securing the greatest level of health for the greatest number of citizens. This strategy requires federal coordination of health system players. This strategy requires establishment of national performance and expense targets. This strategy requires a baseline of coverage for all consumers. This strategy requires proactive management in both the promotion of health and the amelioration of disease. This strategy requires a significant, stable and impartial funding source. This strategy requires commitment and contribution from both sectors, every constituency and each citizen. This strategy will only be accomplished if our finite, national healthcare budget is managed and optimized for what it is – a precious national asset.

A genuine challenge to our national healthcare budget under a universal coverage program is the potential for a “feeding frenzy” mentality among all constituencies and population groups, including: consumers, providers, employers, manufacturers, administrators, suppliers and regulators. This underscores the importance of our holistic approach under the Two-Sector Solution, with standards, benchmarks, criteria and measures for each player on a nation-wide, across-the-board basis, to ensure the appropriate research, development, manufacture, marketing, purchase, delivery, consumption and regulation of healthcare products and services. Some of the safeguards under our redesigned health system will include:

• ‘Bio-Economic Assessment’ studies to determine the value-quotient for all new technology (see Section Two);

• Tax policies for manufacturers to guide research and marketing practices (see Section Two);

• Performance measurement reporting and quality incentive programs for providers (see Section Two);

• Clinical practice guidelines, protocols and standards for providers (see Section Three);

• Use of ‘Primary Care Technician’ gatekeepers by low-copayment population groups (see Section Two);

• Modification of EMTALA legislation for hospital emergency rooms to make lawful, and mandatory, the denial of services to consumers without emergency medical conditions;

• Use of copayment penalties for consumers who habitually abuse healthcare services or products, as well as legislation enabling providers to lawfully deny the provision of services to such consumers;

• Centralized, real-time, electronic medial records allowing providers to be fully informed of each consumer’s medical service history at the point of care (see Section Three);

• Complete transparency and multi-constituency oversight of the Healthcare Security Administration and the Public Health Plan; and,

• Societal ethics establishing appropriate behavioral guidelines and accountabilities under universal coverage, as codified into a ‘Bill of Healthcare Rights & Responsibilities’ for each constituency and every consumer, and reinforced by comparative, “Consumption, Compliance and Activity Reports” and "Personal/Organizational Contribution Scorecards" (see discussion under Operational Solution #5).

In summary, our country’s healthcare budget should be viewed as a single national asset, finite in capacity, infinite in importance, with each dollar spent for optimum effect, in order to achieve our goal of securing the greatest level of health for the greatest number of consumers. This will necessitate evidence-based and cost-benefit management of healthcare need, resource investment and service delivery, through a holistic, nation-wide strategy founded upon effective, efficient and equitable solutions, benchmarks and measures of success for each healthcare constituency and every population group.

Operational Solution #4:
Require all Employers to purchase (or self-insure) a ‘National Benefit Plan’ (or better) policy from either a Private Health Plan or from the Public Health Plan, with subsidies for those Employers that meet economic eligibility criteria.

Comment: This solution is also in response to Root Cause #1, the failure of the free market to distribute healthcare coverage or services to all citizens. As we have discussed, the employer-based coverage model is practical, cost-effective and widely accepted. This operational solution builds upon that long and successful tradition, by entrusting and enabling employers to continue their important role as the primary point-of-coverage for all employed citizens and their families. This is accomplished in a manner that minimizes change to the current system where employers and health plans come together in their local marketplace to negotiate and contract for healthcare coverage services. Employers who currently offer coverage to their employees will see minimal change, as long as their healthcare coverage meets or exceeds the National Benefit Plan standards for both level of benefits and premium contribution requirements. For employers who do not offer coverage, health plan enrollment and administration systems are inexpensive and can be easily integrated into their existing payroll or employee management system, creating an efficient, seamless and one-time-per-month process. For most employers, there exists either the expertise or the human resource capacity to devote the time required to manage the process of evaluating, negotiating and selecting a health plan from their local marketplace. For large employers (i.e., 100 or more employees), this process has become a fine art or, at least, an essential corporate competency, as they exploit the buying power of their employee population to leverage preferred arrangements from health plans. For all these reasons, the employer remains the most appropriate entity for this important, point-of-access function under a universal healthcare system.

Indeed, any redesign proposal that removes the employer from this critical market role leaves a large and costly hole to be filled. Certainly, any proposal that places the individual employee in this evaluation, negotiation, selection and monthly administration role is simply unrealistic, uninformed – or callous. Such an approach would lose the economies of market leverage enjoyed by larger employers, but not by solo employees, as well as the economies of administrative scale enjoyed by all health plans, as they interact with a single entity representing thousands of lives, rather than interacting with the thousands of lives on a one-by-one basis. Finally, any redesign approach removing the employer would necessitate the development of new enrollment and administration organizations or bureaucracies, adding an additional cost element to a health system that is already overburdened with “cost elements.”

A degree of change will certainly be experienced by all employers, but this proposal is designed to mitigate the negative effect of that change through streamlined administrative requirements, along with financial subsidies for ‘eligible employers.’ Economically-disadvantaged employers, who are currently unable to afford healthcare coverage (or, for whom, the National Benefit Plan would represent an increase in premium and/or benefit levels over their existing policy), will be eligible for a premium subsidy from the HSA, which is paid on a quarterly basis to the health plan. This subsidy comes in the form of a reduced, payroll-tax premium rate for National Benefit Plan coverage through the Public Health Plan. The payroll-tax premium rate runs from a low of 5% of total payroll to a maximum of 15%, based on an employer’s economic eligibility analysis. (Note: This range includes quartile decimals, e.g., 5.25%, 9.50%, 14.75%, etc.) Objective economic criteria will be used to determine eligible-employer status, such as average wage, net income, cash flow, fixed costs, balance-sheet ratios and other factors. The Financial Assessment Committee is charged with establishing both the eligibility criteria and the percentage-rate structure for eligible employers.

Employers will be able to conduct their own economic eligibility analysis by entering their company’s economic data directly into the HSA website, which will automatically calculate their payroll-tax rate, i.e., 5-15% of total payroll, for a National Benefit Plan policy under the Public Health Plan. This percentage of payroll premium rate an employer pays is subject to change each year, based on their updated economic eligibility analysis. It is important to recognize this “15% cap” by the Public Health Plan, in essence, establishes a premium ceiling for the entire marketplace. This is because Private Health Plans that are unable to offer employers a level of premium that meets or beats the “15% cap” will find their marketshare in rapid decline. During their negotiation process with Private Health Plans, employers will disclose their payroll-tax-rate calculation for Public Health Plan coverage, ensuring a worst-case premium quotation from a Private Health Plan that equates to 15% of total payroll. However, it is certainly not unreasonable to expect that some, if not many employers will pay a few points more in order to secure coverage through their favorite Private Health Plan

For eligible employers with an average wage that is very high or very low when compared to the norm, an outlier clause could be used to set their premium rates for Public Health Plan coverage. For example, a minimum dollar amount of $100 per employee per month could be used as a premium floor, and a maximum dollar amount of $600 per employee per month could be used as a premium ceiling, instead of the 5% and 15% payroll-tax rates. For non-eligible employers, i.e., employers that do not meet the economic criteria, their payroll-tax premium for National Benefit Plan coverage through the Public Health Plan would be at the 15% rate. In all cases, the current federal tax deduction for health insurance premiums paid by the employers would remain intact.

The primary administrative change for those employers new to health insurance coverage is the monthly collection of premium contributions from employees (via payroll deduction) and the remittance of the final premium amount (i.e., employer premium, plus employee contribution) to the health plan. For Private Health Plans, the monthly remittance is transacted by mailed check or electronic funds transfer. The Public Health Plan, however, builds on top of another successful and well-established system, the FICA payroll tax, which has been used by employers for many years to calculate and remit Social Security and Medicare contributions on behalf of the employer and its employees. By adopting this mechanism for both the determination of the amount of premium (i.e., 5-15% of total payroll), and for the administration of its monthly payment to the Public Health Plan, several positive benefits are realized:

a. Payroll-tax premium reporting and remittance methods are already in place;

b. Simple, flat-rate computations are used (i.e., 5-15%), obviating the need for demographic or health-risk adjusters (i.e., medical underwriting);

c. The issue of how (and whether) to cover part-time employees is solved, as eligibility and premium amounts are a function of total payroll, not individual hours worked;

d. Similar to Medicare’s FICA tax, the payroll-tax premium will not be capped, so it is neither regressive (like the Social Security payroll tax), nor progressive (like the federal income tax); and

e. Linking payroll to premium is an appropriate and effective means to ensure healthcare affordability over time, as wage inflation is the best barometer of consumer purchasing power and, ultimately, employer purchasing power in our consumer-based economy; and

f. Linking payroll to premium also provides an additional method or device to help us achieve that “Holy Grail” of economic reform, first noted in the Forward to this handbook, as payroll is usually on par with the inflation rate of the Consumer Price Index (CPI) for All Goods and Services – rather than with the CPI for Medical Services, which has been much higher in recent years.

In summary, universal coverage as designed under this Two-Sector Solution will have an overall positive impact on employers. Employers will be able to budget their healthcare costs year-after-year with a degree of confidence, as the “15% cap" of the Public Health Plan’s premium rate sets a pricing standard and benchmark for all health plans – if not a de facto marketplace maximum. This will allow employers to focus their resources on their core business, rather than on making strategic business decisions each year in reaction to the rising cost of healthcare coverage. With universal coverage for all citizens, employers will enjoy improved levels of employee health, increased levels of employee productivity and creativity, and higher rates of job satisfaction and retention. Their employees will no longer be forced to work for them due to ‘job lock,’ but will choose to work for them by their own preference. Potential employees will no longer be job-locked with another employer, but able to pursue their career aspirations with any employer of their choice. In fact, job lock will quickly become an obsolete term, as workers become secure in the knowledge their healthcare coverage and costs will be identical (or, at least, predictable, in the case of a change in their level of household income), no matter whom their employer, what their job title or where in the country they chose to live. Some employers will even make the decision to offer a richer benefit or cost structure than the National Benefit Plan, in order to attract and retain employees in this new era of low unemployment, which will also be the result of universal coverage due to: a. The growth of high wage jobs in the healthcare and information technology industries, b. The resulting ripple effect on job creation in other industries, c. A healthier, happier, more motivated and mobile workforce, now able to focus their time and energy on improving their standard of living, and d. The expansion of small and start-up businesses, as entrepreneurs are no longer paralyzed by lack of access to affordable coverage. Truly, universal healthcare coverage will benefit employers and employees alike.

Operational Solution #5:
Require all Citizens to secure coverage through their Employer’s health plan or, if unemployed or retired, directly from the Public Health Plan or a (contracting) Private Health Plan, with premium and copayment subsidies based on level of income.

Comment: This solution also responds to Root Cause #1, the failure of the free market to distribute healthcare coverage or services to all citizens. Under the Two-Sector Solution, enrollment in a health insurance plan is both a human right and a legal obligation. All citizens will be required to secure coverage through their employer’s health plan or, if unemployed or retired, directly from the Public Health Plan or through a Contracting Health Plan of their choice. The ultimate point-of-responsibility for securing healthcare coverage will lie with each individual consumer, or head of household in the case of a family. This means no citizen will ever again be a financial burden to others or to themselves as a result of a medical condition. This means every citizen will have access to preventive medicine, early detection services and disease management programs, helping control rising healthcare costs. This means enrollment is accomplished through self-initiative and self-enforcement, further reinforcing the ethic of personal responsibility and self-empowerment under universal coverage. Of course, self-policing is also more cost-efficient than paying a third-party to monitor compliance. As a final check, however, failure to enroll would be penalized by an automatic cut-off of any governmental entitlements, such as tax refunds, Workers’ Compensation checks, Social Security payments and so on.

As previously discussed, securing National Benefit Plan coverage is one of several responsibilities each citizen will have under the Two-Sector Solution. (Note: For dual-income families, each worker would be required to secure coverage under their employer’s health plan, and not as a dependent under their spouse’s health plan. Coverage of children would be subject to the “Birthday Rule,” i.e., children would be covered under the health plan of the parent whose birthday is closest to January 1st.) This program of universal coverage will undoubtedly represent the most sweeping social change to occur in our country since the enactment of Medicare and Medicaid back in 1965. As it touches every American life, family and organization, the Two-Sector Solution must be clear, precise and thorough in laying out the purposes, objectives, responsibilities and accountabilities of its agenda. Each constituency must be fully aware of its individual and organizational role under health system redesign, so they may endeavor to be positive contributors to its success – or, at least, not be surprised by the repercussions if they are not. Accordingly, a “Bill of Healthcare Rights & Responsibilities” (see End Notes for a complete listing) will be an essential guide and cross-check for each constituency and every American, illuminating actions that are supportive and productive, while highlighting those that are not, as we tread the shared pathway as a unified nation, with a unified mission toward the accomplishment of this heroic national objective.

It is critical that all individuals view this program as representing not a ‘hand-out,’ but a ‘hand up’ – providing a secure and solid footing that enables each citizen to focus their skills, talents and efforts not on worrying and strategizing about healthcare bills and medical insurance, but on reaching their full, God-given potential. In other words, the true spirit and intent of this program is for universal coverage to be a ‘springboard,’ rather than a ‘safety-net.’ One descriptor implies upward momentum toward financial independence and an ever-improving lifestyle, while the other implies a downward fall into a web of continued dependency and mediocrity. The mindset of personal growth and social advancement must be facilitated and encouraged through the very structure of the program, by placing as many decisions, opportunities and responsibilities into the hands of each citizen and each family, as possible. Actually, the very concept and purpose of universal coverage must be positioned in the hearts and minds of consumers not as a governmental program, but as one of the many ‘community tools’ available to all Americans in a modern democratic society, including public education, libraries, mass transit, national parks and so forth, as a right and a responsibility of citizenship in the pursuit of life, liberty and happiness.

The primary responsibility of each and every citizen, whether employed or unemployed, young or old, able-bodied or disabled will be to have current, ‘proof-of-coverage’ documentation from their health plan. Employed citizens must contract for their National Benefit Plan coverage (or better) through their employer’s health plan, which may consist of a Private Health Plan options, the employer’s self-insured health plan or the Public Health Plan. Unemployed and retired citizens must contract for their National Benefit Plan coverage directly through a Contracting Health Plan operating in their area, or through the Public Health Plan which operates nationally. Based on household income, many consumers, whether employed, unemployed or retired will be eligible for subsidies in the form of reduced monthly premium contributions and lowered copayment amounts for healthcare products and services. Employed consumers will remit their monthly premium contribution to their employer via payroll deduction (who passes it on to the health plan). Unemployed and retired consumers will remit their monthly premium contribution directly to their health plan. An annual, out-of-pocket maximum for both premium contributions and copayments will be set at 5% of a household’s, annual adjusted income, up to a maximum of $12,500 per year. It will also be the responsibility of both the consumer (employed, unemployed or retired) and the employer, as appropriate, to separately input individual and family data directly into the HSA online database every 6 months, including wages, occupation, employer, marital status, dependent status, contact information and health plan. This redundant input by both consumer and employer (if employed) will provide both a cross-check for accuracy, as well as help instill the ‘rights and responsibilities’ mindset of universal coverage.

For newly unemployed citizens, whether through involuntary or voluntary termination of employment, their responsibility is to maintain their National Benefit Plan coverage through the federal law known as COBRA. Under the Two-Sector Solution, COBRA legislation would remain in effect, but subject to the following changes:

a. Policy: COBRA coverage would be mandatory between jobs, unless the unemployed consumer is added to their spouse’s health plan coverage.

Comment: COBRA provides a ready-made policy and procedure for filling one of the potential gaps in coverage under the employer-based coverage model used by the Two-Sector Solution. The goal of universal coverage, of course, is for healthcare coverage to be continuous and seamless, as well as universal.

b. Policy: COBRA coverage would not be subject to a duration time limit, e.g., 18 months, etc.

Comment: I imagine the rationale for a duration time limit under the original COBRA legislation was political. Under universal coverage, the only rationale for a time limit is the one placed by God on an individual’s lifespan.

c. Policy: COBRA coverage must be provided through a Contracting Health Plan or the Public Health Plan, which would require consumers to switch health plans if covered under a non-contracting Private Health Plan at the time of employment termination.

Comment: This allows for the policy changes listed under e., below, and also maintains consistency in the requirement that non-contracting Private Health Plans are limited to covering employed consumers.

d. Policy: COBRA coverage is limited to a National Benefit Plan policy, in order for the consumer to be eligible for the benefits described under e., below.

Comment: This maintains consistency of the policy that the Healthcare Security Administration does not subsidize policies in excess of the National Benefit Plan.

e. Policy: COBRA participants would pay their current premium and copayment amounts for the first six months of COBRA coverage. After the first six months of COBRA coverage, premium and copayment amounts would decrease by 50%. After the first 12 months of COBRA coverage, premium and copayment amounts would decrease again by 50%, and would remain fixed at that level for the duration of COBRA coverage. These decreases are subject to a limitation of not dropping below the premium and copayment levels determined by the consumer’s, annualized household income.

Comment: This policy attempts to reconcile the conflicting objectives of not placing an undue financial burden on consumers during a period of unemployment (when they should be focused on finding new employment or enhancing their job skills), while not providing a financial incentive for workers to seek or retain unemployment status.

The balance between rights and responsibilities is most critical and clear-cut when balancing the right of universal coverage with the responsibility for appropriate utilization. This means consumers must assume responsibility for following the advice of their healthcare professionals, and not overutilize, underutilize or otherwise abuse products and services. This means adhering to the health improvement and/or disease management plans prescribed by their personal healthcare team. This means becoming informed on their healthcare status and disease condition, as well as those of their dependents. This means paying copayments in a timely manner. To help achieve this degree of dependability and performance, consumers must be educated on the impact of their actions or inactions. Information that empowers and engages consumers will include semi-annual “Consumption, Compliance and Activity Reports” published by the HSA outlining key measures of success for the universal coverage program, based on national, state, local and individual-consumer data. The report will include such information as overall expense versus budget amounts for various disease, provider, demographic, geographic, product and service categories; as well as compliance rate, participation level and cost/benefit data for health improvement programs, disease-specific support groups, e-health services and disease management plans (see End Notes for a sample report). Each consumer will see, in an easily understandable format, how their level of performance compares and ranks with those of their peers. Consumer information will be sorted by age, gender, geography, disease and service/product utilization, which is then encapsulated into an individual, “Personal Contribution Scorecard.” (Note: Other “Scorecards” will be published for each constituency, i.e., employers, health plans, providers, manufacturers, etc., comparing their organizational performance levels with those of their peers.) Consumers will receive or access their Personal Contribution Scorecards online every 6 months, and will be asked to attest to their compliance with the “Consumer Bill of Healthcare Rights & Responsibilities,” as well as complete a short survey instrument on personal healthcare consumption and promotion activities.

Through the instruments of information, self-empowerment, self-responsibility and inter-personal scrutiny, a sense of ownership will develop and grow, causing consumers to take pride in or suffer shame from their personal contribution scores. Friends, family members, co-workers, church family and the like, will all take great interest in sharing and comparing their personal scorecards with one another. All consumers will know how their personal contribution toward universal coverage ranks within their demographic peer groups – but only they will know if that contribution is the result of their best efforts, or otherwise. I believe the vast majority of Americans will be truly inspired by and grateful for this new ‘community tool’ of universal coverage, instilling the desire and motivation to learn, understand and fulfill their rights and responsibilities as healthcare consumers, in order to achieve a Personal Contribution Scorecard (PCS) ranking that represents the best of their God-given ability.

The most valuable personal contribution a consumer can make, however, is also the most intractable. Prevention of acute disease, through lifestyle modification and early detection, is generally accepted as the single, most important and controllable variable in both the reduction of healthcare cost and the enhancement of clinical outcome. Unfortunately, prevention cannot be legislated. In a democracy, there exists no external method, penalty or incentive that will cause behavioral change (e.g., quit smoking, improve diet, increase exercise, seek diagnostic services, wear seatbelts, etc.), unless and until an internal motivator has been activated. Prevention is not a booklet, a class, a discount, a rebate, a surcharge or an x-ray. Prevention is a mindset, a personal discipline, a way of life that must be learned, embraced and practiced. Like the proverbial horse led to water, we can only provide the water of access, information and support, while the horse of personal change is beyond our grasp. We can only reach it indirectly, through the policy of universal coverage, through the enlightenment of education, through the pride of accomplishment, through the shame of peer review or through the prayers and encouragement of a loving family. The challenges of self-motivation and self-discipline will surely persist under a system of full access to preventive healthcare services. Does this mean the program is not worthy of implementation? No, of course not. Whether it is lifestyle behavior, appropriate use of services or the timely remittance of copayments, we should never let the negative actions of a few deter us from making decisions that will be of such great benefit to so many. On the contrary, the essential public nature of healthcare demands that we first do what we know is right, then strive to raise the level of understanding, contribution and accomplishment for all participants.

Operational Solution #6:
Implement a national ‘Health Improvement Tax’ on unhealthy foods and beverages, and on goods, services and processes that cause environmental pollution.

Comment: This solution is also in correction of Root Cause #1, the failure of the free market to distribute healthcare coverage or services to all citizens. The rationale for the Health Improvement Tax (HIT) is based on the scientific evidence that 70-90% of disease is caused by lifestyle choices and environmental contaminants. Because disease, medicine and wellbeing are as much societal issues as they are individual concerns, a national funding strategy based on disease-promotion factors is a fair, equitable and appropriate system. The HIT will be one of six, dedicated revenue sources for universal coverage under the Two-Sector Solution. The other five funding sources are:

1. Premium contributions paid by employers;

2. Premium contributions paid by consumers;

3. Copayments paid by consumers;

4. Continuation of Medicare funding through the FICA payroll tax. (Note: Medicare’s Part B premium and benefit schedule for retirees will be discontinued, as will the need for retirees to purchase supplemental coverage to fill-in the gaps left by Medicare coverage. Instead, retirees will be treated no differently than all other citizens, as they access National Benefit Plan coverage through either the Public Health Plan or a Contracting Health Plan. As with all consumers, premiums and copayments for retirees will be adjusted by household income, meaning that wealthier retirees contribute larger amounts toward their monthly premium and copayment levels than less-wealthy retirees.); and

5. Contributions made by states toward Medicaid will be continued for the purpose of universal coverage, but rolled back to manageable levels, e.g., each state’s 1990 outlay amount, thanks to the new revenues derived from the HIT. To ensure long-term predictability and budgetability, future annual increases for states will be capped at the rate of the CPI for All Goods and Services. Also, states will no longer have responsibility for managing a state Medicaid program, as the single Public Health Plan is managed at the federal level by the Healthcare Security Administration. Therefore, states will enjoy a one-time windfall from the Two-Sector Solution, which can certainly be put to many good uses in each and every state. This will be in stark contrast with the Medicaid-induced financial crisis experienced by most states today. Instead, states will have the new responsibility of funding and administering consumer outreach and enrollment ‘clearinghouse’ programs to identify, monitor and enroll unemployed and retired state residents into the Public Health Plan or into a Contracting Health Plan operating in their state. States, however, will retain the shared responsibility with the federal government for nursing home coverage for eligible state residents.

The HIT will be very broad-based, allowing it to be very low-rate (e.g., the greater of 0.5% or $0.01 per ‘unit’), and still able to generate billions each year due to the extensive consumption of unhealthy foods, along with the pervasive manufacture, processing, importation and distribution of toxic substances in our society. The tax would be levied at the manufacturer, processor, importer or wholesaler level, whenever possible, further minimizing the impact on the consumers’ pocketbook. An additional public benefit may ensue as companies desire to disassociate their products, services, processes, practices or brand image with the stigma of being “HIT,” i.e., subject to this unflattering tax. Of course, the only way to disassociate is to change the product, service, process or practice so that it is in harmony with human health and our ecosystem – a win-win proposition for all. Theoretically, there would be an inverse relationship between a reduction in HIT revenues due to less toxic products, services and communities, and an increase in the state of health of the American consumer – thereby lowering the need for HIT revenues. In addition to funding universal coverage, the HIT will also provide the incremental funding required by the National Institutes of Health, Environmental Protection Agency and Internal Revenue Service to identify, monitor and collect the new tax. After collection, all net proceeds will be under the purview and management of the Healthcare Security Administration. HIT revenues would not be allocated for any other use, as it is crucial for universal coverage to have a continual, stand-alone and lock-box source of funding. Healthcare should never again have to compete with other social or fiscal needs, utilities or programs in the budget-making or legislative processes.

I can hear a skeptical reader remarking to himself, “I wonder when he was going to get to the tax increase!” Well, we are there. Simply put, no other source of funding can meet the challenge of this massive undertaking. It must be borne by society as a whole. The HIT is both equitable and customary, as it targets all consumption of a given product or service on a pro rata basis. Similar tax policies have been used for many years with other consumer products that have a negative impact on society, e.g., alcohol, tobacco and gambling, for which tax revenues were used to fund programs to offset that negative impact. Also, as designed under this Two-Sector Solution, much of the HIT revenues will go toward the creation of high-wage jobs in the healthcare and information technology industries, as universal coverage expands both the need and the financing for these professions. These new jobs will, in turn, increase the funding of general tax revenues. To re-paraphrase for the 21st Century: “What’s good for healthcare is good for our country.” Without a doubt, the HIT is an investment in both our economy and in our people. With 60% of our economy based on the purchase of consumer goods and services, universal coverage will enable many citizens to purchase goods and services they otherwise would not have been able to, due to a lifting or easing of the triple burdens of healthcare expense, ill health and job-lock. Over the medium term, the increase in the level of health, hope, productivity, mobility, happiness and creativity will have a dramatic and positive impact throughout our economy, our culture and our society.

Undoubtedly, the success or failure of the Two-Sector Solution for health system redesign lies in its capacity to secure sufficient and sustainable financing. On this question, I remain wholly optimistic because the end will both justify and enable the means. Just as with Social Security, once our society has experienced the freedom, the confidence and the ‘esprit de community’ engendered by universal coverage, it will never again turn back the clock to the days when fear of disease and injury overshadowed the pursuit of life and legacy. Nothing is more motivating, more intimidating and more precious than our own humanity. Benjamin Franklin’s maxim still holds true to this day: “Health is wealth,” as does its corollary: “Disease is poverty.” These states of wealth and poverty are not just pecuniary in nature, but also describe the outcome of individual creativity, productivity and fulfillment. Whether rich or poor, the consequence of health or disease on our humanity is identical – liberation or subjugation. Our highest priority as humans must be to retain an acceptable degree of health and wellbeing, in order to pursue life to the consummation of our God-given abilities and passions. In our modern era, this requires equal portions of both self-discipline – and medical insurance. The former is something money cannot buy, but can certainly buttress, through access to preventive medicine services, fitness centers, higher education, etc. The latter, of course, is something only money can buy. Therefore, if the affordability of medical care or health insurance becomes an issue in one’s life – it soon becomes the predominate issue. The consequence of universal coverage is very clear: once experienced, it will soon become as natural and as dear to us as our personal freedom – and, like our freedom, it would incite another ‘revolutionary war’ if it were to ever be revoked!

“Why would we ever want to place such ‘forbidden fruit’ in the hands of the masses in the first place?” I can hear our skeptic thinking to himself. I will respond by sharing a thought of my own: “I wonder if a similar question was asked during the drafting of our Constitution, when the ‘forbidden fruit’ was not universal coverage, but the Bill of Rights?” Universal coverage is not some Marxist “opiate of the masses,” but a Jeffersonian “moral duty,” essential for the success of a capitalistic democracy in the 21st Century. Good health, physical, mental and spiritual, is an essential ingredient for productive citizenship, whether to perform the political act of casting an informed vote, or the economic act of contributing to the vibrancy of our nation. Our thoughtful skeptic continues, “OK, I can see the functional benefit of universal coverage, but how do you know if this misnomer, “Health Improvement Tax” can even cover the cost, now, let alone in the future?” To be quite honest, I do not know. Nor, do I believe, could anyone else know with any degree of certainty, before its actual implementation. However, a “quick and dirty” analysis does tell me that a penny added to every candy bar sold, a nickel to every soda pop sold, a dime to every hamburger sold, a quarter to every dry-cleaning order, a dollar to every barrel of pesticide manufactured, a sawbuck for every automobile sold and so on, throughout every industry, would quickly add up to the several billion dollars required of the HIT each year to fill any financing gaps left by the five other funding sources for universal coverage. In any event, when the benefits of universal coverage are added into the financial equation, the impact of the HIT on consumers will make it seem less a penalty and more an investment toward a better life for all. Once enacted, I am confident the self-justifying nature of universal coverage will cause it to be ardently protected and willingly reshaped by the political will of the electorate, as necessary, to ensure and enable its continued success through any and all fiscal challenges into the foreseeable future.



Section One: A Foundation for Universal Coverage – Summation

The landscape of our redesigned healthcare system is beginning to take on form and gather substance:

• We have laid the foundation for universal coverage, accomplished through the combined resources of Private Health Plans and a national Public Health Plan re-engineered for the 21st Century; both sectors working together in the dynamic, competitive environment of our nation’s redesigned health system that encourages new ideas, innovative experiments and a shared commitment to ensure continuous, comprehensive, quality-driven and affordable coverage for all citizens across their lifespan.

• We have created a level playing field for competition between the Public Health Plan and Private Health Plans through: a. Community rating, b. Shared reimbursement schedules for healthcare services and products, c. A common benefit plan, d. A virtual “15% cap” on employer premiums, and e. An identical premium subsidy structure for eligible employers and consumers.

• We have established the shared national goal of: Securing the greatest level of health for the greatest number of citizens.

• We have introduced the strategy of population-based management as the most efficient, effective and equitable means to allocate scarce healthcare resources (see Section Three for further discussion).

• We have established a comprehensive schedule of benefits representing a generally-accepted baseline of coverage for all Americans, called the National Benefit Plan.

• We have officially sanctioned the employer as the primary point-of-coverage for all employed citizens, ensuring a convenient, efficient and dedicated means of enrollment for workers and their families, using market mechanisms and administrative systems that have been in place for many years.

• We have officially sanctioned the individual (or head of household) as the primary point-of-responsibility for securing healthcare coverage, either through their employer or, if unemployed or retired, directly through a Contracting Health Plan or the Public Health Plan.

• We have established healthcare as an essential public utility, and have ensured affordable and equitable access by adjusting the cost of premiums and copayments according to a consumer’s level of household income, or to an employer’s set of financial eligibility factors.

• We have established a clear and comprehensive set of rights, responsibilities and roles for each constituency within the redesigned health system, including consumers, employers, providers, manufacturers, health plans and regulators, in a manner that aligns individual incentives with national objectives. Semi-annual, “Consumption, Compliance and Activity Reports” provide each constituency and every consumer with a detailed inventory and ranking of their comparative level of contribution toward the success of universal coverage (i.e., “scorecard).

• We have implemented a stable, multiple-source and dedicated financing system for universal coverage, with linkage to environmental and lifestyle factors that contribute to disease and ill health.

• We have established monetary targets for the three, primary cost centers driving healthcare inflation, i.e., the medical-industrial complex of insurers, manufacturers and providers: a. Health plans, in the form of the “15% cap” on premiums, b. Participating healthcare providers, in the form of the HSA fee schedule, and c. Drug and medical device manufacturers, in the form of the HSA reimbursement schedule. These financial targets will help achieve three, mission-critical objectives: 1) Allow our federal government to have a reasonable, democratic and market-based means to manage soaring healthcare costs, 2) Establish clear, obtainable and socially-responsive financial goals for health plans, providers and manufacturers to work toward, that are within the confines of our national healthcare budget, and 3) Incentivize health plans, providers and manufacturers to weed-out inefficiency, waste, error, duplication and extravagance, in order to optimize each of our country’s, finite healthcare dollars. These aggressive fiscal goals are based on the premise that private industry works best when it is provided with understandable objectives, quantifiable challenges and a socially-justified rationale – as was the case during World War II when industry successfully underwent enormous redesign efforts, in response to requests from the federal government. And, yes, the analogy of war to healthcare is appropriate, as I consider healthcare to be a co-equal member in the “Triple Crown” of American prosperity for the 21st Century: Healthcare, education and freedom. Truly, redesign of our nation’s healthcare system is as consequential to our nation as is war. (Note: I am substituting “freedom” for “income” in this ultimate hierarchy for American prosperity, as true parity in education, healthcare and personal freedom I believe would tend to aggregate income distribution toward the center of a bell-shaped curve.)

Let me try to briefly summarize the Pros and Cons from this initial phase of our health system redesign effort:

Pros
• All citizens have National Benefit Plan coverage from birth to death.

• The National Benefit Plan covers all services that cost-effectively provide for a generally-accepted level of good health.

• Healthcare resources are optimized through a population-based, resource management strategy.

• The cost of premiums and copayments for consumers is varied based on level of household income.

• The employer-based coverage model is retained.

• The premium for employers is adjusted according to economic factors – with a maximum premium level for all employers under a National Benefit Plan policy equating to 15% of total payroll.

• Private-sector healthcare providers, manufacturers and insurers are retained.

• Competitive dynamics in the healthcare industry are stimulated through the entrée of the Public Health Plan into the commercial marketplace.

• The practice of “medical underwriting” is replaced with “community rating.”

• A dedicated and equitable funding source is implemented that is very broad in scope to minimize its financial impact on the end consumer.

• A structural and informational foundation is set for the growth of a new societal ethic that holds every consumer and each constituency “socially accountable” for playing a constructive role in the overall success of universal coverage.

Cons (Note: To be honest, I am playing the devil’s advocate, here, as I do not identify any of the following as being necessarily negative – it all depends on their execution and the end result.)

• The federal government assumes a larger role in delivering healthcare services.

• The federal government assumes a larger role in regulating the health insurance marketplace.

• Private Health Plans are required to compete on the same economic terms as the Public Health Plan.

• Healthcare providers and manufacturers are required to provide services on economic terms established by the federal government.

• Employers are required to purchase healthcare coverage for their employees.

• Citizens are required to purchase healthcare coverage for themselves and their dependents.

• A new, national tax structure is implemented.

Hmmm, if the Cons were read on their own and out of context – they would make this proposal appear rather harsh! Hopefully, though, I have done an adequate job of explaining how these various operational solutions function within the overall framework of our comprehensively-redesigned health system. Towards that end, let us now acquire a more vivid understanding of how the Two-Sector Solution will impact different segments of our society, by imagining a few realistic and common scenarios. At the close of our initial redesign phase, we are ready to visit 5 different constituencies or population groups under our 21st Century health system, to observe its consequence from the following, socioeconomic points-of-view: I. A lower, middle class consumer, II. An upper, middle class consumer, III. A small business owner, IV. A regional Contracting Health Plan, and V. A multinational corporation.

I. Scenario: Julie, an employed, single mother of three young boys (with no child support) works as an administrative assistant for a small trucking company in Portland, Oregon. On her first day of employment one year ago, she transferred her National Benefit Plan coverage from her COBRA policy to coverage under her new employer’s policy. As her new job raised her annual household income, Julie’s premium contribution and copayment amounts were increased, accordingly. All other aspects of her benefit structure remained the same. However, she was required to change physicians and hospitals, as the regional Private Health Plan offered through her new employer only contracted with one-half of the physicians and hospitals in the metropolitan area. (Note: Over 90% of the providers in Portland are participating in the universal coverage program, but this health plan chose to limit the number of providers it contracted with, in order to negotiate an even more favorable provider compensation arrangement than is available through the HSA fee schedule.) Julie now earns an annual, adjusted household income of $22,000.00 and has a monthly health insurance premium deducted from her paycheck in the amount of $50.00. Her copayments include: $15 for physician office visits, $5/$10 for generic/brand prescription drugs, $50 for emergency room or outpatient hospital visits, and $100/day for inpatient hospital services. Her annual, out-of-pocket maximum for both premium contributions and copayments is $1100.00. (Note: The premium contribution amount and copayment levels are set by the Financial Assessment Committee, based on adjusted annual income, with family size added into the calculation for the premium. As outlined above, the annual out-of-pocket maximum is set at 5% of annual adjusted income, up to a maximum of $12,500 per year.) Julie’s family averages ten, physician office visits per year, two outpatient hospital episodes per year and two brand-name drugs per month, for a total annual expenditure of: $490.00. When added to her annual premium contribution amount of $600, her total healthcare expense comes to $1090, just below her out-of-pocket maximum. Of course, in any year where a family member needs inpatient hospital care, she would reach her out-of-pocket maximum. Sounds like things are going pretty well for Julie – you would agree? However, for us to get a more complete financial picture of our single mother’s life, we need to analyze her other living expenses. She rents a small, three bedroom, one and one-half bathroom house in a safe, but modest neighborhood for $800/month; has a $175/month payment for her fuel-efficient car; spends an average of $250/month on utilities and gasoline; and $450/month for a well-planned food budget for herself and her three growing boys (Note: She was forced to discontinue their once-a-month trip to a fast-food restaurant, in order to cover the modest, but across-the-board price increases that resulted from the Health Improvement Tax). When added to the $90.83 she spends on healthcare, Julie’s total monthly outlay is: $1765.83 versus a monthly take-home pay of: $1833.33, leaving $67.50/month for “extras,” like clothing, recreation, college tuition, retirement and savings. Not exactly the “American Dream.” Unfortunately, this financial picture is all too common in our country today. Now, would anyone say the Two-Sector Solution is charging our prudent, mother/administrative assistant too little for her family’s healthcare needs?

Epilogue: With the security of universal coverage, Julie decided to pursue her dream job of being a news reporter for a local TV station. She embarked on her new career by starting out as an administrative assistant for a local TV station, earning a similar level of income as with the trucking firm. Within a year, she was able to move into the news production department. A year later, Julie landed her first, on-camera position reporting on local-interest stories, earning a significant increase in annual income, as well.

Comment: A beneficial result for both workers and employers under universal coverage is the elimination of the need for individuals to make ‘defensive’ career or life decisions – decisions driven by the fear of losing healthcare coverage or the uncertainty of benefit plan changes, rather than by the desire to pursue personal ambitions. Instead, life-improvement decisions can be made solely on the basis of how to best apply one’s skills, talents or desires to achieve individual and family success and happiness – the authentic “American Dream.”

II. Scenario: Now, let’s take a look at Julie’s employer, Don, the owner of the small trucking firm in Portland, Oregon. Prior to the enactment of universal coverage, Don was unable to afford healthcare coverage for his 14 employees, but attempted to maintain wages above the industry average, so they could purchase individual coverage on their own – if they could afford it and, of course, if no family member had any pre-existing conditions. The wages for his 14 employees, plus the salary for him and his wife, averaged a total annual payroll of $650,000.00. When the Two-Sector Solution was enacted, Don conducted his initial economic eligibility analysis at the HSA website and was relieved to find that his company was eligible for a 5.75% payroll tax premium rate, which would cost him $3115 per month, significantly less than the 15% maximum rate of $8125 per month. This additional monthly outlay certainly impacted the bottom line, i.e., his personal wealth, but he felt very gratified to finally be able to afford quality healthcare coverage for his valued employees. Another impact on his business was the Health Improvement Tax (HIT). As his fleet of seven trucks all operated on petroleum, i.e., diesel fuel, his company was also subject to a modest “HIT.” He also discovered that most of the commodities he used on a daily basis in his business, such as diesel fuel and engine parts, were also “HIT” with a small, one-time price increase. However, he was pleased to see that a minor adjustment in his own charge structure would cover these incremental costs and, according to his sales manager, without generating any negative reaction from his clientele in this competitive industry. Don had considered, but decided against attempting to include the new expense of health insurance within his revised pricing table, as he and his sales manager felt his larger competitors would be all to eager to take away his customer base.

III. Scenario: Suzanne is a marketing executive for a large, consumer electronics manufacturer based in Cincinnati, Ohio. Prior to passage of the Two-Sector Solution, her employer provided all employees with coverage through a national Private Health Plan that was fully-paid for single employees and 50%-paid for employees with a family. This coverage was comparable to the National Benefit Plan level of benefits, and cost Suzanne a monthly payroll deduction of $425 for family coverage (husband and one child). This coverage provided an annual, out-of-pocket maximum for families (i.e., for deductibles, copayments and coinsurance) of $3500. Therefore, Suzanne had a worst-case scenario for total health expenses (i.e., premium and benefit cost-sharing) in any one calendar year of $8600. This amount was well within the ‘tolerance level’ of her annual, adjusted household income of $185,000. Subsequent to passage of the Two-Sector Solution, Suzanne’s employer conducted an economic eligibility analysis and found, to no surprise to the human resources staff, they would not be eligible for a premium subsidy, so their payroll-tax premium rate under the Public Health Plan would be at the 15% maximum level. However, this premium rate turned out to be somewhat less than their current premium through a Private Health Plan for a level of coverage that only required minor changes to be in full compliance with the National Benefit Plan (namely, the changing of deductibles and coinsurance into coapyments that were, actuarially, very similar, as well as the addition of new preventive medicine, health promotion, disease management and e-health programs). Following several, intense negotiation sessions, the Private Health Plan reduced their current premiums by, approximately, 5%, which gave the electronics manufacturer a new premium amount that was equivalent to a 14.35% payroll-tax rate. The financial impact on Suzanne was twofold: Her monthly payroll deduction was reduced to $415, while her annual, out-of-pocket maximum for total health expenses (i.e., premiums and copayments) was increased to $9250 (5% of $185,000). Overall, Suzanne and her family were delighted with the benefit plan changes, as they had long intended to consult a nutritionist about improving their diets, and were also relieved to calculate that in a typical healthcare year, their out-of-pocket expenses would be about the same. Suzanne was also pleased to see the Health Improvement Tax had, essentially, no financial impact on her family’s budget, nor would it represent any marketing challenges for the consumer electronic product line for which she was responsible.

IV. Scenario: CarePoint Health Plan was one of many ‘provider-sponsored’ insurance companies that came into existence following the passage of the Two-Sector Solution. CarePoint is owned and operated by the local hospital and physicians in North Platte, Nebraska, who believed the enactment of universal coverage made it financially advantageous for healthcare providers to enter the Contracting Health Plan industry for several reasons:

a. The ‘guaranteed funding’ resulting from healthcare coverage for all citizens, which ensured a stable and steady revenue source;

b. The ability to design their business plan to achieve the required pricing target for a known, competitive premium level, i.e., 15% of total payroll or less for a given employer-client.

c. The reduction in administrative burden for both healthcare providers and health plans under the re-engineered Healthcare Security Administration, which significantly decreased the operating capital required of a start-up health plan;

d. As healthcare providers, they knew they were in a prime position to effectively, efficiently and expertly manage both the health risk and the healthcare delivery of services to a covered population of employed, unemployed and retired consumers, most of whom would already be their existing patients. Their population-based management strategy was designed to focus on consumer education and outreach, promotion of healthy lifestyle behaviors, careful monitoring and management of members with chronic disease, and early intervention of those with newly diagnosed disease. For non-clinical operations, which were not part of their core competencies as healthcare providers, including claims adjudication, enrollment processing and information technology services, they decided to outsource to a national Private Health Plan, who agreed not to compete against them within their regional marketplace; and

e. Their ability to adopt a more competitive compensation model than the HSA fee schedule, which they knew would be used by all of their health plan competitors.

Epilogue: Operating within the rural area of two, adjoining states, CarePoint became the #2 Contracting Health Plan in their service area after 3 years of operation. They enjoyed a 60/40 split between commercial clients (i.e., employers) and non-commercial members (i.e., the unemployed and retirees). Two other provider-sponsored health plans had also launched start-up programs at about the same time that competed in portions of CarePoint’s market area, and three other, regional health plans that had been operating in their region for many years prior to the enactment of the Two-Sector Solution were acquired by larger, national health plans, while two others had simply gone out of business. Carepoint became a charter member of the “Provider HealthPlan Association,” a trade organization representing the many new provider-owned health plans that became operational within their local markets following the passage of universal coverage.

Comment: In general, I foresee a very positive outcome for those Private Health Plans that learn to operate and excel in this newly redesigned marketplace, whether provider-owned, investor-owned or otherwise. The Public Health Plan, while sturdy, dependable and efficient, cannot incorporate the small innovations and customer “delights,” as can Private Health Plans, particularly at the local or regional level. Well-managed, creative-minded and customer-focused Private Health Plans can develop brand images and product features that uniquely respond to the needs and imaginations of customer groups in different markets. Also, due in large part to the vastly expanded customer base resulting from universal coverage, the accessibility of the HSA fee schedules and a streamlining of health plan regulation, I foresee a decentralization of Private Health Plans, whereby local entrepreneurs launch small-scale health plans, possibly in partnership with community physicians and hospitals, that focus all their attention and resources on local needs, expectations and conditions – thereby capturing significant marketshare. In response, national health plans would expand their outsourcing lines of business, by leveraging their administrative capacities, i.e., electronic transaction processing, information technologies, consumer nurse-support lines, reinsurance products, actuarial and consultation services, etc., as they re-position their organizations to become a supplier of services that operate best under centralized, large-scale economies. Overall, I predict a very robust health insurance marketplace after the new competitive dynamics have been brought into play and the polarities between the public and private sectors produce their desired effects – as they operate side-by-side in the same markets, working toward the same objectives and playing under the same standards and conditions. Under such a stimulating environment, I have little doubt that the full promise and hope envisioned by the Two-Sector Solution would soon be achieved.

V. Scenario: For our final constituency, a multinational corporation, I will attempt to surmise the effect of the Two-Sector Solution on an actual firm: General Motors Corporation. This prognosis is solely based on information derived from their website, www.gm.com. Recently, GM announced the layoff of over 28,000 Americans due to lowered sales and rising overhead costs, costs which in large part were the result of increasing employee healthcare expenses. Under this proposal I presume General Motors, even during this period of financial difficulty, would not meet the eligibility criteria for a premium subsidy. Therefore, they would be subject to the marketplace cap of 15% of total payroll for National Benefit Plan coverage purchased through the Public Health Plan. Of course, as previously discussed, national Private Health Plans would certainly meet or beat the “15% cap,” in order to acquire or retain such an important client. From the GM website, I gleaned the following company statistics for its USA operations during 2002: a. An average of $1500 is added to each car sold to cover employee healthcare costs, b. An average of $3800 spent on healthcare per covered member per year (‘member’ includes employees and their covered dependents), c. A workforce of 198,000, and d. A total payroll of $9.1 billion. From this information, I will assume an average contract size of 2.35 multiplied by 198,000 employees bringing their total covered membership (i.e., employees and covered family members) to 465,300 lives during that year. Multiplying $3800 by 465,300 we find the total USA medical bill for GM in 2002 was $1.768 billion. Dividing $1.768 billion by $9.1 billion we find GM spent 19.4% of total payroll on healthcare in 2002. Therefore, under the Two-Sector Solution they could cap that percentage at 15%, or $1.365 billion, netting an annual savings of $403 million. While this would make a large dent on their cost side, certainly healthcare costs, alone, cannot be blamed for lackluster sales. Maybe the impact of the HIT tax on GM’s petroleum-based product line, which would average $100 or more per vehicle sold, would provide a financial incentive for expanded research into engines that utilize less polluting and more renewable sources of energy. Such research may very well result in products that achieve an increase in consumer demand, as well as cause a decrease in the level of their HIT tax. The main point from this cursory analysis, however, is that the Two-Sector Solution does not appear to place a great or an inequitable burden on a large employers like General Motors Corporation.

From our brief and, yes, unscientific imagining of the effect the initial phase of our Two-Sector Solution will have on five different constituencies, I do not foresee major social upheavals or insurmountable fiscal challenges to be the likely outcome. In any event, I am confident that whatever difficulty arises, it can be readily absorbed or effectively managed by a given constituency, industry, sector – or by society as a whole. Surely, the advent of universal coverage will result in changes that are felt by many, if not by most Americans. Changes that will necessitate a shift in priorities, a rearrangement of expenditures or a realignment of strategies – but, priorities, expenditures and strategies that will be equally impacted in a positive way by the many beneficial aspects of universal coverage. In essence and in truth, the blessings will outweigh the adversities.

However, let me again play devils’ advocate for our thoughtful skeptic by focusing on three, “red flag” issues I suspect are burning away in his imagination: Regulation, price-fixing and bureaucracy. In the Forward to this handbook, I described the healthcare industry as, “largely unregulated.” I say this because, other than state and federal benefit mandates for non-ERISA insurers, licensure and certification requirements for providers, safety and efficacy standards for manufacturers, and procedural regulations for all entities operating within the Medicare program, the industry has not had its innovation, acquisition, merger or profit-making capacities inhibited by burdensome levels of regulation. This can be plainly seen in the manifold product designs that have surfaced in the managed care arena over the past dozen years, from PPOs, to EPOS, to MSAs, to HSAs, to Open Access HMOs and now to Consumer-Directed Plans (which, by the way, I liken to a good-intentioned, but ineffectual rearrangement of those proverbial deck chairs aboard the Titanic). This is in addition to the many health plan acquisitions, mergers, start-ups and closures that have been too numerous to mention.

The provider arena has been equally innovative and active as evidenced in the development of outpatient services, specialty hospitals and new ownership models, as well as in the many mergers and acquisitions occurring among physician groups, hospital systems and investor-organizations. And, of course, growth and advancement in health science and medical technology during this same period has never been surpassed. However, I do agree that many of Medicare’s procedural requirements are overdone, anti-productive and deserving of modification or repeal. The Two-Sector Solution calls for the streamlining and “goaltending” of all regulation so that purpose is placed before process, to ensure that each and every regulatory policy and procedure has a direct or in-line connection to the improvement of consumer outcome or cost control. I suppose we could delve further into the political philosophy behind governmental regulation and whether it is a help or hindrance to society, but I am confident that reason will prevail amongst the majority of readers of this handbook, as they concur that a comprehensive review of all Healthcare Security Administration regulation by multi-constituency committees with the mission of pruning out any and all regulation that is not purpose-driven is a fair, appropriate and adequate means to secure both competence and productivity in this industry of finite resources and infinite consequence. For an industry that holds the very lives of our populace in its caring and expert hands each and every day, an appropriate degree of government regulation and social accountability is necessary and proper, as it benefits provider, consumer and purchaser, alike.

Some readers will refer to the negotiated provider fee schedules used by both governmental and commercial insurers as ‘price fixing,’ but they actually represent a common contractual arrangement between buyers and sellers within all industries. Indeed, some of the worst abuses and wastefulness of governmental purchasing power inured not to the detriment of private industry, but to the pocketbooks of taxpayers, e.g., the exorbitant prices paid by the Pentagon for such common articles as hammers, toilet seats, etc., first uncovered in the 1980’s, and still occurring in many government purchasing offices today. However, I do not disagree the term “negotiated” casts a very different light when one of the parties in the transaction is the federal government. Without a doubt, under the Two-Sector Solution, the negotiation process is intended to be one-sided – but with that “one side” being society as a whole, in order to achieve our shared national goal of universal coverage. Provider and manufacturer fees must be carefully calibrated, albeit on a take-it-or-leave-it basis, to ensure both a modest return on investment and a cost-effective expenditure for our limited, national healthcare budget. The 21st Century health system must be designed to reward only those providers and manufacturers who are willing and able to weed-out inefficiency, waste, error, duplication and extravagance, in order to optimize each of our country’s, finite healthcare dollars. (Note: Under Guiding Principle #5, a new, provider compensation methodology will be introduced that will enhance the potential for gain or loss, depending on the provider’s organizational ability to deliver quality-driven, population-based healthcare services.) It is indeed ironic, however, that under our present state of affairs, the primary party that is ‘injured’ by the many negotiated fee schedules used throughout the healthcare industry are the uninsured – as they are the last remaining payers of the full billed charge.

Some readers will claim that requiring Private Health Plans to accept the identical employer and consumer premium subsidy payments that are used to fund the Public Health Plan (i.e., the “15%”[3] premium cap) is equivalent to price fixing. I will not argue with that assessment. But, I will counter-argue that ‘health-system fixing’ is even more important. Securing universal coverage for all citizens can only be accomplished through the agency of efficiently operated health plans. It is quite clear the free market has failed in this endeavor. The Public Health Plan, as an ‘artificial’ catalyst in the public marketplace will establish aggressive, quantifiable and comparative measures for health plan performance. This performance baseline will set new benchmarks for delivering evidence-based, quality-driven healthcare services to all citizens within the confines of our national healthcare budget. Private Health Plans that are able to operate in compliance with those standards and within the boundaries of that budget will be successful, respected and worthy “community partners” within our 21st Century health system. Private Health Plans that are unable to operate within these new performance measures will reveal their unworthiness to be contributing, community partners in this great national undertaking. This issue of an “efficient corporation” versus an “inefficient corporation” is particularly relevant and urgent in the healthcare industry today, an industry underscored by unlimited need competing for limited resources. This state of corporate affairs raises several interesting and pertinent questions for us to ponder:

(3) I place quotation marks around “15%” in its context as a premium cap, so that readers do not confuse this percentage with an annual premium rate increase, but recall that it refers to the percentage of total payroll.


Question: “What is it we wish to accomplish as a nation: prop-up inefficient corporations – or ensure universal healthcare security for every citizen?”

Opinion: I trust this question is rhetorical and requires no answer. Even so, it is an important question to bear in mind – lest we ever forget or stray away from the proper answer as we are carried away in the heat of the healthcare debate. This question is also valuable in that it opens the door to a series of even more fundamental questions.


Question: “What is the appropriate role of the corporation within a modern, democratic society founded upon Judeo-Christian values?”

Opinion: The appropriate role of a corporation is to produce goods and services that meet the needs and expectations of customers, and in a manner that improves not just the owners, but the workers, the consumers, the community, the ecology and the society in which it has been granted a license to operate. Unfortunately, we have had the great misfortune in recent years to experience the inappropriate role played by some major corporations, which should not have surprised us when we have allowed our blind faith in corporate largesse to triumph over our civic duty to ensure public accountability. Corporate accountability in America today is clearly lacking, as it has required either a scandalous degree of malfeasance or the self-motivation of individual whistleblowers or states’ attorneys general to bring wrongful corporate actions or omissions to the light of day – and into a court of law. For an essential public utility, corporate accountability in the healthcare industry is even more crucial – not just to prevent wrongdoing, but to promote “rightdoing.” Voters, legislators and regulators must pro-actively establish well-defined parameters for both quality and cost, within which providers, manufacturers and insurers must compete, innovate and deliver life-sustaining goods and services to American consumers. This is the appropriate role of a healthcare corporation within our modern, democratic society that was founded upon Judeo-Christian values – a role the Two-Sector Solution has been designed to promote.

Question: “Should a corporation have the same rights and responsibilities as an individual?”

Opinion: Of course not. The purpose of society is to safeguard the ability of individuals – not corporations – to pursue “life, liberty and happiness.” We must never lose sight of this underlying fact: Corporations are a means to an end, rather than an end unto themselves. Corporations are “organizational servants” that exist to accomplish our desires in a manner and scope that individuals cannot accomplish on their own. As a “means” or as a “servant,” corporations should be held accountable to a separate “social contract,” whereby they are granted a separate set of rights, including the right to exist, in exchange for a separate set of responsibilities, including the responsibility to do no harm. Of course, these rights and responsibilities are established through the political will of the electorate – an electorate that evolves and matures over time, so that corporate rights and responsibilities will evolve and mature over time, as well. For the healthcare industry, I believe the present political will has evolved and matured to the point where it is ready for the establishment of a “regulated marketplace,” a marketplace where both sectors, public and private, are utilized to their fullest extent, a marketplace where a public health plan may compete under the same terms and conditions with private health plans, a marketplace where operational standards, outcome measures and budgetary targets are set for all players, a marketplace where each healthcare dollar and every clinical outcome is optimized to the current level of medical and administrative science – in sum, a marketplace that has the vision, the strategy and the resolve to secure the greatest level of health for the greatest number of citizens.

Question: “Is it fair for a public corporation to compete with private corporations?”

Opinion: I can best answer that with another question: “Is it fair for so many Americans to be without healthcare coverage?” The answer to both of these worthy questions comes down to a moral judgment: Which “fairness” is more important to you? I would be delighted to be living in an America where every citizen had access to affordable, comprehensive and quality healthcare coverage that was engineered, implemented and financed by the private sector working through the agency of a free market. Maybe that could happen some day, but that sure is not the case today. Our present system of competition between private sector corporations operating within a minimally-regulated marketplace has been a failure for many American citizens – and the magnitude of that failure is growing every day. Therefore, something needs to be done – but only if we can collectively hear the call to “Go and do likewise,” by helping the neighbors lying at our feet. For me, this strategy of “inter-sector” competition, along with the other recommendations of the Two-Sector Solution, certainly appears to be a worthy experiment, in response to such a worthy calling.

For our final self-inquiry, I believe it is both interesting and fair to slightly re-shape the previous question and then re-ask it:

Question: “Is it fair for private insurance corporations to compete with a public insurance corporation when it comes to the essential public utility of healthcare?”

Opinion: If health insurance is a commodity that is only differentiated by price, then that would be a very legitimate question. If this were the case, taxpayers, purchasers and consumers would be best served by a “single payer” model, whereby a single, health insurance organization (public or private) could leverage the entire market, i.e., optimize the law of large numbers required in the insurance business, in order to achieve the lowest possible pricing structure. However, I am not convinced that health insurance is a commodity that is only differentiated by price. Having personally experienced many insurance companies as a consumer, each one definitely had their own distinct “corporate personality,” which shaped the features, benefits and drawbacks of their entire product line. Multiple health plans operating in a competitive environment are subject to financial incentives and marketplace pressures that compel them to experiment, innovate and take risks, resulting in the continuous improvement of program design, operational efficiencies and clinical outcomes. A single health plan may start out strong, but its financial effectiveness and social responsiveness would eventually diminish due to a lack of peer stimulation and intellectual “collisions” that can only occur within a competitive environment. Therefore, I do not believe a single-payer model would be in our best interest over the long term. Healthcare is too important to place all of our eggs into a single basket – or into a single sector. Instead of fearing Public Health Plan competition, Private Health Plans should welcome it and “ride the wave” of health system redesign by striving to differentiate their product, not through price alone (due to the limitations of the “15% cap”), but primarily through innovation, quality improvement and continuously building a better product.

Now, back to our third and final “red flag”: a new federal bureaucracy. Yes, a new federal bureaucracy will be created in the form of the Healthcare Security Administration, with its management of the Public Health Plan, regulation of Private Health Plans, administration of the Benefit and Finance Committees, and management of HIT revenues. However, other than for a one-time transitional expense, this transformation of a current bureaucracy (i.e., the Centers for Medicare and Medicaid Services) into the new, independent department of the HSA should be cost neutral. This will be due in large part to the cost-avoidance savings derived from the streamlining of Medicare’s regulatory requirements for providers and health plans (which reduces expense for providers, health plans and the HSA). Therefore, rather than a “new” bureaucracy, the HSA represents a “replacement” bureaucracy. Of course, the Public Health Plan will have more beneficiaries (i.e., members) than current Medicare, due to the addition of consumers transferring from Medicaid and other federal healthcare programs (less those choosing to secure coverage through a Contracting Health Plan), plus new consumers derived from the ranks of the unemployed, as well as the addition of commercial members derived from the employer marketplace. This expanded membership is good and necessary for the spread of insurance risk, and represents incremental cost, rather than new cost.

As I bring Section One to a close, let me emphasize the design and intent of the Two-Sector Solution is not to engender dependency, or even guarantee adequacy – but to secure equality of opportunity. To an extent, I agree with those who assert that governmental safety nets can do more harm than good when they create dependency, which drags down society as a whole. However, on the other end of the spectrum, “pure” capitalism (i.e., each man for himself) also results in dependency. Let me explain using the analogy of a river. The flow of a river over time naturally causes larger and smaller deposits to build up along its banks from the unequal silting of earthly sediments carried along in its stream. The eventual result for all rivers is a slower, meandering course, which is best seen when its zigzag pattern is viewed from above. A similar phenomenon occurs under capitalism. An unequal “silting” of financial resources occurs over time causing larger and smaller deposits of wealth to build up within different segments of society, eventually resulting in a slower, meandering course for society as a whole. This is due to the creation of a structural underclass of consumers, i.e., consumers who suffer from a permanent disparity in opportunity – due to a permanent disparity in wealth. The greater the “purity” of capitalism (i.e., no checks and balances on either wealth accumulation or on poverty), the greater the resulting disparity in opportunity. This phenomenon is also best seen when viewed from “above,” i.e., from a statistical perspective. For me, the definitive test of whether or not a given “degree” of capitalism is achieving optimal performance for our society is not to look at the extremes, i.e., the number of Americans living in poverty or the number of Americans with assets over a million dollars – but to look at the percentage of our population living in the middle.

The express goal of our economy should not be to increase the size of the upper class, as it often grows at the expense of lower classes, nor should it be to decrease the size of the lower class, as it also grows at the expense of the other classes. Instead, the primary goal of our economy should be to grow the size of the middle class(4). The middle class is unique in its ability to produce and consume resources in a manner and to an extent that does not detract from the other classes, and is still able to share, through taxation, a portion of its wealth for the benefit of society. Lacking more precise terminology, let me call this approach “modified capitalism.” Modified capitalism does not mean we place roadblocks in front of those who aspire to be in the upper class, nor do we spend the way out for those in the lower class – the science of distribution necessitates that we have both ends of the bell curve in our society. Instead, modified capitalism means that fiscal and monetary policies of our government are measured, evaluated and promoted based on the sole criterion of their ability to grow the percentage of Americans living in the middle class. Using this social measure, I believe we will find that policies equalizing opportunity, particularly in healthcare, education and freedom, will also have the greatest impact on growing the middle class – and on advancing our nation as a whole.

(4) I define “middle class” as the financial ability to purchase a home within 30 miles of the workplace, that is priced within three standard deviations above or below the median price of homes for that community and, using a 30-year mortgage rate, requires a monthly payment for principle, interest, taxes and insurance that represents less that 25% of annual household income.


The beauty, the relevance and the significance of healthcare, education and freedom is their transcendence above discussions and analyses of social class, governmental policy and economic philosophy. Instead, they represent the circulatory system that brings life to the very heart of our social existence. In the 21st Century, like it or not, healthcare is as fundamental to our human condition, to our personal growth and to our social progress as are education and freedom. What can a person accomplish without their health? Can one’s full potential be realized without education? How far will one’s abilities get them without the personal freedoms to create, to explore and to express? Equality of opportunity is a hollow dream without these three vital resources. And each comes with a large, social price-tag: Freedom requires the expense of a military, a constabulary and a judiciary system; education requires an elementary, secondary and university school system; and healthcare requires a network of providers, researchers and manufacturers, along with an insurance distribution mechanism. In all cases it is efficient, effective and right for these essential public utilities of a modern democratic civilization to be financed in large part using public funds. They are simply too precious to leave to the vagaries of philanthropy, volunteerism or market forces. To share the wisdom of Abraham Lincoln: “We should do for ourselves collectively through our government the things the market system does not do at all or as well.”



Section Two: A Foundation for Affordability

This Section Is Under Construction


Sample Contents:

Guiding Principle #4
The Federal Government should play a proactive role to help optimize market forces, resource allocation and desired outcomes in the healthcare industry.


Operational Solutions:
1) Require all drug and device manufacturers to incorporate a “Bio-Economic Impact Analysis” in the FDA’s new technology review process, analyzing a product’s comparative efficacy, safety and retail cost profile with other products in its class to determine its overall “value quotient.”

a. The value-quotient of a drug or device should be taken under consideration in determining its appropriate placement within a clinical practice guideline(s) (see Section #3), e.g., first-line therapy, second-line therapy, etc.

b. The National Benefit Plan should include, exclude or apply significant consumer cost-sharing (e.g., 50% copayment) to new technology, based on its value quotient.

2) Require all drug manufacturers and biomedical researchers (public and private) to submit all non-proprietary research findings to a new “National Biomedical Research Library” managed by the National Institutes of Health and open to all researchers, in order to decrease research duplication and increase research synergy through shared knowledge. (Note: “Non-proprietary” to be defined by the NIH and FDA.)

3) Limit tax deductibility of total marketing expenses of a drug manufacturer to 25% of its research and development expenditure. Ban the use of direct-to-consumer prescription drug advertising, marketing rebates and trade names.

a. A prescription drug's features and benefits should be a scientific, rather than a marketing communication. A drug's financial success should be based on therapeutic efficacy, not marketing prowess, in order to optimize our national healthcare budget. Federal tax and regulatory policy should be used to encourage drug (and medical device) manufacturers to work with healthcare provider organizations to establish institutional avenues of information exchange, especially the clinical guideline development process (see Section #3). Multiple brand or trade names are a source of confusion and clinical error. The single generic name should be the sole nomenclature used by healthcare providers. Branding could be accomplished by indicating the manufacturer name (i.e., the original discoverer) along side the generic name.

4) Create a new category of provider, called the “Primary Care Technician” (PCT) that is an independent practitioner and nationally certified (i.e., subject to a standardized and reciprocal state licensure process). The PCT would be authorized to provide a defined set of primary care, prescription drug and hospital-based services. (Note: A specific list of symptoms, conditions and services included in the PCTs scope of authority would be provided to consumers.) Establish a unique set of reimbursement (CPT-4) procedures codes and clinical practice guidelines for the PCT. Provide federal start-up loans to PCTs for education and office set-up costs. Many primary care services can be effectively and safely provided by a lower-cost provider, which would help optimize our national healthcare budget.

5) Create a three-tier benefit structure for the Public Health Plan based on quality of provider performance. “First Tier” providers are those with the highest scores on their “National Performance Measurement Set” (see Section #3). Consumers pay the lowest copayment when accessing these providers. “Second Tier” providers are those with the next highest range of scores, for which consumers pay a higher copayment, etc. This benefit structure will incentivize providers to compete based on quality. Providers should be rewarded for quality with increased marketshare, not increased payment (i.e., “Pay for Performance”). With the high fixed costs of operations, marketshare can mean the difference between achieving a gain or a loss for providers. Therefore, this approach allows the Public Health Plan to reward providers for quality performance, while remaining within the national healthcare budget.

6) Re-engineer the nursing educational curriculum from a generalist approach to the establishment of various areas of nursing specialties, with associated levels of education, licensure, clinical authority and compensation within each specialty. Develop nursing diagnoses, interventions, clinical guidelines and consumer outcomes for each area of specialty. Develop nursing reimbursement codes based on the Nursing Interventions Classification (NIC) system for each area of specialty and level of authority for use within institutional settings - elevating the profession from a loss center to a profit center, benefiting both financial and clinical outcomes. (Note: This requires backing-out nursing costs from hospital DRGs and APGs). Rename the nursing profession to attract more males. These changes would help establish nursing as an independent clinical science, ensure a fuller utilization of each nurse's education, talent and skills, and achieve a higher degree of job satisfaction and career retention, resulting in a sufficient, stable and specialized supply of nurses, along with improved cost control over the long term.

7) Create a federal Public Insurance Program for medical malpractice coverage. Pass comprehensive, federal tort-reform legislation that: 1) Shields providers from liability when they correctly follow and perform the appropriate, federally-approved and legally-recognized clinical practice guideline, even if it results in an adverse consumer outcome (see Section #3); 2) Limits liability of individuals or corporations to their adjudicated degree of fault, including the degree to which the adverse outcome was the result of individual versus systemic error and/or omission; 3) Establishes private-sector, “peer-review panels” to determine the judicial appropriateness of cases before they enter the judicial system; 4) Establishes compensation ranges for scheduled pain and suffering categories; 5) Caps legal contingency fees on an inverted scale form 10-20%, based on amount of recovery, plus out-of-pocket costs; 6) Schedules payments for future damages over $50,000; and 7) Allows disclosure of collateral source recoveries in jury trials.



Section Three: A Foundation for Quality


This Section Is Under Construction


Sample Contents:

Guiding Principle #5
The provision of healthcare services should be subject to national, evidence-
based clinical guidelines and uniform, performance measurement / reporting standards.


Operational Solutions:

1) Under the direction of the Agency for Healthcare Research and Quality (AHRQ), public and private healthcare organizations should be mobilized for the ongoing research, development and formal adoption of comprehensive, federally-approved and legally-recognized clinical practice guidelines for the top 500 ICD-9 codes within a 5 year timeframe (i.e., an “Apollo Project” for healthcare quality).

a. As a science, medicine should identify the optimal pathway for the diagnosis, treatment, education and monitoring of a consumer with a given set of symptoms, clinical findings, pathologies and personal data. 21st Century medicine will be underscored by evidence-based clinical guidelines and other electronic, decision-support tools that, when correctly implemented, will: a. Improve healthcare quality and consumer outcome, b. Adjudicate physician payment decisions (i.e., “guideline-based” reimbursement – see below), and c. Shield providers from malpractice liability.

b. American consumers should always expect to receive the appropriate healthcare services, regardless of provider, facility or geographic location. Providers should always expect to receive payment, as well as protection from malpractice liability, when they correctly perform the appropriate clinical guideline. For these important objectives to be achieved, an “Apollo-type” undertaking is required, calling for the formal pronouncement of specific and aggressive goals to be accomplished within a targeted timeframe (e.g. comprehensive clinical guidelines for the top 500 ICD-9 codes within 5 years).

c. Electronic decision-support tools and consumer management guidelines will result in decreased provider variation and error, increased appropriate resource usage, decreased defensive medicine, enhanced consumer outcomes and experiences, and decreased healthcare and malpractice insurance costs.

d. A guideline-based reimbursement methodology (vs. procedure-based) should be developed to ensure physicians and other individual caregivers are compensated for providing services that are evidence-based and medically appropriate (i.e., blending CPT-4 codes into the appropriate clinical guideline reimbursement code). Providers correctly performing the appropriate clinical guideline will be protected from malpractice liability, even if an adverse consumer outcome occurs.

e. A guideline-based medical record should be developed to ensure providers are documenting service delivery in accordance with the appropriate clinical guideline, as well as to document the rationale for any guideline deviation. (Note: All guideline deviations would be analyzed by the AHRQ for the purpose of continuous guideline improvement.)

f. The appropriate ‘point-of-marketing’ for drug and medical device manufacturers would be during the clinical guideline development process. This is because once a product has been embedded and prioritized into a guideline, as a first-line modality, second-line modality, etc., providers must follow the guideline in order to receive reimbursement (or have a scientific rationale for any guideline deviation). Therefore, marketing after-the-fact would not be cost-effective.

2) Under the direction of the Institute of Medicine (IOM), public and private healthcare organizations should be mobilized for the ongoing research, development and formal adoption of federally-approved and legally-recognized “National Performance Measurement Sets,” that quantify clinical outcomes for selected groups of performance measures, varied by type of healthcare provider, type of medical specialty, and size and type of facility.

(Note: The ongoing, decision-making process for the review, adoption and implementation (i.e., recommendation to Congress for codification into law) of both clinical guidelines and performance measures would be conducted under the auspices of the AHRQ and IOM, respectively, within a public-private committee structure.)

a. Outcome and performance measurement equips providers, researchers and manufacturers with scientific feedback data, enabling them to continuously improve their products and services. Consumers, employers and insurers equipped with comparative, provider evaluation criteria are empowered to make well-informed provider-selection decisions. These data would also be used to determine the selection criteria under the three-tier National Benefit Plan (e.g., “First Tier” physicians are those in the top 25th percentile of the National Performance Measurement Set for their specialty, etc.).

3) Under the jurisdiction of the Department of Health and Human Services (DHHS), regulate provider oversight activities to ensure the consistent and national application of effective monitoring, data collection, reporting and sanctioning standards and protocols.

a. Provider oversight and medical error detection and reporting systems should be robust and consistent across all organizations and geographic areas, in order to achieve objective, fair and effective outcomes.

b. Uniform provider oversight protocols would result in increased identification, disclosure and sanctioning of poor performing providers, and decrease malpractice insurance costs.


Guiding Principle #6
Healthcare information should be collected, transmitted and stored digitally, using interoperable standards with centralized accessibility.

Operational Solutions:
1) The delivery of quality healthcare services in the 21st Century cannot be accomplished without national, 24/7 access to standardized and interoperable information, transaction, storage and retrieval systems. In particular, Providers should have access to practice guidelines, clinical information, health records and transaction / order entry applications from online terminals located at every point of Consumer contact (i.e., exam room, inpatient room, recovery room, etc.). Additionally, consumer health record information should enter the data warehouse on a close-to-real-time basis and be instantly retrievable, regardless of where they were created. Clearly, the issues of cost, standards, interoperability and warehousing cannot be addressed by the private sector, alone, thus the need for a two-sector solution. A “Hill-Burton”-type of federal legislation is required to provide loans and grants for the purchase of computer systems and software programs, along with federal mandates for the development of uniform technical, data and operability standards, centralized information repositories, and even for the establishment of uniform medical nomenclature.


Guiding Principle #7
Healthcare decision-making by Providers, Manufacturers, Insurers, Employers and Regulators should be driven by the goal to optimize “Consumer outcome,” subject to the confines of the National Benefit Plan, applicable statutes and our national healthcare budget.

Operational Solutions:
1. A voluntary commitment to follow the appropriate “Bill of Healthcare Rights & Responsibilities” by each constituency and every consumer within the healthcare industry should be a national objective – and manifested by a public pledge to social accountability. This national commitment would align organizational and personal incentives around the goal of placing “consumer outcome” as the driving motive and primary rationale for all healthcare decision making, limited only by the constraints of plan design, regulation and budget. In essence, this commitment represents a national “Hippocratic Oath” taken by participating organizations and consumers affirming that: “Our organizational or personal healthcare decisions will do no harm.” For organizations, the commitment would be embedded into appropriate policy, procedure and strategic planning documents. All applicable business decisions would then be subject to an “ethical screening test,” based on the following question: “How will this decision impact consumer outcome?” The appropriate manager would sign-off on the decision, attesting that it achieves an optimal consumer outcome (subject to the limitations outlined above), when compared to the other alternatives under consideration. (Note: For individual consumers, their public commitment to the success of universal coverage would consist of a survey instrument and a formal agreement to abide by the “Consumer Bill of Healthcare Rights and Responsibilities,” which would be completed and certified by the consumer or head of household every 6 months via the HSA website -- see End Notes.)



Section Three: A Call to Action

This Section Is Under Construction


Sample Contents:

The political influence wielded by vested interests from the medical-industrial complex will make it very difficult for universal coverage or health system redesign to ever be achieved through a top-down change process. Therefore, comprehensive reform will only be successfully championed through the legislative process with the impetus of broad-based, bottom-up support. In essence, it will require a ‘social movement’ phenomenon conducted by informed and interested healthcare consumers who transcend ideological, geographic and party lines, and actively participate in the change process by contacting their local, state and federal elected representatives on a coordinated basis with a consistent, specific message.

To achieve this level of consumer activism, four change elements will be necessary:

1) A significant level of dissatisfaction with the current state of affairs (i.e., the societal impact of a rising number of uninsured citizens and/or the personal impact of escalating healthcare costs) – resulting in a national discourse.

2) A healthcare redesign proposal that clearly defines an understandable and equitable solution to a compelling, social policy objective (i.e., universal coverage, pricing integrity and national quality standards),

3) A leadership nucleus willing and able to initiate the call for change using grassroots tactics (i.e., speakers’ bureau, news conferences, media interviews, public demonstrations, personal appeals, organizational piggybacking, internet campaigns, etc.), and

4) A (growing) coalition of consumer activists (and interested organizations, including employers, providers and academia) willing and able to communicate the features, benefits and rationales of the proposal to local audiences on a regular basis over a sustained period of time.


If you would like to learn how to become a “champion for change,” please contact me at: brad@wizard.com. Thank you.


The essential human nature of healthcare demands brave new ideas that are not restrained by tradition, ideology or special interest. Our healthcare system deserves open-minded and open-hearted thinking that will generate ideas that aspire toward models of financing and delivery founded on science and public policy, empowered by equality and accountability, transformed by competition and innovation, and dedicated to consumer outcome and security. Neither sector can accomplish these goals alone.

Summary of Key Proposal Components
1) To ensure equality of opportunity in a modern, democratic society, healthcare should be viewed as an essential public utility, rather than a free-market commodity.

2) As an essential public utility, continuous access to a minimum benefit package of evidence-based, quality-driven healthcare services should be guaranteed for all citizens.

3) The commercial marketplace has been unable to ensure quality and affordability, or allocate healthcare coverage to all citizens – thus the need for a two-sector solution.

4) A national, Public Health Plan (terminating Medicaid and re-engineering Medicare) should be used to ensure safety-net coverage for all unemployed citizens.

5) The Public Health Plan should be introduced into the commercial marketplace to create a beneficial, dynamic tension with Private Health Plans, stimulating competition, innovation and quality improvement.

6) Employers should be required to be the primary, point-of-coverage for all employed citizens and their families, with coverage purchased either from Private Health Plans or the Public Health Plan (with premium subsidy based on economic criteria).

7) Citizens should be required to secure proof of coverage, either through their employer’s health plan or, if unemployed or retire, directly through the Public Health Plan or through a Contracting Health Plan(with premium and copayment subsidies based on income level).

8) As a science, medicine should standardize and codify clinical decision-making and performance assessment through the formal adoption and national implementation of uniform clinical practice guidelines, performance measures and oversight systems.

9) A Hill-Burton-type federal program for information technology should be enacted to ensure: a. Interoperable computer systems with uniform technical standards and medical nomenclature throughout the healthcare industry, b. Centralized repositories for consumer medical records, clinical guidelines and other healthcare information, and c. The placement of online terminals at every point-of-contact between provider and consumer.

10) Physicians should be transitioned from procedure-based to guideline-based reimbursement to ensure the medical appropriateness of services rendered.

11) To optimize cost-effective and quality-appropriate care, a new category of provider should be created (‘Primary Care Technician’), that is independent, nationally certified and authorized to provide a defined set of primary care, prescription drug and hospital-based services.

12) Consumer products and manufacturing processes that have an adverse impact on health should be taxed to compensate for the cost of prevention, detection and treatment programs – and to fund universal coverage (i.e., “Health Improvement Tax”).


End Notes

This Section Is Under Construction


Sample Contents:

I. Guiding Principles

Guiding Principle #1

In a modern, democratic and largely Christian society – access to comprehensive, affordable and quality-driven healthcare services should be a basic human right for all Citizens.

Guiding Principle #2

The Employer-based coverage model is the most efficient and cost-effective vehicle for health insurance access by employed Citizens and their families.

Guiding Principle #3

A strong and viable Public Health Plan is required to ensure safety-net coverage for uninsured Citizens, and to stimulate competition in the healthcare marketplace.

Guiding Principle #4

The Federal Government should play a proactive role to help optimize market forces, resource allocation and desired outcomes in the healthcare industry.

Guiding Principle #5

The provision of healthcare services should be subject to national, evidence-based clinical guidelines and uniform, performance measurement / reporting standards.

Guiding Principle #6

Healthcare information should be collected, transmitted and stored digitally, using interoperable standards with centralized accessibility.

Guiding Principle #7

Healthcare decision-making by Providers, Manufacturers, Insurers, Employers and Regulators should be guided by the goal to optimize “Consumer outcome,” subject to the confines of the National Benefit Plan, applicable statutes and our national healthcare budget.



II. Bill of Healthcare Rights & Responsibilities

Employer Responsibilities

• Offer the National Benefit Plan (or better) to all employees (full-time and part-time), either through the Public Health Plan, a Private Health Plan or on a self-insured basis.

• Input employee data (Wage, occupation, marital status, dependent status, contact information & health plan) into HSA online database every 6 months.

• Accept employee’s Defined or Reduced Premium Contribution Amount plus any Consumer Premium Subsidy Payment as satisfying employee’s premium contribution requirement. Remit these amounts each month to the health plan, along with employer premium.

• Conduct a semi-annual review of the online “Employer Contribution Scorecard,” and complete and return the healthcare activity survey instrument.

• Report any healthcare abuses to the Healthcare Security Administration.

Consumer Responsibilities

• Secure National Benefit Plan coverage for all household members, either by enrolling in their employer’s health plan or, if unemployed or retired, enrolling directly in the Public Health Plan or in a Contracting Health Plan.

• Input personal household data (Wage, occupation, employer, marital status, dependent status, contact information & health plan) into HSA online database every 6 months.

• Utilize healthcare services and products as directed by your Personal Healthcare Team – and do not overutilize, underutilize or otherwise abuse products or services.

• Follow the Health Improvement and/or Disease Management Plan(s) prescribed for you by your Personal Healthcare Team.

• Conduct a semi-annual review of your “Personal Contribution Scorecard,” and sign-off, complete and return the attached, online survey document.

• Become educated on your healthcare status, and those of your dependents.

• If you are 50 or older, or have been diagnosed with a terminal disease, create an Advance Directive document and provide a copy to your Primary Care Provider.

• Report any healthcare abuses to the Healthcare Security Administration.

Contracting Health Plan Responsibilities

• Accept all the terms and conditions listed under Private Health Plan Responsibilities.

• Enter into a contractual agreement with the Healthcare Security Administration to offer coverage to Eligible Consumers who are unemployed or retired under the same terms and conditions as the Public Health Plan.

• Accept the Eligible Consumer’s Defined or Reduced Premium Contribution Amount plus any Consumer Premium Subsidy Payment as satisfying the consumer’s premium contribution requirement under a National Benefit Plan policy.

• Conduct a semi-annual review of your “Health Plan Contribution Scorecard,” and complete and return the healthcare activity survey instrument.

• Report any healthcare abuses to the Healthcare Security Administration.

Private Health Plan Responsibilities

• Offer a National Benefit Plan and/or PLUS option to employer clientele.

• Utilize the HSA Provider and Manufacturer Fee Schedules for National Benefit Plan or PLUS policies when reimbursing Participating Healthcare Providers (unless using a separately negotiated and more competitive compensation arrangement).

• Accept the Copayment Subsidy Payment on behalf of Participating Healthcare Providers (and adjust their reimbursement, accordingly).

• List only Participating Healthcare Providers in the provider directory.

• Accept the Eligible Employer’s market premium amount (i.e., as negotiated between the employer and health plan using Community Rating Procedures) and the Defined or Reduced Consumer Premium Amount, plus any Employer and Consumer Premium Subsidy Payments as satisfying the Eligible Employer’s premium requirement under a National Benefit Plan policy.

• Utilize Community Rating Procedures, adjusting for age, gender and industry only, to calculate premium rates.

• Conduct a semi-annual review of your “Health Plan Contribution Scorecard,” and complete and return the healthcare activity survey instrument.

• Report any healthcare abuses to the Healthcare Security Administration.

Participating Healthcare Provider Responsibilities:

• Accept the Healthcare Security Administration’s Provider Fee Schedule payment (as adjusted for copayment amount) from Private Health Plans, Self-Insured Employers and the Public Health Plan, less the copayment amount paid by consumers, as payment-in-full for covered products and services under a National Benefit Plan policy.

• Perform services and provide products in compliance with the National Clinical Guideline standards.

• Collect and transmit the required clinical and administrative information under the appropriate National Performance Measurement Set.

• Provide products and services in a cost-effective manner.

• Conduct a semi-annual review of your “Provider Contribution Scorecard,” and complete and return the healthcare activity survey instrument.

• Report any healthcare abuses to the Healthcare Security Administration.


Public Health Plan Responsibilities

Healthcare Security Administration Responsibilities

Manufacturer Responsibilities



III. Two-Sector Solution: A Glossary

Note: Glossary terms are sorted by subject area, rather than by alphabet.

CONSUMER

Defined Consumer Premium Amount: The monthly amount consumers pay for National Benefit Plan coverage under a Private Health Plan or the Public Health Plan, adjusted by family size (i.e., employee only, employee plus spouse and employee plus family). This amount represents the ‘ceiling’ or maximum amount paid by a consumer for National Benefit Plan coverage who is not eligible for a premium subsidy based on household income. This amount is set on an annual basis by the Financial Assessment Committee of the Healthcare Security Administration, upon review and approval by Congress and the President. (Note: This amount is determined using multiple economic factors and, therefore, not directly tied to the actual operating expense of the Public Health Plan – see “PMPM Total Expense Calculation.”)

Reduced Consumer Premium Amount: The reduced monthly premium amount paid by an Eligible Consumer, based on a consumer’s, annual household income. These amounts are set on an annual basis by the Financial Assessment Committee of the Healthcare Security Administration, upon review and approval by Congress and the President. Current, federal pre-tax deductions for premium contributions made by consumers will remain in effect. (Note: For employed consumers, payments are made to their employer, via monthly payroll deduction, which are then remitted to the health plan. For unemployed and retired consumers, payments are made directly to their chosen health plan, i.e., the Public Health Plan or a Contracting Health Plan.)

Consumer Premium Subsidy Payment: A quarterly payment made by the Healthcare Security Administration (or its fiscal intermediary) to Public, Private or Self-Insured Health Plans to cover the difference between the Defined Consumer Premium Amount and the Reduced Consumer Premium Amount paid by individuals Eligible Consumers, who receive a premium subsidy based on household income. (Note: These amounts are based on the annual, PMPM Total Expense Calculation process.)

Defined Copayment Amount: The amount of the copayment per encounter, episode or quantity for covered, healthcare services and products under the National Benefit Plan policy. These amounts are set on an annual basis by the National Benefit Committee of the Healthcare Security Administration, upon review and approval by Congress and the President.

Reduced Copayment Amount: The reduced copayment amounts paid by an Eligible Consumer to a Participating Healthcare Provider for various healthcare products and services under the National Benefit Plan (or PLUS) policy, based on the consumer’s household income. These amounts are set on an annual basis by the Financial Assessment Committee of the Healthcare Security Administration, upon review and approval by Congress and the President.

Copayment Subsidy Payment: A quarterly payment made by the Healthcare Security Administration (or its fiscal intermediary) to Public, Private or Self-Insured Health Plans to cover the difference between Defined Copayment Amounts and Reduced Copayment Amounts paid to providers by the Eligible Consumers who are their covered members. Health plans track and remit an invoice each quarter for this differential payment amount. (Note: Health plans make up the copayment ‘shortfall’ received by Participating Healthcare Providers for a given product or service through the payment of a correspondingly larger portion of the Provider Fee Schedule amount. For example, if the Provider Fee Schedule amount for a given service is $100, and the Defined Copayment Amount is $20, the amount paid by the health plan to the provider should be $80. However, if an Eligible Consumer has a Reduced Copayment Amount of $5 for that service, the amount paid by the health plan to the provider would be $95. Therefore, the Copayment Subsidy Payment would be $15.)

Annual Out-of-Pocket Maximum: The dollar limit an individual or family will pay in a calendar year from payment of premium contributions and copayments. This amount is set at 5% of a household’s, annual adjusted income, up to a maximum of $12,500 per year. This maximum will be reviewed on an annual basis by the Financial Assessment Committee of the Healthcare Security Administration, upon review and approval by Congress and the President.

Eligible Consumer: Unemployed and retired citizens whose level of annual household income makes them eligible for premium and copayment subsidies. The amount of premium and copayment subsidy for each calendar year is based on the consumer’s household income for the previous, 12-month period. (Note: The terms “consumer” and “member” may be used interchangeably.)

Personal Contribution Scorecard: A semi-annual report published by the Healthcare Security Administration to educate consumers on the impact of their personal healthcare consumption, compliance and activity levels in comparison with demographically-adjusted peer groups.

EMPLOYER

Defined Employer Premium Amount: The monthly amount an employer will pay for National Benefit Plan coverage under the Public Health Plan, equal to 15% of total payroll. This amount represents the ‘ceiling’ or maximum amount paid by an employer for National Benefit Plan coverage under the Public Health Plan, with reductions to that percentage (i.e., 5-14%) based on the employer’s eligibility for premium subsidy (see “Eligible Employer). Current federal tax deduction policy for health insurance premiums paid by employers would remain in effect.

Reduced Employer Premium Amount: The reduced monthly premium amount paid by an employer, expressed as a percentage of total payroll (i.e., 5-14%), for a National Benefit Plan policy under the Public Health Plan, based on the employer’s eligibility for premium subsidy (see “Eligible Employer”). These percentage amounts are set on an annual basis by the Financial Assessment Committee of the Healthcare Security Administration, upon review and approval by Congress and the President. (Note: Private Health Plans may choose to meet or beat the payroll-tax premium rate for a given employer. In either case, the Private Health Plan receives the same Employer Premium Subsidy Payment as the Public Health Plan would have for a given employer. For Public Health Plan coverage, the Reduced Employer Premium Amount, along with the Reduced Consumer Premium Amounts are remitted through the FICA payroll-tax process to the Public Health Plan. For Private Health Plan coverage, the employer’s and consumers’ premium amounts are remitted through monthly payments made directly to the Private Health Plan.)

Payroll-Tax Premium: A premium methodology for National Benefit Plan coverage under the Public Health Plan that is based on a flat percentage of an Employer’s total payroll expense, utilizing the same administrative procedures as the FICA payroll tax for Social Security and Medicare. The percentage amount is 5-15%, based on whether the employer is an Eligible Employer. Eligible Employers pay 5-14%, while non-eligible employers pay the maximum 15% of total payroll for National Benefit Plan coverage under the Public Health Plan.

Employer Premium Subsidy Payment: A quarterly payment made by the Healthcare Security Administration (or its fiscal intermediary) to Public and Private Health Plans to cover the difference between the Defined Employer Premium Amount and the Reduced Employer Premium Amount paid by its employer-clientele that are eligible for premium subsidies (see “Eligible Employer”). (Note: These amounts are based on the PMPM Total Expense Calculation process.)

Eligible Employer: Employers eligible for premium subsidy based on meeting economic criteria, e.g., average wage, net income, cash flow, balance sheet ratios, etc. of their business. The economic criteria also determine the amount of premium subsidy an employer would be eligible for, expressed as a percentage of total payroll (i.e., 5-14%). Employers are able to enter their company’s economic data directly into the Healthcare Security Administration website to determine their eligibility status. (Note: If the Eligible Employer chooses the Public Health Plan, their premium payment is the flat, 5-14% of total payroll. The Public Health Plan also receives the additional Employer Premium Subsidy Payment from the HSA. If the Eligible Employer chooses a Private Health Plan, their premium payment is negotiated with the health plan. The Private Health Plan also receives the same Employer Premium Subsidy Payment that would have been paid to the Public Health Plan. Eligible Employers do not receive premium subsidies for National Benefit Plan PLUS policies.)

Self-Insured Health Plan: A health plan that is self-insured and self-administered by an employer and offers the National Benefit Plan (or better) to its employees. Self-Insured Health Plans are subject to the same requirements as Non-Contracting Health Plans.

FEDERAL GOVERNMENT

Healthcare Security Administration: The federal department responsible for the management of the Public Health Plan, the regulation of Contracting Health Plans (i.e., those providing coverage to unemployed consumers), the payment of premium copayment and our-of-pocket subsidy payments, the establishment of the Provider Fee Schedule, the administration of the National Benefit Plan Committee and the Financial Assessment Committee, the publishing of semi-annual “Consumption, Compliance and Activity Reports,” and the pre-authorization of healthcare services or products rendered by Non-Participating Providers .

National Benefit Plan Committee: A non-partisan, multi-constituency committee within the Healthcare Security Administration responsible for recommending on an annual basis the benefit structure of the National Benefit Plan (i.e., covered benefits, limitations, exclusions, and Defined Copayment Amounts), subject to review and approval by Congress and the President. The committee is comprised of representatives from each of the key, health system constituencies, including consumers, providers, employers, insurers, administrators, manufacturers, suppliers, taxpayers and regulators. Committee membership is for 3-year terms, with appointments made on a non-partisan basis by a mix of elected officials, including Governors, Representatives, Senators and the President.

Financial Assessment Committee: A non-partisan, multi-constituency committee within the Healthcare Security Administration responsible for recommending on an annual basis the Employer and Consumer Premium Subsidy Payment, Copayment Subsidy Payment and Annual Out-of-Pocket Maximum structures for Eligible Employers and Eligible Consumers. All of these amounts are subject to review and approval by Congress and the President. The committee is comprised of representatives from each of the key, health system constituencies, including consumers, providers, employers, insurers, administrators, manufacturers, suppliers, taxpayers and regulators. Committee membership is for 3-year terms, with appointments made on a non-partisan basis by a mix of elected officials, including Governors, Representatives, Senators and the President.

National Benefit Plan: The defined package of covered services and products, along with their various copayments, limitations and exclusions. This benefit plan design is set by the National Benefit Plan Committee on an annual basis, subject to review and approval by Congress and the President. The National Benefit Plan establishes the generally-accepted baseline for a minimum level of benefits for all citizens under universal coverage.

National Benefit Plan PLUS: Any private-sector benefit plan design used by a Private Health Plan or a Self-Insured Health Plan that offers a higher level of benefits, a lower level of limitations and exclusions, and/or a reduced copayment structure than the National Benefit Plan. The copayment and annual out-of-pocket maximum structures must be equal to or better than the Reduced Copayment Amount and Annual Out-of-Pocket Maximum for any Eligible Consumer. Eligible Employers do not receive a premium subsidy for a PLUS plan.

Consumption, Compliance and Activity Reports: Semi-annual reports published by the Healthcare Security Administration that outline key measures of success for the universal coverage program, based on national, state, local and individual-consumer data. The report will include such information as overall expense versus budget amounts for various disease, provider, demographic, product and service categories; as well as compliance rate, participation level and cost/benefit data for health improvement programs, disease-specific support groups, e-health services and disease management plans (see Appendix for a sample report). A primary purpose of the report is to educate consumers, and other constituencies, on the impact their individual actions and inactions have on the overall status of the universal coverage program. Each consumer will be able compare their level of performance with those of their peers, sorted by age, gender, geography, disease and healthcare service usage, and summarized into a “Personal Contribution Scorecard” (PCS), which includes analysis, numerical scores and comparative rankings. Other “contribution inventories” will be published for each constituency, i.e., employers, health plans, providers, etc., comparing their performance levels with their peer groups.

National Biomedical Research Library: A library containing non-proprietary basic research information generated by all public and private healthcare manufacturers and biomedical researchers that is managed by the National Institutes of Health and open to all researchers.

PRIVATE HEALTH PLANS

Contracting Health Plan: A Private Health Plan that has contracted with the Healthcare Security Administration to provide National Benefit Plan coverage for unemployed and retired citizens on the same financial terms and conditions as the Public Health Plan, i.e., accept the Reduced Consumer Premium Amount plus the Consumer Premium Subsidy Payment as satisfying the member’s premium contribution requirement.

Non-Contracting Health Plan: A Private Health Plan that has not contracted with the HSA to provide National Benefit Plan coverage for unemployed and retired citizens. Therefore, Non-Contracting Health Plans are limited to the commercial insurance marketplace, i.e., marketing to employers. All Private Health Plans (Contracting and Non-Contracting) must: a. Make a National Benefit Plan and/or PLUS option available to its clientele, b. Utilize Community Rating Procedures when developing a premium rate quote for a given employer, c. Accept an Eligible Employer’s market premium amount (i.e., the Reduced Employer Premium Amount, as negotiated between employer and health plan using Community Rating Procedures) and the Reduced Consumer Premium Amounts, plus any Employer and Consumer Premium Subsidy Payments as satisfying an Eligible Employer’s premium requirement under a National Benefit Plan policy, d. Utilize the HSA Provider Fee Schedule for National Benefit Plan or PLUS policies (unless using a separately negotiated fee schedule with providers), e. Accept the Copayment Subsidy Payment on behalf of Participating Healthcare Providers (and adjusting their reimbursement, accordingly), and f. Only list Participating Healthcare Providers in the provider directory.

Community Rating Procedures: Private Health Plans must establish a base premium rate for each local market (i.e., city, county, state or region, as defined by the health plan), which are filed with the Healthcare Security Administration on a quarterly basis and made available for public viewing on the HSA website. The community base rates may then be adjusted for a given employer group only using the factors of average age, gender mix and type of industry, without any consideration given to the medical status or health risk of employees or their family members.

HEALTHCARE MANUFACTURERS

Manufacturer Reimbursement Schedule: A reimbursement schedule set by the Healthcare Security Administration on an annual basis for products manufactured by drug and medical device companies covered under a National Benefit Plan or PLUS policy. Manufacturers who wish to have their products covered under the National Benefit Plan will be required to use the HSA Reimbursement Schedule as their “pricing schedule” for the billing of their covered product line.

Bio-Economic Impact Analysis: An analysis conducted by the manufacturer that assesses a new technology’s comparative efficacy, safety and retail cost profile with other products in its class to determine its overall “value quotient.” The value-quotient is used by the Agency for Healthcare Research and Quality to help determine the appropriate priority and placement of the new technology into the clinical practice guidelines.

HEALTHCARE PROVIDERS

Participating Healthcare Provider: Individuals and organizations that provide healthcare services or products in compliance with state and federal regulations (e.g., Physicians, Hospitals, Pharmacies, etc.), who agree to accept the HSA Provider Fee Schedule payment, less the Defined Copayment Amount, as payment-in-full for all consumers under a National Benefit Plan or PLUS policy. (Note: National Benefit Plan or PLUS coverage may be provided through a Private Health Plan, a Self-Insured Health Plan or the Public Health Plan).

Non-Participating Healthcare Provider: Individual and organizational healthcare providers who have not agreed to accept the HSA Provider Fee Schedule. Consumers under a National Benefit Plan or PLUS policy may not access non-participating providers without prior authorization by the HSA (except in the case of an emergency).

Provider Fee Schedule: A fee-for-service compensation schedule set by the Healthcare Security Administration on an annual basis for covered products and services rendered by Participating Healthcare Providers to all consumers under a National Benefit Plan or PLUS policy. Participating Healthcare Providers are required to use the HSA Provider Fee Schedule as their “charge master” for the billing of their services.

Primary Care Technician (PCT): A new provider category of independent practitioner, subject to a standardized and reciprocal state licensure process, and authorized to provide a defined set of primary care, prescription drug and hospital-based services. A specific list of symptoms, conditions and services included in the PCT’s scope of authority is provided to consumers.

National Performance Measurement Set: Groupings of mandatory performance measures comprised of key quality indicators that vary based on type of healthcare provider, type of medical specialty, and size and type of facility. The Institute of Medicine is responsible for the management of the National Performance Measurement Set and for the creation of annual reports for public review.

Guideline-Based Reimbursement: A compensation methodology for physicians based on clinical practice guidelines. Instead of the current procedure-based system, physicians would be paid a flat fee for a consumer based on which clinical practice guideline they fall into over a specified timeline of care. This new system would require the “blending” of CPT-4 procedure codes into the appropriate clinical practice guideline(s).

Guideline-Based Medical Record: A system of creating consumer health records based on the applicable clinical practice guideline over a given episode of care. Instead of the current problem-oriented system, all health record information development would be structured around the identification and implementation of the appropriate clinical practice guideline.

PUBLIC HEALTH PLAN

Public Health Plan: The expanded, re-engineered and re-named Medicare. The Public Health Plan may provide coverage to employed, unemployed and retired consumers. The Public Health Plan competes with all Private Health Plans in the commercial insurance marketplace for both Eligible Employers and non-eligible employers. The Public Health Plan also competes with Contracting Health Plans in the non-commercial insurance marketplace for unemployed and retired consumers. The Public Health Plan is a separate, operational unit within the Healthcare Security Administration. The Executive Director of the Public Health Plan reports to the Public Health Plan Governing Board.

Public Health Plan Mission Statement: “The Public Health Plan works in partnership with private-sector Providers, Manufacturers, Suppliers and Administrators. Our Mission is to coordinate, manage and continuously improve the cost-effective administration and delivery of healthcare services for our Members to ensure quality of information, advocacy and outcomes.”

Public Health Plan Governing Board: The Public Health Plan is governed by a constituency-based committee under the purview of the Healthcare Security Administration, comprised of representatives from each of the key, health system constituencies, including consumers, providers, employers, insurers, administrators, manufacturers, suppliers, scholars and regulators. Committee membership is for 3-year terms, with appointments made on a non-partisan basis by a mix of elected officials, including Governors, Representatives, Senators and the President. The Governing Board’s goal is to ensure the Public Health Plan is in philosophic and operational compliance with its mission. Ultimate authority and accountability for the Public Health Plan resides with the Healthcare Security Administration, Congress, the President and voters.

Operational Review Committees: Independent, public-private committees under the purview of the Healthcare Security Administration responsible for providing expert analysis and opinion to the Public Health Plan staff and Governing Board for the various functional areas within the Public Health Plan (e.g., Provider Fee Schedule development, provider contracting, accounting, consumer grievance resolution, etc.)

PMPM Medical Expense: The actual amount spent by the Public Health Plan for covered medical expenses, expressed as a Per Member Per Month (PMPM) dollar amount, averaged over a rolling, 12-month period.

PMPM Administrative Expense: The actual amount spent by the Public Health Plan for administrative expenses, expressed as a Per Member Per Month (PMPM) dollar amount, averaged over a rolling, 12-month period.

PMPM Total Expense Calculation: The PMPM Medical Expense and PMPM Administrative Expense are used to calculate the Public Health Plan’s total budget for each, new fiscal year in the form of the Employer and Consumer Premium Subsidy Payments. Each fiscal year, the Employer and Consumer Premium Subsidy Payments are adjusted (up or down) to reflect the previous year’s PMPM Medical and Administrative Expense loss or gain versus budget, plus the new year’s projected inflation for the PMPM Medical and Administrative Expense. The calculation goal is to achieve a net neutral bottom line on a going-forward basis for the Public Health Plan. (Note: The Employer and Consumer Premium Subsidy Payments may result in total amounts that are higher or lower than the total of the Defined Employer and Consumer Premium Amounts, which are set by the Financial Assessment Committee using multiple economic factors, and not solely based on the PMPM Total Expense Calculation. In other words, the actual cost of operating the Public Health Plan determines the amount of the Employer and Consumer Premium Subsidy Payments.)

Three-Tier Benefit Structure: A benefit plan design element under the Public Health Plan where consumer copayment levels are based on a provider’s quality performance score on their specific “National Performance Measurement Set.” A provider’s score will place them in the First Tier, Second Tier or Third Tier, with correspondingly higher levels of copayments. For example, an office visit copayment for a First Tier Family Practice Physician might be $10, while a copayment for a Second Tier Family Practice Physician might be $20, and a copayment for a Third Tier Family Practice Physician might be $40.



IV. Political Analysis

Multiple constituencies will be affected by any redesign of our healthcare system, including: consumers, employers, providers, suppliers, insurers, state governments, federal organizations, lawyers and tax payers. These players comprise the political economy of healthcare change. No single redesign proposal will be agreed upon by all parties. Therefore, if political acceptance and compromise become guiding objectives, or even secondary concerns, the outcome will be less than optimal. The essential nature of healthcare demands the best our society has to offer. Therefore, proposals for health system redesign should look beyond political economy and remain one-pointed in their focus on finding ways and means to achieve the sustainable allocation of equitable, accountable and quality-driven healthcare coverage and services in a manner that will secure the greatest level of health for the greatest number of citizens.

However, any health system redesign proposal should be cognizant of its potential impact on each player, in order to better present (and defend) its case to the ultimate decision-maker: voters. I have attempted to provide a political analysis of the Two-Sector Solution proposal using a 10-point scoring scale, with 1 representing the most ‘Pain’ and 10 representing the most ‘Pleasure’ for each affected stakeholder.

Constituency: Healthcare Consumers

Pleasure

• Improved level of health
• Increase in healthcare quality, affordability & security
• Increase in equality of opportunity
• Increase in productivity & mobility
• Increase in provider evaluation data
• Decrease in environmental pollution

Pain

• Increase in benefit / premium cost-sharing for some

Overall Score: 10

Comment: The proof that healthcare is an essential public utility is the fact that all constituencies, regardless of socioeconomic status or political philosophy, share the common link of being healthcare Consumers. We all require healthcare services to have an equal opportunity in life, liberty and the pursuit of happiness. From the viewpoint of a Consumer, this proposal guarantees access to this fundamental human need. “Proof of Coverage” will be a requirement for all citizens, with coverage provided either through an Employer or, if unemployed or retired, through the Public Health Plan on an individual basis.

Constituency: Employers – Public Health Plan Purchaser

Pleasure

• Improved level of employee health
• Increase in employee productivity & satisfaction
• Decrease in healthcare costs for some

Pain

• Increase in healthcare and administrative costs for some

Overall Score: 8

Comment: Initially, most of these Employers would be first-time participants in the health insurance market, as they respond to the federal mandate and take advantage of the Public Health Plan’s subsidized coverage (i.e., 5-15% of total payroll) for those employers meeting economic eligibility criteria

Constituency: Employers – Private Health Plan Purchaser

Pleasure

• Decrease in healthcare costs for some
• Increase in employee productivity & satisfaction
• Decrease in COBRA risk for some

Pain

• Increase in administrative costs for some

Overall Score: 8

Comment: These Employers will reap the benefit of a powerful, new competitor in the marketplace, as Private Health Plans work harder to retain their existing clients.


Constituency: Healthcare Providers – Physician

Pleasure

• Decrease in charity care & bad debt
• Decrease in health insurance cost
• Decrease in malpractice insurance cost
• Decrease in administrative burden

Pain

• New “Primary Care Technician” competition for some
• Adherence to clinical guidelines
• Transition to “guideline-based” reimbursement and health records
• Decrease in reimbursement rates for some
• Increase in information technology cost & effort

Overall Score: 6.5

Comment: The major challenges for physicians will be the incentive to improve quality, in order to have ‘First-Tier’ access to Consumers in the Public Health Plan. Also, the re-engineering of medical office systems to incorporate clinical guidelines, outcome measurement and data collection.

Constituency: Healthcare Providers – Hospital

Pleasure

• Decrease in charity care and bad debt
• Decrease in health insurance cost
• Decrease in malpractice insurance cost
• Decrease in inappropriate Emergency Room usage
• Decrease in administrative burden


Pain

• Adherence to clinical guidelines
• Decrease in reimbursement rates for some
• Increase in information technology cost & effort

Overall Score: 7

Comment: Hospitals will have the same incentive as physicians to improve quality to earn ‘First-Tier’ status, as well as the challenge / opportunity to work closely with their physician partners in the re-engineering of clinical decision-making, patient management, data collection and provider oversight systems.

Constituency: Healthcare Providers – Nurse

Pleasure

• Increase in professional stature
• Increase in occupational opportunities & rewards

Pain

• Decrease in authority & income for some

Overall Score: 8

Comment: With specialized training and licensure, coupled with nurse-based clinical guidelines and reimbursement codes, the nursing profession will make a giant leap toward being viewed as an independent and professional clinical science. However, some current nurses will find that their level of training and experience places them in the lower ranks of the revised professional hierarchy.

Constituency: Healthcare Manufacturers – Pharmaceutical

Pleasure

• Increase in sales volume
• Decrease in health insurance cost

Pain

• New physician communication strategies
• New research & development strategies
• Decrease in reimbursement rates
• New technology “bio-economic” analysis

Overall Score: 5

Comment: Pharmaceutical manufacturers will have the challenge of redesigning their marketing strategies to position their products as first-line therapeutics at the point of clinical guideline development. Additionally, they will have the incentive to re-engineer research and development activities to focus on searching for new molecular entities that will achieve high value-quotients.

Constituency: Healthcare Manufacturers – Other

Pleasure

• Increase in sales volume
• Decrease in health insurance cost

Pain

• New research & development strategies
• Decrease in reimbursement rates
• New technology ‘bio-economic’ analysis

Overall Score: 6

Comment: Healthcare manufacturers will have to redesign their marketing strategies to focus on the clinical guideline development process, and their research and development strategies to improve the value quotient of new products.

Constituency: Healthcare Insurers

Pleasure

• Increase in administrative business for some
• Decrease in provider reimbursement costs
• Decrease in number of competitors
• Decrease in adverse risk
• Decrease in administrative burden

Pain

• Powerful new market presence
• One-time conversion costs
• Decrease in covered lives for some

Overall Score: 6

Comment: Private Health Plans will have a powerful new competitor in the marketplace, creating the incentive to ensure their product line either meets or exceeds the new pricing and performance standards set by the Public Health Plan.

Constituency: State Governments

Pleasure

• Elimination in uninsured state residents
• Elimination of Medicaid & S-CHIP costs (except nursing home services)
• Decrease in employee health insurance costs


Pain

• New administrative responsibilities

Overall Score: 8

Comment: With the termination of Medicaid and S-CHIP, State Governments will no longer share financial responsibility for providing healthcare services to indigent state residents. Instead, states will be responsible for financing and administering consumer outreach and ‘enrollment clearinghouse’ programs to identify and enroll unemployed and retired state residents.

Constituency: Federal Organizations

Pleasure

• Expanded scope of responsibility

Pain

• Expanded scope of responsibility

Overall Score: 8

Comment: Expanded responsibilities, along with increased funding as necessary for AHRQ, IOM, FDA, IRS, SSA, NIH and DOL, among others.

Constituency: Health-Adverse Industries

Pleasure

• Decrease in health insurance cost
• Increase in employee health, satisfaction & productivity

Pain

• Increase in pollution-control and/or administrative costs for some

Overall Score: 6

Comment: Wherever possible and practicable, the collection of the new Health Improvement Tax on junk foods and beverages and polluting goods, services and processes will be transacted at the wholesale level. Of course, this tax and its associated administrative costs would be passed on to the ultimate consumer of these products and services.

Constituency: Trial Lawyers

Pleasure

• Decrease in burden of proof

Pain

• Decrease in caseload & income

Overall Score: 4

Comment: With the introduction of legally-recognized, clinical guidelines, the burden of proof will be limited to determining the degree a physician or corporation incorrectly performs or implements the guideline(s) in question. As this process matures, guideline-based fee schedules for attorneys could be developed, replacing contingency fees.

Constituency: Individual Tax Payers

Pleasure

• Decrease in property taxes

Pain

• No discernable impact

Overall Score: 9

Comment: As federal or state personal taxes will not be used to fund the Public Health Plan or universal coverage, individual tax payers will not see an increase in their tax burden. Instead, their state property taxes will decrease significantly, due to the elimination of Medicaid. Also, due to its broad-base and low-rate, the Health Improvement Tax will only have a modest impact on the retail price of affected goods and services.