A More Ideal Health Care System

This will now be my fifth post on the issue of health care over the last several weeks. I will recap these posts as they establish key principles for a more ideal health care system.

In the first entry, I argued that the business of insurance should not be regulated as a public utility. While the insurance industry may exhibit "too big to fail" characteristics which must be managed, it is a fundamentally profitable business model which does not require a massive initial capital investment like other infrastructure such as roads or a power grid.

The second post then focused on the concept of rights. A government guarantee of health care provision constitutes a positive claim right against either the health care providers and/or those who are forced to fund the guarantee. The state should not support or guarantee positive claim rights as this creates a state without limitless power.

I then turned to the concepts of human needs and the social safety net in my third post. In this I concluded that a social safety net is important to meet the human need of security by protecting those who have from those who have not. This introduces the potential need for state funded health services.

In my most recent post, I presented data gathered from the World Health Organization for a comparative analysis of national health care finances (public and private) as well as services and outcomes. My conclusion is that the U.S. system is inefficient as the costs do not justify the level of service - nor are Americans more healthy as a result.

I now want to turn to the design of a more ideal health care system. I say "more ideal" because I do not want to be so arrogant to conclude that I present would be "the ideal" system. With that in mind, let's start by grouping health care services into three categories: prevention, maintenance, and emergency care. Prevention encompasses wellness and routine check-ups. Maintenance includes health services such as prescription drugs, surgeries, blood tests, and extends to things like extended hospital stays, rehabilitation and chemotherapy. I'll define emergency care as unexpected events which require immediate attention such as heart attacks and accidents - including ambulance services.

Except for the unlucky few who are born with or develop health issues or contract diseases in their youth, most of us go through life relatively healthy. A more ideal health care system would revolve around prevention and occasional maintenance services with access to emergency services. I fall into this category - most you reading this probably do too. Successful prevention should help minimize the need for maintenance and this is a two-way street. Both the patient/consumer and the doctor/provider have a role in prevention. Lifestyle choices such as diet and exercise have a clear impact on prevention; however, the advice and assistance of health care professionals can also aid in prevention. This relationship should serve as the basis of the health care industry.

The design of this relationship should ensure that the incentives for both the individual consumers and the health care professionals are aligned to provide the best care possible. It is thus in the consumer's best interest for the service provider to also want to minimize maintenance services. I would suggest that this can best be done by placing the majority of the cost burden due to maintenance upon the health care professionals. This will force an emphasis on prevention. Recall that this is a two-way street. Thus, the consumer must also have an incentive lead a health lifestyle which aids in prevention.

This structure of incentives leads me to believe that a health care subscription service might be the best fit. In this model, the individual would pay a monthly subscription to a health care provider such as a family doctor, local hospital, or possibly a new type of entity that could specialize in these services. In return for the subscription fees, the provider would offer wellness consultations, preventative services, check-ups, and basic maintenance services such as prescription drugs, blood screening, x-rays, etc. The consumer's subscription fees would be higher or lower based on lifestyle choices, the willingness to opt-in to wellness programs offered by or sanctioned by the provider, the level of service desired by the individual, and the general level of health of the individual.

In addition to providing the basic preventative and maintenance services, the provider would also be responsible for emergency costs and more expensive specialist costs when required. As these costs would be less consistent and more expensive, the provider may purchase insurance contracts which cover them in such events. This may lead to a disincentive for the provider to pay for more expensive, but often necessary, treatments. However, this would lead to a direct impact on customer satisfaction and health outcomes. In a model such as the one described, the consumer would have the ability to shop for the best plan which meets their needs. A third-party regulatory body and/or consumer advocacy groups could publish subscription levels, mortality rates, and other relevant statistics to help consumers find the best value for their money. Further, the doctor/patient relationship would have more meaning and specialization would develop where some doctors would focus more on nutrition or exercise and other may tout alternative medicines.

Another feature that I believe that consumers would demand out of such a system is a sort of price guarantee. Consumers would not want their subscription costs to fluctuate too much or be modified in the case where they develop a condition which requires a higher degree of treatment. The subscription contracts could establish a fixed price over the course of months or even years and allow for renewal at prices which do not exceed a specified price level.

In terms of affordability and emergency coverage, this system would still have gaps. Note that I do not believe that access or choice of a provider service should be linked to employment. The subscription fees should be paid out-of-pocket by the individual so that the consumer has as much control over choice as possible (while also making the costs of health care more top-of-mind). Some people will still not be able to afford such a plan. This needs to be addressed from two points: access to emergency services and provision of basic care. Emergency services can be provided via the same infrastructure as described above since, in times of emergency, service should be provided first before we understand who is paying for the services. Basic care is a bit different.

I truly and emphatically believe that basic care can be provided via non-for-profit organizations funded largely (if not completely) by charitable donations. I have no empirical evidence prepared to support such a claim; however, between private individual donations, corporate donations from health providers (sanctioned and supported by their subscribers), and, in the worst case scenario, a tax on the for-profit health care industry which directly funds not-for-profit basic care providers, I'm sure we could cover it.

There are still plenty of questions which must be asked to determine how such a system would address all the critical issues of a health care system. It would be futile to attempt a comprehensive analysis on this blog. But, I do believe that the system describes addresses misaligned incentives, affordability, and overall cost. I have not addressed senior care or those with chronic conditions. The same framework should extend to such circumstances. Two facts that we must all remember in the health care debate are that we will all die and that health care costs money (just like food, water, clothing and shelter). We cannot expect that there would ever be a system which grants everyone infinite access to all forms of health care nor one where nobody dies.