The American Health Care Plan

By John A. Lanzalotti, M.D.

Copyright 1991

 OVERVIEW

The American Health Care Plan is a coherent strategy for comprehensive health care reform that integrates an economic plan, medical liability reform plan, medical education reform plan, a plan for improving access to affordable pharmaceuticals / prescription drugs, and a plan for improving medical outcomes and medical practice delivery reform. The economic plan which is designed to provide a major systemic transformation to the health care market that will result in a new patient centered, consumer driven market based system is the keystone without which reforms in the other areas would fail.  

The economic plan involves a market reform strategy that seeks to create a functional market in American health care where every American has affordable access to personally owned, portable, individually underwritten health care insurance and an ability to pay market price for health care. Our plan targets the inefficiency of our current insurance and financing design as well as our dysfunctional delivery system. We believe that correcting this inefficiency is the best way to make insurance and care accessible and affordable to every American.   

Our plan utilizes an expanded “health care account”, a lifetime savings asset account funded from a variety of current sources by a defined contribution of the money used to pay today’s insurance premiums. This account is  fortified directly by lump sum insurance payments made to the patient instead of to the providers. The patient will pay all medical and health care expenses directly from the account via an electronic debit card. The plan targets and eliminates all reversible cost drivers and the perverse incentives that are a part of our current third party payer, procedure driven, pre-paid health care system. The economic plan introduces competition to the health care market that will keep costs and prices low and quality of care high. The plan calls for the creation of a much more efficient and affordable type of health care insurance that pays into one’s asset account when an expensive insurable event occurs without out of pocket deductibles, co-pays and waiting periods.

This insurance uses computerized experiential data based on the actual care of real patients to establish protocols for insurable events. Each protocol is comprised of various complexity levels based of the severity of the primary illness or injury, the necessary procedures and the presence or absence of any co-morbidities. Each complexity level is tagged to a lump sum pay off amount providing the patient with the necessary funds with which to pay their medical bills for all care associated with that event. The use of protocol insurance precludes the insurance company from having to micro-manage every procedure done by every physician. It also avoids a continuous payment of money form the insurance company for each procedure performed at every visit to the provider. Each payment gives the patient an appropriate amount of money for the particular complexity of their illness or injury so that they have a budget from which to pay for all of their non-discretionary care at market value. 

The plan also calls for high risk pools that function similarly to health care insurance for those Americans that are chronically ill who have predictably high medical expenses year after year and who lack sufficient resources to finance them, have pre-existing conditions or are considered un-insurable by setting up catastrophic claims reinsurance pools. Under such a model, all insurers in a state or region would cede their cata­strophic claims to the pool, and the cost of the pool would then be funded out of a per-covered-life assessment on all insurers. In that way, the burden of high-cost cases would be spread evenly among all carriers and insurers, who would have strong economic incentives to manage these cases, and not simply dumped on the taxpayer. In addition, there would be a public-private partnership between the federal government and insurance companies who would administer a subsidy to keep premiums affordable for the working poor. By having the insurance fortify one’s asset account and having the patient pay all health care expenses from their account does not shield the consumer from the true costs of services the way third party payment does today which often results in over-utilization.

The unique element of the economic plan which differentiates The American Health Care Plan from other “market”plans are these protocols. The protocols have several very important functions. First, they allow us to move from third party procedure driven insurance payments to a lump sum payment without requiring expensive legal contracts. Lump sum payment encourages the physician to assume total integrated management of the patient’s problem. This will discourage the disjointed episodic delivery of procedures by various doctors associated with today’s system. Second, they allow us to move to the individual insurance market from group insurance removing the burden of managing health care from employers. The protocols obviate expensive administrative costs traditionally associated with the individual market. By moving to the individual market we can provide true portability for every American. Third, the protocols allow us to use medical experience and broadly accepted standards by the medical community of what constitutes good health care and define episodes and the relative value of that care. Fourth, these protocols allow us to reduce administrative costs from 31% to less than 2%, showing significant savings.  This means that The American Health Care Plan can be started today in the private sector by companies that are self insured under ERISA and at a minimum will be able to show significant cost savings with no changes in current law.

This economic plan not only creates a functional and responsive market in health care but addresses the continued absence of personal choice and control of health care options that exists in today’s dysfunctional market. It provides a more aggressive, comprehensive and fundamental approach to reform which is needed.

 Medical liability reform involves addressing the three major problems today with medical malpractice suites; 1. Patients aren’t adequately protected from medical malpractice, 2. the fact that most patients don’t have the money or insurance to pay for health care required when there has been a bad result of medical treatment whether it is a direct result of  malpractice or not. Today the patient has no recourse but to sue the doctor. The other major problem that exists 3. is that as a result of the high costs of defending malpractice cases most of which the doctor wins, the medical liability insurance premiums are rising dramatically forcing many good doctors out of practice. Many of the current proposals for medical liability reform that include limiting punitive damages, pain and suffering awards, attorney contingency fees, the jury’s role in determining the amount of awards, class action suites and the fault and non-fault based systems of alternative dispute, fail to address these three major problems adequately.  

The American Health Care reform plan  proposes 1. The use of the American Health Care Plan's  economic plan to provide affordable access for all Americans to health insurance and health care services in conjunction with eliminating the collateral source rule and 2.  Procedural safeguards to prevent specious cases from being started, costing money which begins with filing of the claim. In our current system having the plaintiff's attorney certify to the court that a malpractice action has been committed by a physician is like asking the fox to guard the hen house. We propose that we adopt a special health or medical court that would be primarily administrative,  eliminating the adversarial system in Med Mal Practice. We recommend adopting a similar system that is used in the Exhaustion of Administrative Remedies Doctrine that currently exists in the Federal Tort Claims Act and apply it to med mal cases. This would require a panel of court appointed experts acting at the discretion of the judge to determine if there is probable cause that  a deviation from the standard of care occurred. The experts, who may choose to use objective surveys of large numbers of physicians to help determine the standard of care, and if there was a deviation, will determine whether it resulted in causation of damages. Filing a claim would depend on the issuance of a certification from the panel that would serve as a jurisdictional prerequisite to begin the suite.  The panel would also act in an advisory capacity to the judge who would establish parameters for the jury. This administrative court would use various pre-determined categories representing ranges of award payments. The judge would give the jury discretion to award a payment only within a particular range category depending on the case. This system would be fairer to patients, result in less expensive and much shorter litigation and eliminate specious cases quickly and provide consistent rulings on the standard of care from case to case so that precedents are set and that like cases are decided alike.  Unlike the current system, where  jurors determine the standard of care on an ad-hoc basis. 

The American Health Care Plan addresses the changing role of the physician as well, from a seller of  reimbursable procedures to that of a trusted professional whose job it is to exam, to diagnose and to treat illness and injury and within the context of appropriate treatment, provide the patient with information concerning the benefits and risks of various cost options so that the patient can make informed decisions concerning their health care. The role of the physician is that of a broker of services rather than a seller of procedures as it is under the current paradigm. 

The American Health Care reform Plan recommends the use of electronic medical records to reduce the number of mistakes as well as redundant costs from the unnecessary duplication of medical testing. 

The Plan also addresses information technology. The plan calls for the establishment of a non –governmental and  independent Institute for Pharmaceuticals, Technology, and Outcomes Assessment to systematically evaluate new drugs and technologies and quantify their health benefits in relation to their costs to provide legitimate information. In this way the physician can determine if the marginal benefit is justified by the marginal cost. Make these evaluations available to all practicing physicians at the point of service through computer access.  

The Plan also recommends a re-structuring of the pharmaceutical market so that there is less duplication of the very expensive development of new drugs, more competition among the wholesalers of prescription drugs and the use of economies of scale with increased buying power to reduce costs and elevate quality of all medications. 

The Plan recommends reforms in the training of physicians that eliminates the high Medicare costs that currently funds graduate medical education and transforms the residency training process from being an extended hazing period to one of efficient training of the skills, attitude and knowledge basic to being able to meet the needs of the patient.