What is Protocol Insurance?

"The principles of Jefferson are the axiom of a free society"

Abraham Lincoln

A Nonpartisan Economic, Health and Public Policy Research Foundation


Protocol Insurance 

Health Care costs and prices are increasing. This inflation is a function of insurance design and the current method of filing claims by providers, third party payment and third party regulation. Currently, the methods to finance health care are complex, inefficient, and poorly designed. In particular, there are a lack of proper incentives, many perverse incentives, increasing micromanagement, overhead and administration costs of medical care delivery, all resulting in a dysfunctional market characterized by eccentric power distribution, over-utilization, high costs, high prices, and low quality of insurance and health care delivery.  As system specifications and the need to micromanage the finance and delivery of healthcare to control rising costs, the task of reforming the system has become more highly complex, further driving up costs. This increased complexity has resulted in a need to shift the paradigm of the design of health care insurance, of the finance and delivery of health care and the design of the health care market  place; and created a need for a computer based system to obviate the inefficiencies of the current system and handle complicated data that is necessary to determine the proper insurance payment for any given patient with their individual needs.

The purpose of this plan is to redesign health insurance to eliminate many of the perverse incentives and inefficiencies of the current health insurance product. This plan eliminates twenty-two of the twenty-three cost drivers – those problems associated with current health insurance design that are responsible for driving up the costs of health care in this country. These medical costs consequently drive up the costs of all of our goods and services manufactured or produced by American business. The plan also proposes a new design with checks and balances in a level playing field for the health care market place which will create competition and quality care at lower costs.

The health care finance system according to this plan features an expanded health care savings and asset account that may be funded in a variety of ways giving all Americans equal purchasing power.  An insurance carrier is paid a premium out of the account.  When a patient sees a health care provider, the health care provider generates an electronic medical work-up.  The work-up is analyzed by software, which determines an appropriate protocol and complexity level associated with the patient’s condition.  The protocol and complexity level are then transmitted to the insurance carrier, and the insurance carrier makes a global or lump sum payment directly into the patient’s health care asset account based on the physician work-up determined protocol and complexity level.  The patient accesses those funds using an electronic debit card, to pay the health care provider directly. This allows for immediate direct payment by the patient on the day of service at fair market value at prices set by the provider and not some third party. This eliminates cost shifting and the cost of billing and collections as well as the cost to file and follow-up on insurance claims

This plan will allow the doctor freedom to practice medicine, i.e., to diagnose and treat the patient within the context of appropriate care as defined by the physician and professional standards and not some third party to offer the best quality care at the lowest cost to his patient, to be able to offer the patient various value options at different prices and not be restricted and constrained by the overweening top-down bureaucratic control necessary with today’s insurance design. The protocols also allow the insurance payment to be closely and accurately matched to any patient’s particular medical needs and eliminate the need for third-party micro-management and rationing of health care to the patient. The use of computer software allows the physician to simply work up his patient and by so doing automatically match the complicated data defining the patient’s problem with an appropriate protocol complexity level that accurately matches the patient’s condition. This plan should result in a 50% overall savings( 800 billion dollars in today’s market) and reduce administrative costs to less than 2% while providing 24 hour coverage that is accessible, portable, affordable and renewable to all Americans.