Sunday, March 31, 2013

Better Health Care System?

Better Health Care System?

Health care quality and cost are one of the biggest issues plaguing the world today, threatening to overwhelm consumers and government budgets everywhere and is growing worse year after year.

The root of healthcare inflation is the current health insurance system. Why?

  • Hospital and medical providers are prone to prescribe unnecessary and expensive visits, tests, operations, medications and hospitalizations so as to maximise profit and avoid litigation.
  • Price gouging and fraud are very widespread under the present system.
  • Insured patients will also likely to opted for ever more visits/tests/operation/medication/hospitalization since insurance will pay for them. Many of the procedures are unnecessary or even detrimental to their health.
  • Health insurance companies have to increase premium year after year to cover ever increasing medical expenditure and to make a decent profit.
  • Many in the lower income group are being left out the the system since the cost is beyond their ability to pay.

This is a vicious cycle resulting in ever higher health care cost, straining the capacity of health care providers and will ultimately bring the economy to its knees if something is not being done soon.

The average annual insurance rate has reach $5,600 for single coverage and $15,700 for family coverage in USA in 2012. The average household income is $46,000, which means one third will be spend on medical insurance alone. And the lowest 15% earned only $23,000. They will have nothing left after paying for medical insurance and rental. Soon more than 30% of American may not be able to afford medical insurance at all if the situation continues from about 18% now.

(Reuters) - The cost of healthcare services is expected to rise 7.5 percent in 2013, more than three times the projected rates for inflation and GDP growth.


Hospital Membership Scheme

My idea, HMS, maybe able to cut the cost healthcare in half or even more, improve the health care quality and well being of all if implemented.

Consumers will buy medical coverage, HMS, directly from hospitals and cut out the insurance companies altogether.

Premium will depend on age, condition and lifestyle of individual but at a much lower rate since the middle men’s markup and administration expenses will be eliminated.

  • Hospitals will have no incentive to prescribe unnecessary procedures since they will have to pay for them.
  • Consumers will be encouraged to live a healthier lifestyle since it can lower their premium. (A non smoking, non-obese person who exercise regularly will enjoy lower premium.)
  • Doctors will focus on prevention rather than cure.
  • A healthier customer will incur lower cost, therefore hospitals will be incentivised to advise them to lead a healthier lifestyle.
  • Doctors would be paid a fixed salary commensurate with their qualifications and on profit sharing basis to discourage wastage.
  • Members who incur lower fees than their premium will enjoy a rebate for the next payment, further discouraging wastage.
  • Much lower administration cost for hospitals since they do not have to claim disbursement from insurance companies.
  • All this will free up capacity in hospitals which means they can provide better care for patients who really need them and for more members.
  • Customers who donate their blood or organ should enjoy lower premium, this will increase the number of donors tremendously.
  • Most importantly, hospitals will profit from a healthier rather than a sicker customer. Hospital can hold wellness workshops to teach healthier lifestyle to its members.
  • Disputes should be settled by arbitration instead of lawsuit, which is cheaper and faster for both parties.
  • Governments can also save cost by giving vouchers to the needies to buy HMS.

We should save 30 to 50% just by cutting out insurance (sales commission alone is 15 to 25%) and another 30 to 40% from unneeded procedures and admin cost. Total savings can be up to 60 to 80%! And quality of medical care will improve since hospital will have more capacity when unneeded procedures are eliminated.

Hospitals will also have to compete with other hospitals by providing lower premium and better quality care to attract memberships. They can also form alliances so customers can have a choice of hospitals.

The present system is untenable and will wreck the economy if not fixed. HMS maybe the solution. I hope this will start a debate and be improved.

Simon Teh

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