A solution for Medicare

Medicare is the healthcare insurance program for retired and disabled individuals who have paid enough into the system to become eligible for coverage. It consists of Parts A (hospital), B (physician), and D (drug) coverage, each with separate deductible and coinsurance provisions. Part A is free; parts B and D are optional and require payment of an additional premium, generally withdrawn monthly from one’s Social Security payment. Some beneficiaries choose to enroll in Medicare Advantage (HMO or PPO) plans, which replace their Medicare coverage with a private insurance plan with limited choice of providers.

The majority of beneficiaries who keep traditional Medicare enroll in private Medigap plans to cover part or all of their Parts A and B annual deductibles and coinsurance. Popular Medigap plans include Blue Cross and Blue Shield, United Healthcare/AARP, United American, and USAA Life. Those whose income is below a certain level are eligible for Medicaid coverage, and military retirees and their spouses are eligible for Tricare. A few retirees of large corporations have retiree health benefits which may pay some or all of their deductibles and coinsurance; because this coverage is often only partial, many of these retirees also purchase a Medigap policy.

After a claim for services is processed by Medicare, Medicare is supposed to electronically forward the claim to Medicaid, Tricare, or the Medigap insurance company for processing and payment of any additional benefits. In the case of retiree health plans, it is up to the provider of service or the patient to copy the Medicare explanation of benefits and submit a claim to the health plan.

A consequence of this system is that each claim for medical service is processed twice (or even three times!) by different bureaucracies, costing extra postage each time and utilizing additional paper. Each bureaucracy, in turn, has its own claim processors, administrators, and human resource people to support out of the premium dollars it is paid.

A more efficient system would be to eliminate the secondary insurers. For a Medicaid-eligible beneficiary, Medicaid would pay to Medicare a fixed amount per month; likewise, for a Tricare beneficiary, the armed forces would pay to Medicare a fixed amount per month. An employer which offered retiree health benefits would pay Medicare a fixed amount per month per retiree. Other Medicare beneficiaries, instead of paying a monthly premium to a Medigap insurance company, would pay a comparable, likely lower, premium to Medicare for the level of coverage they desire. Medicare, in turn, would pay 100% (perhaps less, in the case of Medicaid beneficiaries) of the covered amount for each claim, without any need to transmit the claim to another insurer. By receiving the additional premium revenue from Medicaid, the armed forces, employers, and beneficiaries, Medicare would cut its losses. Medicaid, the armed forces, and employers offering retiree health benefits would save the costs of processing claims. Beneficiaries might see a reduction in premiums. Lastly, providers of service would receive payment sooner and save the bookkeeping cost of posting two or more payments per claim.

A downside would be loss of the jobs of those who work for the Medigap insurance companies and those who process claims for Medicaid, Tricare, and some employers.

The problem--too many healthcare dollars spent on costs which are not medically necessary

The United States healthcare dollar is paying the salaries of many people who are not directly involved in providing healthcare. Some examples:
• Creators and publishers of direct-to-consumer print and live media advertising for prescription medications.
• Creators and publishers of advertising for professional and institutional providers of healthcare.
• Employees of insurance companies (medical, auto, workers compensation) which cover healthcare.
• Creators and publishers of advertising for healthcare insurance companies.
• Insurance brokers who sell insurance which covers healthcare.
• Employees of companies which process healthcare claims.
• Personnel department employees who handle group insurance enrollment for employers who provide health insurance.
• Employees of hospitals, pharmacies, medical equipment companies, physicians, and other healthcare providers whose jobs are to submit claims to insurers and communicate with insurers regarding eligibility verification and prior authorizations.

An efficient healthcare system could eliminate most of these jobs, at the price of increased unemployment.

The problem--too many different health insurance transitions

Johnny was born while his father, Sam, was away in the service, so his first health insurance was through Tricare (1). Sam came home and went to college, obtaining student health insurance (2) that covered Johnny as a dependent. Sam graduated and went to work for a large corporation, obtaining employer-sponsored health insurance (3) that covered Johnny. A year later the corporation changed insurance companies (4). Sam left the corporation and started his own business, obtaining small business health insurance (5). Sam died in an auto accident, and Johnny’s mother, Jane, was left in debt. She had to sell their house and move in with her mother, and Johnny was now covered by Medicaid (6). After a few years, Jane was able to go to work and get benefits (7).
Johnny graduated from high school and enlisted in the service, where his health care was provided for in military facilities (8). His unit was sent into combat, and he was injured. His body recovered, but he was left with a post-traumatic stress disorder and discharged medically with a 20% service-connected disability, for which he sought treatment at a VA Medical Center (9). He found work and started college, where he enrolled in the student health insurance (10). One night he had too much to drink and lost control of his car, suffering a broken leg. His hospital treatment was billed to his auto insurance (11). He graduated from college and went to work in a bank as a loan officer. After a waiting period he became covered by its medical insurance plan (12). He met, fell in love with, and married the female letter carrier who brought mail to the bank, and he now had secondary coverage through her insurance (13).
However, one day a disgruntled client whose loan application Johnny had turned down returned with a gun and fired wildly, striking Johnny in the shoulder. He was taken to the hospital and treated, the costs being billed to the bank’s workers compensation carrier (14). His injury wasn’t too bad, but he decided he didn’t want to work for the bank any more. He went to the state Vocational Rehabilitation department for help in re-training to be a real estate salesman. His PTSD, which had been under control, had flared up, but the VA wouldn’t treat him because the latest trauma wasn’t service-related, so his treatment was paid for by VR (15).
Johnny finally found his niche and did well in real estate. He started with a large agency and obtained coverage thru its health insurance (16), but he did so well he left and started his own agency, purchasing a new policy for it (17). He and his wife traveled a lot, and once while in Mexico he came down with Montezuma’s revenge; his emergency room visit was covered by his traveler’s insurance policy (18). When he turned 65 he went on Medicare (19) and purchased a supplemental policy (20) to cover its gaps.