Principles for Cost-Effective Sustainable Health Care Reform

1.         Universality -- single risk pool

2.         Standardized benefits, adequate for effective medically necessary care

3.         Minimize administration

4.         Promote professionalism in health care

5.         Quality Improvement

6.         Ensure adequate professional workforce, especially for primary care

7.         Accountability must be to the health needs of the population

8.         Separate, sustainable funding for health care

1.       Universality -- single risk pool

Large health care savings become possible if competing plans are consolidated into a universal program with a single risk pool. This will eliminate insurance costs of underwriting, adverse selection, multiple private bureaucracies, brokers, lobbying, and marketing and advertising. Health plan incentives to avoid covering the sick and to "cherry pick" healthier subscribers and risk pools will be eliminated. There will be no pre-existing condition exclusions, cost-shifting, and disputes over who is responsible for paying for care. A broader risk pool will reduce per capita insurance reserve requirements. For businesses, a universal program will uncouple health insurance from employment status, and eliminate employer costs for health benefits administration. Patients will gain free choice of providers, with no restricted panels by plan. Everyone will have access to the same care, and the poor will no longer be relegated to an under-funded Medicaid program. The state will save the cost of eligibility determination for Medicaid. For care providers, there will be no uncompensated care. Universal coverage could remove health care costs from medical malpractice, worker's compensation, and auto insurance, greatly reducing insurance costs, even without tort reform.

2.        Standardized benefits, adequate for effective care

A universal program will require comprehensive benefits, adequate for all medically necessary care. Since those now covered under Medicaid will be included, co-pays and deductibles will have to be eliminated or so minimal that they could be waived for those who could not afford them. For the poor, there must be no financial barriers to seeking appropriate care. For those with moderate incomes, there will be no "under-insurance" or unaffordable costs for those with serious or disabling illness. Medical bankruptcy will be eliminated.

3.     Minimize administration

With a universal program, billing and clams processing will be vastly simplified and standardized. Electronic health records and gathering of data for quality improvement will be standardized across all patients and providers. So will formulary and prior authorization policies for drugs. Incentives for cost-effectiveness should be at the point of service, between doctor and patient, minimizing central management of health care decisions by the program (managed care) with its high administrative costs. Global budgets for hospitals and integrated care systems will eliminate billing costs that can consume up to 20% of hospital budgets.

4.       Promote professionalism in health care

In order to protect the public interest and safety, a universal health program must require maintenance of high standards for professional training. Professional scope of practice must be based on training, not lobbying. Physicians and other providers should be required to maintain membership in a professional organization, tied to licensure, to ensure that peer review and professional ethical standards are enforceable, and to promote continuing education. A universal program will also require organization of physicians and other professionals for negotiation of fees with the program, and for participation in quality improvement. The program should harness professionalism to keep health care equitable and cost-effective. The net income potential for professionals must be commensurate with the training and skills necessary for their scope of practice, and any reduction in professional pay must be tied to reduction in administrative burdens (cost, time, and hassles), reduced risk of lawsuits, and subsidies for training costs.

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