I’ll get to healthcare in a minute, but before that, a couple of digressions, which by now you should expect from me:
First, my daughter Julia, who graduated from high school in May (a year early, no less) is now on Day 5 of her Latin American adventure. She will be in San Pedro Sula, Honduras, for the next 9 months working in an orphanage. She’s like that. Right now, she’s in Guadalajara for two weeks of intensive language school. She set up a blog to chronicle her trip and the little schnook already has something like ten times the number of subscribers I do. You can be one too – just visit http://juliainhonduras.wordpress.com.
Second, last week, I went to Detroit for my quarterly meeting with the wonderful folks at EOS Worldwide, whose system I use to help company achieve better performance. I went a day early so that my friend Steve Smolinsky and I could play golf. The trip to the golf course, with Steve at the wheel, was nothing less than harrowing, but worth it since I got to see Steve score a hole in one. The irony is that this occurred during one of the two worst rounds of golf played in North America this year. The other was the one I played alongside him. You can, and should, read about it here.
Lastly, my flight to Detroit put me smack in the middle of United’s complete computer meltdown. On a whim, I had checked in online, so I got through it all in relatively good shape, and with lots of sympathy and “there but for the grace” thoughts for the thousands of people standing in long, non-moving lines. Since United couldn’t check people in, the security lines were very short, which enabled the nice TSA folks to give much more scrutiny to the few of us who got through. I emerged with my honor, if not my virginity, intact, which is all I have to say about that.
Now, on to healthcare. . .
My business partner, Bill Burnett, says that new ideas are formed through synthesis, which simply means that you’re walking around with a body of knowledge in your head, and occasionally you bump into a bit of someone else’s knowledge that magically triggers a new thought which helps you solve a problem. So it is with me and healthcare.
Last weekend, I read an article that my shotgun-toting friend Tim Padgett sent to a bunch of people, one of whom sent it on to me. It was from the latest Fortune magazine, which asked two of their writers, Geoff Colvin and Allan Sloan, who are political polar opposites, to see if they could solve the deficit problem. (Spoiler alert – they did.) Along the way, they said a couple of things about Medicare that were just the catalyst I needed. And voila! Healthcare solved. So here we go:
1) Institute a federally run, single-payer health insurance system, which amounts to extending Medicare to everyone. I’ve said elsewhere that I think a single-payer system is inevitable and that we should just get on with it. This would correctly reflect the fact that most health insurance isn’t really insurance, but is actually a confiscation and transfer of wealth from younger, healthier people to older, less healthy people. It would immediately provide universal coverage and would get businesses out of the business of health insurance, which is a business they have no business being in. It also would let people make job decisions based on their skills and career interests, rather than on health insurance.
2) Put a cap on the amount this system will spend on late-in-life services. If I told you that 10% of all healthcare spending goes to people in the last year of life, would that seem like a high number? The real number, according to the National Institutes of Health, is around 20%. Allow the private market to sell late-in-life supplemental policies to those who want and can afford them, very much like current Medicare supplemental policies. (These two ideas come directly from the Fortune article.) These supplements will wind up being like long-term care insurance – something that is reasonably priced if you get in while you’re young and very expensive if you wait until it’s too late. (This is, pardon the phrase, strong medicine, and it will take some work to figure out how to get there. But it reflects the kinds of tough choices we have to make. I know an 89-year-old man who is a terrific guy in the early stages of dementia, and who had a complete shoulder replacement last week. The total price tag on this will probably be $100,000. You and I helped pay for it.)
3) Establish a co-pay scale that goes up as the participant’s wellness goes down. Let’s say the base co-pay is 5%. It goes up by one point for every point your BMI is above what it should be. Whatever that number is, double it if you smoke. So each of us will have a very strong financial incentive to manage our health proactively.
4) Allow the private market to sell co-pay reduction supplements. If you are an obese smoker and want to insure yourself against the extra cost, you have that option (if anyone can figure out how to make money at it).
That’s it. Universal coverage. The end of employer-sponsored health insurance, which is a disaster for businesses, crushes US competitiveness, and is an anachronism left over from a war that ended 72 years ago. Strong incentives to reduce the underlying factors that drive high healthcare consumption and spending. An appropriate role for the private sector.
If there’s a reason why this wouldn’t work, I would like to know what it is. Please comment!