Cover one

An American Health Care Revolution

A proposal whose time has come

By David W. Allen, Jr.

Quality of health care in the U.S. is uneven. On the one hand, the U.S. consistently leads other high-income nations in survival rates for complex diseases, particularly cancer. The U.S. boasts a nearly 70% all-cancer five-year survival rate. In comparison, the UK sits at approximately 55%, and Spain at 57%. The median time from a cancer diagnosis to the start of treatment in the U.S. is 27 days; in the UK, the target is 62 days, and even that target is frequently missed. The U.S. is the undisputed global leader in health care R&D and scientific advancement. On the other hand, the U.S. consistently ranks lower in several fundamental health metrics. Americans have a lower life expectancy, higher maternal mortality rate and higher rates of deaths that could have been prevented with timely, effective medical care than many other high-income countries.

The goals of cost and accessibility are where the most serious deficiencies reside. U.S. National Health Expenditures (NHE) exceed $5.3 trillion annually, 18.0% of GDP, are growing more than 7% annually and are up 62% since 2017. This is $15,474 per person, far more than other high- income countries, which average $6,000 to $7,000. Approximately 27.5 million Americans, 8.2% of the population, are without any form of private insurance or government coverage.  

Physicians spend almost twice as much time on EHR documentation and coding than they do with patients.

How We Got Here

The root of the problem is complex and multifaceted but boils down to defects created by employer-sponsored private insurance and government programs such as Medicare and Medicaid. Third-party payment leaves millions without access to care, dramatically increases its costs and undermines quality. It distorts what patients want and how care is provided. Tweaks intending to restore the dynamics of supply and demand through copayments, deductibles and shifting financial risk to providers don’t work.  

Costs increased by third-party payments are vastly larger than necessary. Obvious costs are the infrastructure to process claims, the burden of a bloated health insurance industry and the diminished productivity of complying with third-party rules. Less obvious is the aggregation of hospitals and physicians into health systems created by the need to negotiate with insurers, not because bigger is better for patients. The whole economy is distorted because employer-sponsored health insurance advantages large businesses over small businesses.

Often overlooked but very important to understand is the cost driven by third-party coding requirements. Health systems install expensive systems and employ certified medical coders and revenue cycle management specialists to ensure every interaction is captured perfectly while insurance companies weaponize their own claims adjusters to find coding errors to justify denial or down-coding of reimbursement. Documentation is an existential mission for physicians.

Reimbursement for a 15-minute office visit depends on whether documentation supports coding as Level 3, 4, or 5. A comprehensive list of secondary diagnoses, relevant and irrelevant, is helpful in inflating reimbursement. Every blood draw, diagnostic image, and separate consultation has its own code, so care must be atomized; churn is more important than efficiency or patient convenience. Innovation is suppressed; if there is no billable code, an alternative cannot be considered. Today in America, physicians spend almost twice as much time on EHR documentation and coding than they do with patients.

An example of why the current system is failing is the fate of the Fairview Experiment. Research by John Kralewski, PhD, from the University of Minnesota School of Public Health, as far back as 1991, revealed that when primary care was reconfigured into a multidisciplinary team — utilizing nurse practitioners and care guides to handle routine visits and phone consultations — the total cost of care dropped by 38%, while patient satisfaction surged by 30%. In any other industry, a 38% gain in efficiency would be a revolutionary success. In American health care, it was a financial catastrophe for the provider. The Fairview model was dismantled not because it failed the patients, but because it failed the third- party billing machines. Insurance companies generally refuse to pay for a phone consultation, a nurse-led care plan, or a check-in that doesn’t have a specific, billable CPT code associated with a face-to-face physician encounter. By mandating that care be atomized into billable units, the current system forces physicians to spend 45% of their time on minor illnesses that could be managed by team members.  

Potential Solutions

How can we fix these problems? The Affordable Care Act decreased the number of people without coverage, but it failed to control costs. Proposals for a universal single-payer system may achieve the goal of providing everyone with access to care but will not bring the costs of third-party payment under control. Single-payer health care will diminish quality. In the U.S., only 31% of patients wait more than a month to see a specialist while in Canada the number is 62%, and in the UK, it is 55%. The U.S. has significantly higher concentrations of advanced diagnostic tools; for example, the U.S. has roughly one CT scanner for every 73,000 people, whereas peer nations often have far fewer, leading to diagnostic delays. New drugs and medical devices typically gain regulatory approval and clinical adoption in the U.S. years before they are accessible in many European or single-payer systems. U.S. patients report higher levels of involvement in medical decisions compared to those in more paternalistic, state-run systems. While outcomes are mixed, U.S. physicians are more likely to discuss lifestyle changes and preventive screenings during routine visits than their counterparts in high-volume, state-managed clinics. The transformation of health care under single- payer systems is ugly and should be unacceptable.  

Proposals featuring Health Savings Accounts will also fail to achieve the goals of accessibility, affordability and quality. It is unclear how HSAs can lead to universal coverage. HSAs do not address the problems of third-party reimbursement. HSAs have the benefit of encouraging the prudent purchase of some health care, but they would rarely be relevant for expensive episodes of care.

An approach that will achieve the goals of accessibility, affordability and quality is to issue every American taxpayer a government-backed health transaction card to pay for health care. Responsibility for repaying charges on the health transaction card will be shared by the taxpayer and the government in accordance with the taxpayer’s income. A critical aspect of this proposal is that people are cognizant they are spending their own money when purchasing health care — but doing so with a government safety net that keeps health care affordable. Third-parties would be prohibited from paying health care providers directly. 

Making it Work

Let’s outline how this might work. Purchases of health care services and products are made with the health transaction card. The provider processes the payment just like a credit card and is reimbursed fully and immediately. The taxpayer gets a monthly statement, just like a credit card. The taxpayer is required to make a minimum monthly payment on any balance, perhaps $100. At the end of the year, if there is an unpaid balance, a portion of this balance will be added to their tax liability and the health card will return to $0. The portion of their unpaid balance that will be added to their tax liability depends on their income level. If they have a low income, they will be required to repay only a small part of the unpaid balance. If they have a high income, they will have to pay more. A reasonable formula might require taxpayers to devote up to 10% of their income to repayment of health expenses, perhaps somewhat more in rare, high-cost circumstances.

This proposal accomplishes the goals of a good health care system.

Here are some examples. Judy is a single mom with two young children who earns $50,000 a year. Routine health needs add $2,000 to her health card and then her youngest is hospitalized resulting in a $50,000 charge. Over the course of the year, Judy has withheld $400 per month for health care federal taxes and made her required $100 per month payments. Since there was no health care purchased in the first two months and no balance on her health card statement, by the end of the year Judy had paid $1,000 on her credit card balance, had $4,800 health care federal income tax withholdings and her health care card showed a balance of $51,000 ($52,000 of purchase less $1,000 payments made). The total amount she is responsible for paying is $5,000 (10% of her $50,000 income). She has already paid $1,000, so she has an outstanding balance of $4,000. She will get an $800 tax refund! Judy is delighted with this plan because she no longer has Medicare taxes to pay and the $400 per month tax withholding and the $100 minimum monthly payments are far less than what she used to pay for insurance.

Bob and Barb are empty nesters in their 50’s with combined incomes of $300,000. Their health care costs were also $52,000 and they also have reimbursed $1,000 through their minimum monthly payments. Bob and Barb, however, are responsible for reimbursing $30,000 for health care purchases (10% of their $300,000 income). They’re not too unhappy about this because, like Judy, they anticipated this liability and adjusted their withholdings appropriately. Also, Barb is delighted her small advertising firm has been able to recruit some top talent from big agencies who previously would not have considered working for a small firm without health benefits.

Steve is an 80-year-old widower struggling to make ends meet on his social security income of $30,000 per year. Steve is happy that his new health care card has made possible health services that would not have been reimbursed by Medicare such as telephone consultations and prescription refills done over the phone or internet. He’s pleased with the new health card because, while he ends up having to pay the full $100 minimum payment each month and has $200 withheld from his monthly Social Security, this is still less than what he used to pay for Medicare Parts A, B and D.

This proposal accomplishes the goals of a good health care system. All will be entitled to a health transaction card and have the means to purchase the care they need; accessibility is achieved. Providers will be able to serve patients in ways best suited to their needs; quality is achieved. The overhead of claims submission, the impositions on physician productivity, the inflation of upcoding, the huge sums removed from health care for insurance company “reserves” and the inefficiency of adhering to codes — all will disappear; affordability is achieved.

This proposal also results in profound and beneficial changes to health care and beyond. The absence of the need for expensive EHS systems, high paid administrators and negotiating leverage renders massive health care systems obsolete; physicians and small clinics are competitive once again. Care will become more geographically distributed, less expensive, more diverse, more convenient and serve patients better. Prudent consumers of health care will no longer choose emergency rooms for non-emergent needs. Government’s role will shrink from determining if the coded service is covered to simple transaction legitimacy. Dead capital retained as reserves by health insurers is released. The economy improves as health care consumes a smaller portion of GDP and small businesses are no longer hobbled by the difficulties of offering health benefits to their employees.

Research tells us that one of the problems patients face when arranging transit is that the conversation begins after they leave the doctor’s office. The appointment is made, and now the patient, often alone, begins to figure out transportation. We can’t expect a physician to assume the challenge of arranging transportation, but we can recommend action steps that will make a big difference.

Start by recognizing potential transportation challenges as part of providing health care. Acknowledge that transportation can be a problem. This may give a timid patient the permission they need to let your staff know about the challenges they face as they schedule a referral or a follow-up appointment. Acknowledging transportation challenges also minimizes shame or stigma related to these travel challenges — which may make it easier for your patient to seek help.

Make a discussion of the challenges in transportation part of scheduling an appointment. Although your office may be open from 7:45 a.m. to 4:30 p.m., some patients without easy transportation might find making an appointment before 10 a.m. very difficult. Some patients with easy transportation may also find 8 a.m. appointments hard to make, because they work late or they have responsibilities to children, or a hundred other reasons. Create an environment where you recognize that getting to the appointments may be complex.

It would be far better to schedule appointments with certain patients after 10 a.m., because you understand the pressures single parents face in getting themselves and their kids around the city on the bus, than to schedule them for 8:30 a.m. and see them miss their appointment. Similarly, it would be far better for a patient needing care from fifty miles away to schedule a January appointment for noon, in case the roads need plowing, making an 8 a.m. appointment an impossible goal.  

You and your staff may or may not be able to solve your patient’s problems, but acknowledging them brings them to mind for the patient so they can begin the problem-solving process.  

Another important action step in addressing these issues is to maintain resources that point patients toward transportation options in your area. You can keep these resources in two forms: — in paper forms such as brochures, handouts and printouts that your staff can manage; the other option includes electronic data access, such as a template email with links to resources.  

Circulate these resources easily and comfortably along with appointment reminders. At an in-office visit, distribute them to patients who might benefit from the information. These strategies may decrease no-shows and increase individual patient satisfaction. They are, however, bandaids, short term fixes that do not address the systemic problem.  

At the level of the large practice, or the practice attached to a hospital system, small changes can make a big difference. For example, hospitals across Minnesota are adding “discharge lounges,” where patients may await transportation home, freeing resources for incoming patients.  

The nonemergency medical transportation system is overwhelmed by demand and undercompensated by the state and by the insurance industry. Deeper, structural solutions are needed, and physicians and their clinic managers must have a role in advocating for the needed changes.

David Beard, PhD, specializes in scientific and technical communication and is a professor at the University of Minnesota Duluth.