Medical Care Reforms

Health maintenance organizations (HMO's) were created to keep under control the costs of medical care (health care). They were to contract with physicians and hospitals and clinics to create a network of medical care providers that could be controlled for costs.

The HMO's have created a number of problems that have to be addressed.

All of the HMO's policies and resulting restrictions are understandable when one realizes that these companies were in business not to provide medical care but to make a profit providing medical care.

HMO's now appear to be causing problems that can only be addressed by getting rid of the HMO system and replacing it with a patient-based system in which a patient buys a major medical insurance policy with a significant deductible ($2500 or more), and the patient then funds the deductible by a credit card account or a medical savings account which is tax deductible as an incentive for the patient to fully fund.

Those patients who cannot afford major medical insurance and the high deductibles could have the benefit of the clinic approach in which physicians/hospitals/clinics can be afforded tax benefits for providing medical services and supplies to indigent patients. Hospitals and clinics which are required to have physicians and other staff on duty who are paid a salary and who are therefore available for medical services regardless of the actual need for emergency services can therefore offer off-peak hour services to indigent patients and receive tax deductions for such services that would affect their bottom line profitability and thus justify the services provided. The same tax incentives would be offered to physicians who provide services to indigent patients. In short, physicians/hospitals/clinics can be encouraged to provide medical services if they can deduct as expenses the money they would have charged to paying patients. If physicians/hospitals/clinics cannot receive income for services provided, then at least they could receive tax benefits instead.

By the patient-based system, the patient then pays directly by means of a medical care debit card (MCDC, similar to a credit card in operation) which is to be given to the medical service provider and which enables the provider to charge the patient's deductible account and then the major medical insurance policy by means of the provider's office computers and therefore eliminate the need for much of the paperwork and administration that runs up the provider's overall medical expenses.

Because the patient pays his initial medical expenses from his deductible account, he would benefit from shopping the marketplace for physicians/hospitals/clinics who/which would offer the best medical products and services at the best (lowest) prices just as he would benefit from shopping for the best prices on any other products and services. This patient's right to shop the best prices for medical products and services would create the marketplace incentives for physicians/hospitals/clinics to lower their prices for products and services and therefore reduce the overall costs of medical care.

The New Hampshire Medical Care Plan

A. Patient Pays - Single Payer Plan. [See D. NH Medical Green Card below.]

By requiring the patient to pay for the costs of medical care, first through a high deductible, then through a major medical insurance policy, the patient will be encouraged to shop for the best price of medical care, have his choice of doctors, and hospitals and clinics, and thus competition among medical care providers will be encouraged.

B. Patient Responsibility for Major Medical Insurance with $2500 deductible. If the individual does not receive medical insurance coverage through his employment, then the individual pays for his own insurance.

The following tables are provided by Mutual of Omaha.

Single individual (no dependents) monthly major medical insurance rates from Mutual of Omaha. This table is posted 6/23/00. Mutual of Omaha will be imposing an 18% increase on 7/1/00.

Mutual of Omaha Major Medical Insurance Plans for a Single Individual

Deductible $2500.00 $3500.00 $5000.00
Age 25 $91.52 $77.66 $61.92
Age 35 $111.97 $95.03 $75.76
Age 45 $161.50 $137.05 $109.28
Age 55 $252.52 $214.31 $170.86

The following table presents Mutual of Omaha's rates for a four-person family consisting of a man, wife, and two children, with the age set for the husband, again with an 18% increase as of 7/1/00.

Mutual of Omaha Major Medical Family Plans [Man/Wife/2 Children]

Deductible $2500.00 $3500.00 $5000.00
Age 25 $181.52 $154.06 $122.84
Age 35 $201.98 $171.43 $136.68
Age 45 $251.51 $213.45 $170.19
Age 55 $342.53 $290.71 $231.78

The following table presents Mutual of Omaha's $2500 Accident Rider to cover $2500 of the deductibles for the Major Medical plans.

Mutual of Omaha $2500 Accidental Rider

Adult per month $23.68
Additional Adult per month $10.00 (Approximate)
Additional Child per month $10.00 (Approximate)
C. Medical Savings Account: Tax deductible $2500 account to cover the major medical insurance deductible.

D. NH Medical Green Card to be used by patient to automatically tap his medical savings account and then his major medical insurance.

The NH Medical Green Card shall be valid throughout the world, and only the usual and customary charges for medical care shall be paid to avoid overcharging.

E. Patient choice of doctors and hospitals/clinics.

The patient shall have complete choice of doctors and hospitals/clinics.

F. Doctor diagnoses. No lawyer or accountant shall have any influence upon the medical process including diagnostic tests and diagnoses.

G. Patient and doctor decide upon treatment plan.

H. Doctors set their own fees.

By this plan, doctors shall be subject to market forces [competition] with the result that physicians’ office fees and other fees shall be be set at reasonable figures.

I. Practicing doctors cannot work for insurance companies: to avoid conflicts of interest.

J. All citizens of NH to be eligible regardless of medical history. [I.E.: No groups; or all of NH is one group.]

K. Insurance companies to offer only major medical insurance. [Accidental riders and/or hospital riders okay.]

L. Insurance companies are to provide coverage to the high-risk people without additional premiums.

No exceptions to illnesses or injuries. All medical problems are to be covered, including mental illnesses.

M. The state is to provide assistance for citizens who have not built up their medical savings account; but this assistance is to be repaid from the individual’s medical savings account when the patient pays into it. [Medical IOU]

N. Individuals who are uninsured can use hospital emergency rooms, especially in off-peak hours; the state is to pay only for the additional medical supplies and drugs, not the salaries of doctors and other personnel who, by law, must man the facility and who are thereby fixed costs and who are not thereby to be included in the cost of treating uninsured patients. The state only pays for additional costs of medical supplies and drugs but not fixed costs such as personnel salaries and expenses.

Hospitals which provide medical care to uninsured patients shall be eligible for tax credits to deduct the usual and customary costs of treatment [salaries] from their profit and loss statements, and thus recover part of their costs of treatment of uninsured patients.

Uninsured individuals can also seek treatment from private doctors. Doctors who choose to provide care uninsured patients shall be eligible for tax credits to deduct their usual and customary office fees and medical service fees from their profit and loss statements, with the result that doctors shall be able to recover part of their costs of treating uninsured patients; the state shall pay for medical supplies and drugs.

O. Lawsuits: Loser pays.

Clear and obvious medical malpractice lawsuits should be heard, but lawsuits dismissed by juries should not be an expense to physicians, nurses, medical care technicians, and hospitals and clinics; therefore, plaintiffs who lose in medical malpractice lawsuits shall bear all costs including lawyers fees, physicians’ downtime, court costs, and other fees related to the cases.

This plan should help reduce the cost of medical malpractice insurance.

P. Judges are to have more responsibility for dismissing frivolous medical malpractice lawsuits.

By guidelines established by a medical review board, and by previous experience, judges shall have the right to dismiss medical malpractice lawsuits they judge to be frivolous.

Q. Incompetent doctors are to be reviewed by a medical review board and are to be denied an NH medical license when judged to be incompetent.

R. Medical review board consisting of three doctors, three lawyers, and one arbitrator (seven in all) to be appointed by the NH General Court/Legislature and responsible for establishing guidelines for the appropriateness/frivolousness of medical malpractice lawsuits and for reviewing the medical competencies of physicians and other medical personnel named in medical malpractice lawsuits.

S. Patients shall have the right to sue their medical insurance companies.

T. The State of NH is to have control of the wholesale prices of medical drugs and supplies to ensure that the lowest national and/or worldwide wholesale prices are offered to all NH retailers with the result that there shall be no unnecessary overpricing of medical drugs and supplies by retailers. NH citizens, especially seniors, shall not have to travel to other states or other countries to get the medical drugs and supplies they need at prices they can afford.

U. News media are to be used for presenting medical information, medical updates and recommendations to NH citizens.