In March, political activist and Market-Ticker founding contributor, Karl Denninger, laid out the rough draft of a bill that, if adopted by brave conservative politicians, has the potential to solve the healthcare debate and turn our Federal deficit into a surplus for the foreseeable future. Sounds too good to be true right? Let’s run through a few key features of his bill and find out:
- Price shielding is eliminated.
This is arguably one of the most egregious problems of our current system. Let’s say your insurance plan comes with a high deductible (often thousands of dollars) and you’d like to pay for a particular medical expense out of pocket. Good luck shopping around without a background in healthcare administration or insurance claims adjusting. Cutting through the red tape insurance companies and medical providers have wrapped themselves in is a near impossible task. Hidden prices inevitably result in the stagnation of competition, and effectively guarantee an increase in overall cost for everyone.
Denninger’s solution? “All providers must post, in their offices and on a public web site without any requirement to sign in or otherwise identify oneself to access it, a full and complete price list which shall apply to every person.”
- Patients must consent, in writing, to any procedure or service, and its price, before it is provided.
This, of course, makes perfect sense. Denninger draws on analogy to strengthen his argument:
“You would never accept a gas station that only displays the cost of your gasoline after you pumped it and varied that price based on who your car insurance was bought from.”
- Patients may not be charged for medical issues explicitly caused as a result of prescribed treatment.
Denninger rightly points out, that in our current system, “hospitals actually have an incentive for you to have a complication since they make more money if you do”. I would hope medical providers choose to adhere to the spirit of the Hippocratic Oath, but considering 60% of doctors aged 55 and older have been sued for malpractice, at least once, it feels safe to say there’s at least a small percentage of bad (or at least negligent) apples out there.
Seeking to provide protections for doctors as well, Denninger makes an important distinction: In cases where the side effects of treatment, which have been “fairly and objectively disclosed in comparison to the original risk of the condition being treated”, result in additional cost, the medical practitioner is absolved of financial culpability. “In other words”, Denninger continues, “you can’t give informed consent to a MRSA infection acquired in a hospital but you can give informed consent to the risk of taking a drug”.
- Emergency patients who are unable to consent may not be charged more than those who can.
This is relatively straightforward. Denninger calls for increased protections for patients who arrive at the hospital unconscious, or severely injured to the point that immediate action is required on the part of medical professionals to save that person’s life.
- Surgical providers must track their success rates and make this information publicly available.
Shopping price is important, but it’s easy to forget there’s a flip side to that coin in quality. Jim Beam is mediocre, low cost bourbon, Pappy Van Winkle is liquid gold that’ll require a second mortgage, and Woodford Reserve falls somewhere in between. When I walk into a liquor store, I can weigh the pros and cons of these three products (and in the case of bourbon, hundreds more) until I decide, much like goldilocks, that one is just right for my needs. Healthcare should be no different. As Denninger says, “customers must be able to shop not only on price, but also on outcomes”.
- Specialist visits (radiology, ENT, lab work etc.) will no longer require a physician referral.
Insurance companies and primary care physicians want you to need a referral. For your doctor, it’s easy money, and for your health insurance provider, it’s a chance your issue will be resolved without a high cost service like a MRI. Paying for specialist services out of pocket has become so rare in the U.S. that most offices today won’t serve you without a referral even if you’re paying out of pocket. Certain radiology procedures, like heart scans, aren’t generally covered by insurance and are advertised and very competitively priced – shopping around is easy for these procedures. But you still need a physician referral.
- Wholesale drug prices may not be higher for the U.S. than they are for other countries.
I’m not particularly pleased with the idea of government mandated price controls on private businesses’ exported products, but until good conservatives are in a position to end government overreach in regulation and the FDA is shut down, I think this is a decent, temporary compromise. Americans shouldn’t be paying eight and a half times more than Italians for certain prescriptions. As we saw with Mylan’s $600 Epipen, and the virtual monopoly on epinephrine the FDA created for the drug manufacturer, government regulation once again made everything worse and more expensive.
- Medicare Part B no longer exists.
Here, Denninger calls for the continued funding of Medicare Parts A and D, but defunds Part B, which covers “routine physician visits”. The beauty in this plan is that it keeps catastrophic coverage in place, turning Medicare into a regular insurance plan. Denninger believes that the increased competition between medical providers, reinforced by public surgical success rates, and the elimination of price shielding, would drop the cost of a routine visit low enough that many Americans would choose to pay out of pocket in the first place.
- Medicaid is repealed
When I read Denninger’s “Medicaid is repealed entirely” bullet point, I swear I could hear leftist heads exploding all across the country. Never fear though, the author lays out a compelling case for those who cannot pay at the time of treatment. His plan features a U.S. Treasury billing program that requires providers to submit unpaid bills within 30 days. At that point, the Treasury purchases the debt from providers and grants the patient an additional 90 day grace period before payment is required in full. If the patient is still unable to pay at the end of the no penalty period, the debt turns into a tax-lien.
Denninger finishes with a disclaimer: “government billing shall not be available for any condition, drug, device or treatment for which a lifestyle modification that the consumer refuses to make will alleviate any or all of said expense and need for medical goods or services”.
Hear that kids? Don’t smoke.
So what about the deficit? How much money does Denninger claim this bill would save us?
According to his best case scenario, Medicare expenses are cut by 75%. In the worst case scenario, his numbers still indicate a 50% drop. Even if we go with the worst case scenario, according to Denninger, “total spending goes from $3.85 trillion to $2.92 trillion in an afternoon. In other words”, he continues, “we go from a $587 billion dollar budget deficit last year…to a $342 billion surplus”.
Well sign me up! His bill won’t fix every problem facing our health care system or the national debt, but it’s significantly better than what we’re currently working with. Wouldn’t it nice if ideas like Denninger’s were part of a broad debate about how to fix the health care system? It’s a shame really, that Republicans no longer believe in individual liberty, small government and personal responsibility. Otherwise, we might actually be able to make this a reality