The EMBRACE Healthcare Reform Plan

Transcription

1 The EMBRACE Healthcare Reform Plan EMBRACE (an acronym for Expanding Medical and Behavioral Resources with Access to Care for Everyone) is a 3 tiered system that promises to: 1) Improve the quality and health of the nation 2) Provide free basic healthcare to everyone with the ability to expand coverage if desired 3) Provide a patient friendly system with universal coverage 4) Check or even reduce public expenditures on healthcare 5) Allow fully portable coverage throughout the country 6) Free businesses from needing to provide healthcare insurance 7) Provide a streamline web-based billing system that will act as a groundwork for web based Health Information Technology (like electronic medical records) 8) Allow for full participation of for-profit health insurance companies with no competition with the publicly financed system 9) Use existing Medicare coding and other features of the existing infrastructure, so that the system is relatively familiar (and there is no need to develop new, unproven methods) 10) Eliminate the need for states to subsidize healthcare coverage (i.e. Medicaid) 11) Allow some free market features without compromising the health of the patient or competing with the publicly funded system. 12) Stop the impending bankruptcy of the Medicare trust fund 13) Allow Congress to control the budget but not need to develop and implement healthcare policy 14) Reduce the time taken by Congress in dealing with healthcare related issues. The United States spends twice as much per capita on healthcare (1) as other developed countries but ranks in the bottom third for important measures such as infant and maternal mortality or life expectancy (2) (3). Current interest in United States health care system reform focuses on the expansion of health insurance to more individuals (4) and to lower the cost to taxpayers, but current proposals lack the structure that would improve the health of Americans in an affordable, efficient, and transparent way that maintains or even expands patient choice (5). The notion that health care should be rationed is anathema to many. Yet, the current system, through limitations in services based on employment status, income, gender, race, age and pre-existing conditions is nothing more than a form of irrational rationing. Single payer plans generally incorporate more rational rationing rules or limits on the availability of services, but these also lead to coverage gaps. To cover uncovered services in these latter systems, there is often growth of parallel outside enterprises that become private and compete with the publicly funded system, usually to the detriment of both. To be efficient and effective any new system needs to acknowledge the role of rationing but be able to incorporate parallel systems in one evidence-based guidelines driven design. Healthcare Professionals for Healthcare Reform is a group of physicians, nurses, medical technicians, hospital administrators, public health experts, healthcare economists, 1

2 business leaders, politicians and patients that was inspired by the realization that there is a lack of input from healthcare professionals in the formation of public policy. The plan that the group developed advocates a three-tiered approach to healthcare and is called Expanding Medical and Behavioral Resources with Access to Care for Everyone (EMBRACE). It is based on the tenet that the entire population should be covered for life sustaining and health promoting basic healthcare with supplemental levels of coverage for those desiring it. The new system will be composed of four pillars: I) a tiered coverage system that will establish automatic universal coverage, II) a healthcare board to oversee the healthcare delivery of the entire country, III) a web based electronic billing form developed by the board and IV) a mechanism for the development and promotion of evidence based practice guidelines within the healthcare system. The EMBRACE 3-Tier System The EMBRACE system would be composed of 3 tiers of coverage and its funding will be tier specific and separate: The base level (Tier 1) would cover the entire population from cradle to grave. Based on best evidence (from the medical literature and expert opinions), it would include all medical, surgical and psychiatric therapies considered life saving, life sustaining and/or preventative. Coverage would be automatic (based on an individual s social security number or similar identifiers), not require registration or fee payment, completely portable and independent of employment status, economic status, race, gender or preexisting conditions. Funds for Tier 1 would be provided through a government subsidized account similar to Medicare (with elimination of all other public insurance). The method of raising this revenue could be similar to the present funding of Medicare (e.g. Federal Insurance Contributions Act tax) and Medicaid, but since there will be no requirement for employer based insurance and hence substantial savings for businesses, additional sources of revenue may be considered including payroll taxes (indexed to salary), a tax on businesses based on the number of employees (and their wages) or a combination of these. Since the number of items covered by Tier 1 in this new system would be substantially less than what Medicare and Medicaid cover currently, there would be funds to redistribute and achieve universal Tier 1 coverage. We believe that this should be at least a revenue neutral redistribution of public funding, but would likely save money in the long run. Tier 2 would cover all therapies considered to help with quality of life (as well as some diagnoses/services that do not have sufficient evidence for a Tier 1 indication). Private insurance carriers would administer Tier 2 services. The private insurance carriers would be allowed to offer a limited number of plans that would be developed by the Board (similar to the Medigap Plans A to L now stipulated by the Centers for Medicare & Medicaid Services-See Table 1)(6). Although each insurance carrier does not have to offer all the plans, the plans that are offered must cover all the services stipulated by the 2

3 Board. This in turn assures that consumers (either employers or individuals) can compare the price of the plans and can be confident of their coverage. In addition, if an insurance provider offers a specific plan in one state, it will be required to offer it in all other states. This will assure portability of all tier 2 coverage. Except for these two stipulations, the private insurance provider will be free to set their fee (on an individual basis), set deductibles and co-pays and even deny coverage. The Tier 2 plans can be broad (covering most Tier 2 services) or can be customized for specific groups: a geriatric plan that covers extended care facilities but not fertility care, a heavy laborer plan that includes chiropractic therapy, or a Workman s Compensation plan purchased by employers, employees or unions. Tier 3 would apply to all medical and surgical issues considered luxury or cosmetic (such as Lasik surgery or Botox treatments). Funding for Tier 3 would not be covered under this system (as is true in the current system) and all bills would go to the patient. However, billing would still be made through the web based universal billing form discussed below. Pharmaceuticals will have similar Tier assignments as medical coverage: Tier 1 would be formulations and therapies that treat or prevent serious illnesses and would mostly be paid by public funds or be heavily subsidized. Tier 2 would apply to those drugs and therapies that enhance quality of life or have not yet had adequate evidence for effectiveness for a particular condition and would be covered by private insurance. Tier 3 would be for luxury items and would likely be out of pocket. Oversight The entire national health system would be overseen by a panel of physicians and other healthcare professionals, public health experts and economists specializing in health care, known as The Board. This Board s mission would be to promote the health of Americans in a socially responsible and economically sound way. Similar to Tom Daschle s recently proposed Federal Health Board (7), it would be a quasi-independent organization resembling the Federal Reserve, which should make it less beholden to political pressures. It would be headed by a chairperson who would be appointed to a 10 year term by the president and require Senate confirmation. There would be representation on the board from all aspects of the healthcare system, including patients, healthcare professionals, hospitals, businesses, insurance and pharmaceutical industry and lawyers. The Board would have oversight of the Centers for Medicare & Medicaid Services, and input into the Food and Drug Administration and the National Institutes of Health. It would use the already established Diagnostic Related Group (DRG), Ambulatory Payment Classification (APC) and International Classification of Diseases (ICD) codes. The Board would decide which diagnoses and services are covered by Tier 1, 2 or 3 based on the medical importance (using evidence-based data including practice guidelines developed by expert medical panels, Cochrane Database reviews and other 3

4 sources), public health considerations and economic impact. This would be updated periodically as more evidence and research becomes available. The Board s input into the National Institutes of Health and the Food and Drug Administration would allow it to direct research focused on therapeutic issues that it needs to achieve its mission (to improve the health of the country and reduce costs). For example, if the evidence supporting a particular treatment modality is based only upon consensus of experts, the Board may direct the Food and Drug Administration (for a medication or device) or National Institutes of Health (for an intervention) to request applications for studies that will allow better tier determination. Among the prerequisites to the implementation of this system would be delineation of the specific relationships between the Board and existing agencies within the Department of Health and Human Services, in particular the Food and Drug Administration and the National Institutes of Health. Some reorganization of these government agencies might be warranted to optimize inter-agency interactions. To address local variations in health and social concerns, the health Board would establish several local health-boards (possibly in each state). These local branches would not only handle local health issues, but may be used to establish peer review boards to hear ethical and malpractice issues. Billing To address the excessive overhead involved in claim submission by providers and insurance companies, a Universal Reimbursement Form would be created by the Board and would be implemented electronically using a web based tool available to hospitals and physician offices. This Universal Reimbursement Form (URF) will be the only form of billing for all providers, will be internet based and will be simple to use. It will transmit data to a Central Billing System, which will decide if the condition/service is Tier 1, Tier 2 or Tier 3. Tier 1 services will be reimbursed directly to the provider. Tier 2 services will trigger a search (by the computer) for insurance coverage; if insurance is found the insurance carrier would be billed, if not the patient would be billed. Bills for Tier 3 would be sent directly to the patient. To help in cases where there is some question about which tier a particular service will be charged, there will be a Billing Inquiry feature on the Central Billing System available to providers and consumers that allows inquiries of tier assignment in advance. Although the Central Billing System will be secured with encryption and other antihacking devices, the internet platform that the URF is based on will be open-sourced and available for entrepreneurial development. Similar to the open sourced platform of the iphone, the URF platform would allow for the development of Health Information Technology on a single fully interactive platform. Implementation 4

5 The transition to the new system would require several steps to assure an effective and smooth change. The first step would be to set up the Board in a process that is yet to be determined, but which most likely would start by appointing a Health Chairman who would oversee the establishment of the rest of the Board. One of the first tasks of the new Board would be to review all the available data and begin assigning Tiers. As these tier assignments progress, the Board would determine where evidence is still lacking (especially when it involves potential Tier 1 assignments) and commission prospective studies to definitively address the issues. These studies would be performed through the National Institutes of Health (NIH) (for disease processes or therapeutic procedures) or the Food and Drug Administration (FDA) (for pharmaceuticals). The studies will be underwritten by the Board when a Tier 1 issue is to be studied and by public/private support when Tier 2 or 3 issues are involved. Another early mission of the Board would be to set up the menu of Tier 2 plans. Working with the private insurance providers, these plans would be, as previously described, clearly defined and offer a variety of options that the Board feels would offer useful supplements to Tier 1 coverage. At a time frame that is to be determined Tier 2 plans would be introduced to the public. As these plans are introduced, prior coverage (whether private insurance, Medicare or Medicaid) would be reduced to services that are not covered by the Tier 2 plans (i.e. Tier 1 services). Finally, within 2 years of the introduction of Tier 2 coverage, Tier 1 coverage would begin. Medicare, Medicaid and all other plans would be phased out. Consequences of the new system It is expected that this new system would favorably affect healthcare in the United States, but some of the consequences will be difficult to predict. The following are likely ramifications of the new system. First, we believe that the universal coverage for basic life-saving, life sustaining and preventive care would have a dramatic impact not only on health, but also the economy of the country. The ready and free availability of preventive office visits and for services such as smoking cessation and diabetic teaching should, over a short period of time, reduce more severe and expensive care later. From the patient s point of view, there is freedom to visit any hospital, clinic or physician that one desires. Since there is universal portability for all insurance, there is unfettered choice. In addition, there will be no bills from most acute treatment in Urgent Care Centers, Emergency Rooms or hospital admissions. Similarly, there will be no bills for Tier 1 related outpatient services (including many chronic illnesses such as diabetes, hypertension, counseling on smoking cessation and accepted preventative visits). If a patient and his/her physician are considering Tier 2 services, the patient may be billed if he/ she does not have Tier 2 insurance coverage. Since this decision will rarely be urgent or life threatening (as it may be for a Tier 1 indication), the patient will have the opportunity to decide if he/she wants to pay for the treatment or procedure and be able to shop for the best price. The universal portability of both Tier 1 and Tier 2 coverage would allow individuals to shop around for the best and most user friendly outpatient and even some inpatient care. This in turn would force inpatient and outpatient healthcare providers to improve quality and convenience of care to keep up with the competition. 5

6 Employees would be able to change jobs without fear of lapsing or losing coverage. This in turn would allow for a more fluid workforce. Businesses would not have to bear the burden of basic healthcare for their employees and large corporations would find a reduced burden of retirement benefits. Both small and large businesses would be able to offer Tier 2 coverage as an optional perk (at a significantly lower cost). For the healthcare provider, central billing and elimination of precertification and other bureaucratic hurdles, would allow medical offices greater efficiency, lower overhead and, most importantly, more time to spend on patient care. In addition, we believe that the elimination of the significantly lower Medicaid outpatient reimbursement rate (compared to Medicare and commercial insurance), combined with the large number of newly insured patients would eventually lead to a significant increase in the number of primary care providers, which, we believe, will increase the availability and implementation of preventive care. There would be significant savings for hospitals. In the Emergency Department (ED) where currently a substantial portion of patients are uninsured, there would be full reimbursement for all emergent and urgent services provided. In addition, since most urgent outpatient office services would be covered by Tier 1, the current reliance on ED services by the uninsured would be significantly lessened so that ED overcrowding will be reduced. The hospitals would also receive full reimbursement for all acutely ill inpatients, including the large numbers that are now uninsured or underinsured. With these savings, the hospitals will be able to redirect funds to upgrade inpatient services and improve the quality and efficiency of care. (EMR, HIT, MRI, etc). Finally, we believe that the new system will provide new and profitable opportunities for the commercial insurance and pharmaceutical industries. The elimination of Tier 1 services from the risk pool will take out some of the greatest potential liabilities for insurers, leaving more predictable returns. In addition, since there would be no need for pre-certification and other bureaucratic processes, the high overhead that commercial insurance companies now spend (reported to be about 12-13% or more) (11), would be virtually eliminated. Advantages of EMBRACE over Single Payer Models EMBRACE is not a plan based on opposition to single-payer proposals; rather, it is a plan that shares the goals of a single payer system, but seeks to achieve them in a form apt to be more readily achievable in the context of US politics and American values, and might even offer operational advantages. The inclusion of private, for profit health insurance carriers in EMBRACE is not only pragmatic, but also follows the example of most of the successful single payer systems in Europe and Canada. In those systems, private insurance has developed after-the-fact but there is an effort to integrate it into the publicly financed system, often with great difficulty. By designing EMBRACE around a multi-tiered system from the start, it allows this integration to occur more effectively. We are, after all, a capitalist society, and the notion that you can get more by paying more is simply part of daily life. EMBRACE, in essence, embraces health care as both a right and a privilege, using a multidisciplinary board of experts to draw the line between the two. 6

7 Ideally, a single payer model would accomplish the goals of improving the health of the nation with a uniform and universal system of healthcare delivery. One such system is the Physicians for a National Health Program model. Proposed (8) in 2003 and introduced to Congress in 2007 as H.R.H. 676 (9), the plan advocates an expanded Medicare system that would exclude all private insurance payers and in addition would eliminate all for-profit hospitals and HMO-type providers. Like our proposal, the Physicians for a National Health Program plan would provide patients universal access to approved medical care that will be paid by a national health insurance agency. However, if the desired treatment or service in the main system is not approved, patients will most likely find ways outside of the system to obtain that service. As discussed above this is likely to lead to the use of unapproved services and may lead to a de facto multi-tiered system (10), where the 2 nd (private) tier is not regulated and subject to abuse. EMBRACE encourages private tier participation for those services not publicly financed. The existence of this integrated private tier allows for fewer covered services in Tier 1, which in turn would reduce the public financial burden. In addition, allowing all the tiers to be a part of the same system (as opposed to being outside the system in most single payer systems) will allow patients to see the same provider for all services. And all service is subject to the same ultimate oversight. Politically, a system that continues to allow private, for-profit insurance and some degree of free market forces will be more viable than a system that attempts to control or eliminate them. EMBRACE preserves many of the favored features of the present system (such as the ability for the provider to offer all services- even if Tier 2 or Tier3), keeping the new system more familiar to the patient and provider, in turn facilitating a transition to it. Advantages over currently proposed legislations EMBRACE is a blueprint for a complete overhaul of the US healthcare system. Although likely to be implemented in stages, each part of the EMBRACE system is designed to work together. In contrast, what is being considered in Congress at the time of this writing (November 2009), is mostly health-insurance reform, with very little integrated system reform. Congress is mostly concerned with expanding coverage and controlling costs. The most likely methods will be through increasing the number of people covered by Medicaid (the cut-rate insurance for the poor with inferior access to healthcare providers), increasing employer based coverage, establishing a virtual healthcare marketplace where consumers can compare health plans (possibly including a Medicarelike public option plan) and legislation to force insurance companies to take all customers no matter what their pre-existing condition. In addition, there will likely be a penalty assessed on businesses that do not provide insurance for their employees and for individuals who are not covered by insurance. Tier 1 coverage under EMBRACE will not depend on age or income and will not be employer-based. The Tier 2 menu of plans will be more user friendly than the healthcare 7

8 exchange, with insurance companies having to conform to the predetermined plans (and therefore easier for the consumer to compare price) rather than the consumer having to sort through the different features of the healthcare exchange (as with the Medicare D experience of multiple plans) without easy price comparison. Also, because the insurance companies are drafting the plans offered in the exchanges, there is no guarantee that the plans are free of omissions or gaps of coverage. Under EMBRACE there will be no issue of pre-existing conditions in Tier 1 (everyone will be covered equally). However, private insurance companies will be allowed to deny Tier 2 coverage to or to increase price for customers they feel are high risk. The only thing that will be required from the insurance company is that it offers the minimum benefits of a particular plan and that it be offered in every state. The price of the plan, any deductibles, co-pays and additional benefit will be up to negotiation between the insurance company and the consumer. There would be no employer mandates in EMBRACE and there would be no need to impose fines. Since all employees of any and all businesses would be covered by Tier 1, there would be a significant relief in financial obligations no matter the size of the business. The additional taxes levied on these businesses to finance the EMBRACE system will be significantly lower than any obligations under the current system or any of the proposed models. I addition to these differences, EMBRACE offers a more comprehensive blueprint for a system wide change that incorporates evidence based practice, electronic billing, a potential for developing a platform for uniform exchange of health information, and a substantial reduction in state government spending on healthcare (with the elimination of the need for Medicaid). Advantages for Patient/Consumer Provide FREE basic healthcare services to EVERYONE from 'cradle to grave'. Allow you to go to any doctor or hospital you choose. Allow for upgrades in coverage for anyone who wants it through private insurance. -Easy to compare plans. -Completely transparent policies. -Significantly less expensive than current private plans. Allow all plans to be fully portable from job to job and state to state. Cost consumers less (in taxes and/or out-of-pocket) than currently; no matter income level or employment status. Considerations EMBRACE will give free basic service to everyone and will include all life threatening conditions like trauma, heart attacks, cancer and stroke; as well as preventative services like high blood pressure, diabetes and high cholesterol (among many other conditions). Coverage will be automatic and available from any doctor or hospital YOU choose. You will be covered no matter where you live or work or what your income level is and will be fully portable from job to job and state to state. 8

9 The optional upgrade will be available through an easy to use menu of coverage similar to how Medigap plans are now offered to Medicare patients (see sample Medigap Menu below). You get to choose the plan you want (rather than what the insurance company is offering), and then you have the insurance companies compete to have you sign up with them. This competition that does not now exist (or is being considered in Congress) and the fact that it only covers what the basic plan does not, will help keep these plans very affordable. For example; let s say you have chest pains and you go to the hospital. Work up in the hospital will be free until all life threatening conditions are ruled out or treated. You will not get any bill for the hospital visit or stay. Visits to the doctor s office for recommended screening examinations (or procedures) as well as for management of chronic conditions like diabetes and high blood pressure will also be free. Some non-life threatening conditions like low back pain (after a free workup excludes a life threatening cause) will probably not be covered by the basic plan (Tier 1), but could be covered by private insurance or be paid out of pocket. Since the basic coverage will be automatic and not tied to income, age or state of employment, it will offer universal portability no matter where you live or where you work. And the best part is that this system will probably end up costing you less (in taxes and/or out-of-pocket) than you now pay. Advantages for Doctors EMBRACE will: Give doctors more input into the healthcare system Allow doctors to maintain independence in decision making Continue current practice settings (private office, HMO, Hospital etc.) Allow more time for clinical practice Allow the physician to offer all services without need for pre-approval, etc. Allow for easy access to patients medical records and testing. Allow for easy and inexpensive integration of electronic medical records into practice Eliminate or greatly reduce administrative overhead spent on getting pre-approvals, appealing denials and/or billing Keep current coding in a fee-for-service system (no need to learn a new system) Allow for instant credit for services rendered Considerations One of the most unrecognized dysfunctional aspects of the American healthcare system is the bureaucratic aspect of medical practice. Medical offices are burdened with the need to get pre-approvals, appeal denials and submit documentation for billing that can be as complex as completing tax returns. Practices usually have to hire several people to perform these un-billable services to free the doctors to perform clinical services, which in turn reduces or even eliminates any profit margin for the practice. In turn, this reduced profit margin reduces the physician s ability to spend more time with patients or to take patients with lesser insurance (like Medicaid) or the uninsured. 9

10 EMBRACE will eliminate almost all the overhead associated with these bureaucracies and will allow doctors to see any patient that requests them and spend more time with each patient. EMBRACE will accomplish this with an easy to use web-based billing form that will be available for free to all healthcare practitioners. There will not be any change in coding or other aspects of the fee-for-service system that most physicians have become familiar (if not comfortable) with. Based on the information the doctor supplies, the central billing computer will take care of the billing (and collection)-immediately crediting the doctor for the service. In addition, the free web-based universal billing form will run on an open-sourced platform that would allow (among many new applications) for easy and safe transfer of medical records and even testing (including video images) between doctors and hospitals. Under EMBRACE, a doctor will be able to offer any test, procedure or therapy he/she feels the patient needs without needing authorization (but will need to let the patient know if it is not covered by Tier 1). This will allow the doctor and the patient to make the important decisions and not have to go outside the system to get unapproved therapies. Political Advantages EMBRACE will: Improve the health of the country Provide a patient friendly system with universal coverage Check or even reduce public expenditures on healthcare Allow Congress to control the budget but not need to develop and implement healthcare policy -One yearly budget for all healthcare expenditures -Reduce the time taken by Congress in dealing with healthcare related issues. Eliminate the need for states to subsidize healthcare coverage (i.e. Medicaid) Stop the impending bankruptcy of the Medicare trust fund Eliminate the SGR Free businesses from needing to provide healthcare insurance Allow for full participation of for-profit health insurance companies with no competition with the publically financed system Allow some free market features without compromising the health of the patient or competing with the publically funded system. Allow fully portable coverage throughout the country Provides free basic healthcare to everyone with the ability to expand coverage if desired Provide a streamline web-based billing system that will act as a groundwork for web based Health Information Technology (like electronic medical records) Use existing Medicare coding and other features of the existing infrastructure, so that the system is relatively familiar (and there is no need to develop new, unproven methods) Healthcare delivery will be rational and more evidence-based, which will lead to improved quality and better health for the nation Considerations 10

11 A) Budgetary considerations: The budget for the EMBRACE system will still be in the control of Congress, but this will all be in one lump sum. Although we expect that the initial price may be the same or even higher than Congress spends now on Medicare, it will be significantly less when one factors in ALL federal spending on healthcare. Gone will be the ever increasing Sustainable Growth Rate (SGR) gap, the fights of whether to privatize Medicare and the need for Congress to make health policy decisions. States will no longer need to supplement funds for Medicaid (there will be no need for Medicaid) or any other state run healthcare programs. Because the Healthcare Board will have to justify the budget, Congress will continue to have full control on expenditures for the healthcare system. B) Political considerations: EMBRACE offers: 1) Universal coverage for the most important type of healthcare, 2) Manageable AND sustainable public expenditures, 3) Full participation of private insurance with only minimal regulatory oversight, 4) Ability to introduce 'free market' type programs into Tier 2, 5) Patient friendly healthcare delivery for EVERYONE, 6) An answer to the Medicare funding quagmire 7) Emphasis on preventative services along with more effective and efficient treatments of disease. The Board, like the Federal Reserve board for the financial sector, will act as an important liaison between the government and the nation's healthcare system. Its decision about tier assignment on an individual basis will be final (i.e. there will not be any such thing as appeals on an individual case) but there will be mechanisms for constant review of how tier assignments are working out in general. Since the Board will have oversight of how providers are paid for Tier 1 services, it will be able to encourage certain services and testing and discourage others. It will also be able to encourage certain types of physician practices, by increasing reimbursement for primary care type services (e.g. office visit for smoking cessation). However, in this system, there is never any denial of service. If a doctor feels a service is needed or a patient requests certain treatment, the patient can have the treatment without leaving the system or needing to go to another doctor or clinic. Since all catastrophic afflictions are covered for free, the worse thing that can happen is that the patient decides that he/she would rather not pay for a service that is not a danger to him/her. The structure of the EMBRACE system also makes it easier to make some of the difficult moral, ethical and economic decisions (such as end of life care) that cannot be made in the present system. Advantages for Business EMBRACE will: Free small and large businesses from being required to provide healthcare insurance of any type Have all employees covered by basic insurance Eliminate the need to negotiate healthcare insurance contracts or manage plans Healthcare and Benefit administration costs and efforts would be dramatically reduced creating tangible savings 11

12 A standardize Tier 1 plan would increase employee satisfaction because of its universal nature and reduce employee dissatisfaction with employer selected plan provisions Impose significantly less in taxes to cover Tier 1 than would be needed to provide insurance to employees Taxes for employer will be determined by the number of employees and their salary FICA-like taxes for employees will remain the same - Get tax breaks for healthy work-place and prevention programs. Be able to offer inexpensive Tier 2 insurance as an optional perk Tier 2 and Tier 3 Benefits would continue to allow for competitive advantage in the employment, attraction, and retention arenas Healthcare costs will remain the same or increase at a slower rate than currently experiencing Tier 1 Benefits create a sense of commonality among all employees Tier 1 Benefits reduce the pressure on employers to constantly improve the plan and could simplify collective bargaining over healthcare Pre 65 retiree medical would be provided for all workers Retiree medical liabilities for firms with large retiree populations would be eliminated thus improving corporate balance sheets Considerations EMBRACE offers the small business owner an enhance competitive advantage in so far as Tier 1 coverage can fill in, on a cost effective basis, a significant gap in the ability of small business owners to attract and retain top talent. Under the current insurance arrangements many small business owners cannot offer their employees an adequate level of health insurance which is cost effective for either the employer or the employee. This economic reality is a deterrent to attracting human capital necessary to drive the success of small business. The combination of Tier 1 Universal coverage combined with the options for Tier 2 would put small businesses on a competitive footing with larger employers to attract the talent necessary for success. The funding requirements for Tier 1 when combined with other statutory benefits in most cases would represent a decrease in total labor costs for small business owners. This segment of the economy provides a majority of private sector jobs and the adoption of EMBRACE would be a significant enhancement to the small business sector. The global competitiveness of US businesses and especially those in the manufacturing sector would benefit greatly from a reduction in both direct labor costs and in the liability created by health benefits for pre 65 retirees. With total benefit costs for production workers approaching 50% of base wage rates, the labor cost component of US workers disadvantages organizations who market and sell their products globally. Despite the enhance productivity of the American worker currently the weak US dollar is maintaining our abilities as a nation to export. EMBRACE would reduce the cost of the benefits portion of total labor costs and virtually eliminate the pre 65 retiree medical cost liability which has been crippling to companies like General Motors and General Electric who have disproportionately large retiree populations compared to their active employees. 12

13 Advantages for Hospitals EMBRACE will: Reduce Emergency Room volume Improve cash flow (almost all acute care admissions will be Tier 1) Significantly reduce overhead associated with billing and other insurance related issues Considerations Because there will be increased access to primary care and urgent care clinics, patients would not need to rely on Emergency Rooms for their routine care or even semi-urgent care. Since most acute admissions to the hospital would be Tier 1 and since all the billing would be electronic (even for Tier 2 and Tier 3), hospitals will not need to worry about getting paid for their service. There will be a significant reduction in the need to hire billers and even case workers to deal with insurance issues. Hospitals will be able to use much of the savings to improve facilities and service for patients/clients. Advantages for Insurance Industry EMBRACE will: Substantially reduce risk because Tier 1 services will not need to be paid Allow risk profiling (e.g. pre-existing conditions) and denial of coverage Allow for free market pricing Separate public insurance from competing with private plans Conclusion EMBRACE offers universal coverage for essential health care, promising to reduce mortality and morbidity and encourage preventive care. The increased efficiency of the system should allow hospitals to reallocate funds to services such as Health Information Technologies, and allow healthcare professionals more clinical time. For the patient, the system offers universal coverage for basic healthcare needs, transparency for Tier 2 coverage, and complete portability of all insurance coverage. Employers will be relieved of the financial burden of coverage for most services while they would retain the option to offer Tier 2 coverage as a benefit to employees. Finally, insurance providers will benefit by eliminating the financial risks associated with Tier 1 services, while the system at large will benefit from centralized billing and a reduction in administrative overhead. 1) Lincoln Chen, David Evans, Tim Evans, Ritu Sadana, Barbara Stilwell, Phyllida Travis, et. al. The World Health Report 2006: working together for health., Geneva, Switzerland, The World Health Organization ) Schroeder, SA. We can do better Improving the health of the American people.n Engl J Med 2007;357: ) Mohammed Ali, Michel Beusenberg, Monika Bloessner,Cynthia Boschi Pinto, Sylvie Briand, Anthony Burton,et al. World health statistics Geneva, World Health Organization

14 4) Schroeder, SA. We can do better Improving the health of the American people.n Engl J Med 2007;357: ) Oberlander, Jonathan Is Premium Support the Right Medicine for Medicare? Health Affairs 19 (5): ) CENTERS FOR MEDICARE & MEDICAID SERVICES, 2008 Choosing a Medigap Policy: A Guide to Health Insurance for People with Medicare. (Accessed April 28, 2008). 7) Tom Daschle, Scott S. Greenberger, Jeanne M. Lambrew, Critical. What we can do about the health-care crisis (New York: St. Martin s Press 2008), pp ) The physicians working group for single-payer national health insurance. Proposal of the physicians working group for single-payer national health insurance. JAMA 2003;290: ) H.R. 676, 110 th Cong. (2007). 10) Sarah Lyall. Paying Patients Test British Health Care System. The New York Times; February 21, ) National Health Expenditures Database at supplementary CMS data at Table 12 (accessed 7/111/2008) 14

15 Table 1: Example from Medigap of how a Tier 2 menu might work. Note that each insurance company must offer the same minimal features for each menu choice (column) but prices and other features may vary. 15