Friday, November 14, 2014

THE CASH FOR HEALTH SYSTEM DESIGN

The CASH FOR HEALTH system uses personal health scores from annual bio-physical tests to create smart managed health care plans for members.  The plan rewards members with cash points back when health scores improve or their catastrophic risk level is reduced. Annual blood tests will create a fully managed health plan with relative costs covered using data from bio-physicals as well as genomic tests for drug sensitivity and cancer prevention.  Diagnostics is the way to write health insurance policy now, with real data on each individual, not actuarial probabilities and statistical guesswork. You cannot change what you can't measure.  

For individuals and employers i
n the United States CASH FOR HEALTH is an alternative to 3rd party payer insurance systems. CASH FOR HEALTH simply takes the money you (or your employer) pay out each month, and manages your health purchases on a CASH FOR HEALTH debit card to maximize your dollar value (cooperatively) with doctors, drug stores, gyms, grocery stores, etc. 

Tuesday, July 7, 2009

A PAY FOR PERFORMANCE SYSTEM FOR HEALTH MANAGEMENT

1. CASH FOR HEALTH is a ROLL-UP to cooperatively convert independent medical 
practices into cash businesses.
2. CASH FOR HEALTH is a solution for employers to afford better health care for employees for less money.
3. CASH FOR HEALTH is a cash reward system for patients as an incentive to improve annual health scores.


THE CASH FOR HEALTH SYSTEM:
PAY-FOR-PERFORMANCE PREVENTION MANAGEMENT
$200 (min.) - $500 (max.) PER MONTH FOR ANYONE TO ENROLL

FOR PATIENTS: 
  • CASH FOR HEALTH MANAGES ALL YOUR HEALTH MAINTENANCE COSTS WITH YOUR CASH FOR HEALTH DEBIT CARD 
  • WIN CASH POINTS BACK BASED ON YOUR HEALTH PERFORMANCE OR WHEN YOU LOSE WEIGHT
CASH FOR HEALTH uses required annual personal health scores to create smart, managed care plans for H2O members and rewards members with cash points back when health scores improve or their catastrophic risk level is reduced. The CASH FOR HEALTH system motivates members to compete against themselves and members are supported by peers and CASH FOR HEALTH coaches to motivate individual success collectively.

I combined the best functioning parts of various systems (including those by Dr. Mehmet Oz, Dean Ornish and Safeway) and I added a special sauce; a cash reward system for members! That is the missing link and sets it apart from anything else on the table now. Another compelling feature, CASH FOR HEALTH separates catastrophic insurance from daily health management costs. As an CASH FOR HEALTH member based on your current health scores and risk level you can opt-in to purchase hospital care coverage from CASH FOR HEALTH insurance partners based on a dollar figure to cover anything from potential hospital visits ($100,000) or for cancer care ($1 million).

CASH FOR HEALTH DEBIT CARD INTERCHANGE REVENUE
iCASH FOR HEALTH financial services collects monthly payments from members, transfer payments (or government or employer subsidized transactional credit) onto individual member debit cards, that are coded for use only for health care services and products from CASH FOR HEALTH suppliers and merchants. 

 Interchange fees will support CASH FOR HEALTH health rewards programs. In other issuer models paying for rewards programs consumes 44% of the interchange costs, processing 13%, network branding 3%, and 35% covers cost of funds and profit margins. As franchisor CASH FOR HEALTH makes money from franchise fees, royalties, and CASH FOR HEALTH debit card interchange fees from suppliers.

TEST BEFORE NOT AFTER YOU'RE SICK. CASH FOR HEALTH TAKES THE GUESSWORK OUT OF HEALTH CARE

The dynamic CASH FOR HEALTH system is centered on empowering members to reduce health risk and win cash for health improvement and maintenance. The solution to smart health is to test before, not after, you are sick. We take the guesswork out of health care. Start with a health plan based on facts. Your facts. If the test determines a specific health issue, or if you have a wellness goal, we design a plan to solve the problem. 

CASH FOR HEALTH monthly plans cost between $200 minimum to $500 maximum (for chronic care patients). CASH FOR HEALTH transfers your monthly payment (from you, your employer, or government subsidy) onto your CASH FOR HEALTH member card (works like a debit card) that you use to redeem day-to-day health related services according to your plan; for medication, chiropractor visits, vitamins, yoga, gym memberships, CASH FOR HEALTH health coach visits, etc. CASH FOR HEALTH is able to provide maximum dollar value and best prices of services for our individual members by working together with vendors as a cooperative group.

Chronic care CASH FOR HEALTH members are managed by a team specifically engaged in care to reduce risk for hospitalization and to manage costs to be affordable for the long-term and to reverse disease. CASH FOR HEALTH membership also allows you to apply for catastrophic health insurance that makes sense. Based on your assessed health risk level determined by CASH FOR HEALTH tests, you can select insurance based on a dollar figure to cover anything from potential hospital visits ($100,000) or for cancer care ($1 million). The CASH FOR HEALTH system motivates members to compete against themselves and members are supported by peers and H2O coaches to motivate individual success collectively (CASH FOR HEALTH Member Circles). Peer support is what keeps people healthy over the long term. Outlined here.


THE CASH FOR HEALTH KEY TO BALANCING PATIENT DEMAND WITH APPOINTMENT SUPPLY

Doctors who see more patients and work more hours, make more money. But there is a fine balance between patient demand and appointment supply to maintain quality care. The ideal practice has 1800-2000 patients per doctor, works 240 days of the year, sees 24 patients per day, 3 times per year. Using that formula doctors can't afford to stay in business due to badly negotiated third party payor relationships with insurers who pay doctors $24 per patient visit. Some patients only come once per year, if at all, and some come too much. Too many uncontrollable variables to manage.

So it occurred to me for doctors to make a profit, we need to control it from the other end! Control the patient! Patient flow and care has to be systemized, and this "control" is "sold" to patients as "wellness care" and prevention attention!

On average 60% of medical practice income goes to salaries, staff benefits, supplies, malpractice insurance, 15% to debt service, 2-5% to state and local government taxes. 

Based on this research 50%-75% primary care visits can be handled by a nurse or healthcare practitioner. Using a nurse managed clinic network healthcare for 10,000 patients costs $800,000 vs. $3-$5 million to operate a traditional model.

CASH FOR HEALTH Volunteer Coaches receive free CASH FOR HEALTH health services. Every 5,000 CASH FOR HEALTH members is managed by one doctor, five practitioners, and 5 volunteers. 

CASH FOR HEALTH : 
5000 MEMBERS PER DOCTOR'S OFFICE CASE EXAMPLE

$21,000,000 Average Annual Doctor Member Revenue 
(5000 Patient Members @ $350 per month x 12 months = $21,000,000)

$1,680,000 Financial Management Fee 8%
$500,000 Doctor Salary $100 per member/per year
$750,000 Practitioner Salaries ($150,000 per year x 5 practitioners per 5000 members)
$500,000 Operations (Rent, Supplies, Equipment Lease, Insurance)
$16,500,000  CASH FOR HEALTH Member Maintenance Actual Cost for 5000 Members
$19,930,000 Total CASH FOR HEALTH Doctor Member Costs
$1,070,000 Profit

CASH FOR HEALTH Member who pays $350 per month = $4200 per year
Actual Annual Per Member Costs = $3,300
$1000 Diagnostic Tests
$250 Plan Analysis
$250 EMR
$400 Exercise Program (Gym, Yoga, etc.)
$100 Doctor Visit (1)
$300 Practitioner Visits (4 @$75 each)
$1000 Medication, Supplements

Saturday, July 4, 2009

FAQs ABOUT CASH FOR HEALTH SYSTEM


HOW WILL THE OBAMA PLAN IMPACT THE STRATEGY?
The missing link in the Obama plan is testing for individual health facts to rationally reallocate money from "Cadillac" plans for people who don't use benefits to people who need them. Health is not static. We need to financially reward health improvements because it saves the government money! Then there is plenty to go around and the medicare problem would organically be solved in the process. Obama would like to start from scratch but can't because employers are health insurance company customers...not you or me...and employers have no other alternative right now. What insurance firms actually sell to large employers, which account for the largest segment of the entire health care market, is administrative services, not actual insurance. And even worse, ask any person on the street and they will tell you their health insurance is FREE! Employees have no idea their employers pay $10,000 - $15,000 per year on health insurance for them. And at these prices employers and doctors are jumping ship. CASH FOR HEALTH is the rescue boat. Employers will "buy" from whomever provides the best care for the least cost to keep their employees in their cubicles. CASH FOR HEALTH goes one step further for $6,000 per employee rather than $10,000. H2O pro-active plans will actually make people healthy, happy, and more productive! An employer will choose CASH FOR HEALTH over any government plan simply because it will be perceived as higher quality in the eyes of their employees. And even better, it really is.


WILL DOCTORS ACCEPT THE CASH FOR HEALTH DEBIT CARD?
Only CASH FOR HEALTH doctors (franchisees) and CASH FOR HEALTH suppliers (participating gyms, pharmacies, food stores) will accept the CASH FOR HEALTH card. The CASH FOR HEALTH system is designed to give member patients a customized list of CASH FOR HEALTH practitioners and suppliers for their personalized health care, so patients never have to worry about a doctor not accepting the CASH FOR HEALTH card. Members of course can pay cash for services outside the network.


DOCTORS ARE NOT BUSINESS PEOPLE.
That is why CASH FOR HEALTH is perfect for doctors. H20 handles the business systems and doctors get to practice medicine and care for patients. CASH FOR HEALTH doctors are current medical practices who have converted to the CASH FOR HEALTH system. Today many doctors can't afford to accept insurance because they are abused financially by Medicare and insurance companies and are without leverage to negotiate changes to payor agreements, fees, and schedules. Doctors get paid on average $24 per patient/per visit and 50% of that goes to their admin staff to manage the paperwork. CASH FOR HEALTH by comparison pays them $75 per patient/per visit by controlling patient flow with mandatory scheduled visits. Doctors will trust a system that pays them cash.  CASH FOR HEALTHs Chairman will be a branded doctor (like a Dr. Oz or Dr. Roizen) and doctor franchisees will trust another doctor.


PEOPLE ARE CUTTING BACK ON DISCRETIONARY AND PREVENTION SPENDING
CASH FOR HEALTH proposes not spending extra; simply reallocating what you are already spending (you or your employer) and saving you money in the process as well as getting more benefits.

PEOPLE HAVE BEEN TRYING TO FIX HEALTH CARE FOR 60 YEARS BUT THERE IS NO COORDINATED THRUST TO LOWER COSTS AND BUILD EFFICIENCY INTO THE SYSTEM

Many of the relics who built this system can no longer make an impact. People's wages have not increased while corporate profits have. So change is coming simply because employers can't afford the current system now.

Health Insurance was created after WW2 as an low cost incentive so employers could entice employees to work in exchange for low wages. Wages were kept static. Software came along and companies became more efficient and profitable. Then banks offered CEOs incentives to invest profits with them instead of increasing wages. As cost of living increased and wages stayed the same people could no longer pay their bills and had to send mom out to work. Families took this as a personal problem. Not an employer problem. With mom as the emotional glue of the family, now out of the house, more stress, more fast food, more fighting over bills contributed to our current chaos.


HOW LONG DOES IT TAKE A FRANCHISEE TO GET 5000 PARTICIPANTS
Current medical practices already have 2,000 - 10,000 patients. CASH FOR HEALTH simply converts these practices to the CASH FOR HEALTH system and inherits their current patients as CASH FOR HEALTH members. CASH FOR HEALTH will simultaneously sell employers in the local area as a "group" and push these new members to each new CASH FOR HEALTH practice. Every new CASH FOR HEALTH franchisee will start with 5000 members minimum and will be recruited that way.


HOW MUCH WILL THE FRANCHISE HAVE TO INVEST TO GET 5000 PARTICIPANTS
Since the CASH FOR HEALTH strategy is to convert current medical practices already in operation so start-up costs are minimal. Many doctors have long term leases and even own their practice location because it is their only profit center now. Once CASH FOR HEALTH eliminates the need for the doctor to continue badly leveraged third party agreements, cash is automatically freed up, and can be applied to the initial franchise fee. We are basically converting them to the H2O system at no cost just by finding them money!


THE 5% PROFIT NUMBER IS VERY LOW TO JUSTIFY A LARGE UPFRONT INVESTMENT.  THIS IS WHY THE COSTS LOOK ATTRACTIVE.
Most doctors right now are breaking even or barely making $100,000 in salary per year and no profit. Based on a patient list (panel size) of 5000 CASH FOR HEALTH offers doctors a $500,000 salary and a $1 million profit/bonus.


Non-medical franchise or retail businesses or with one location is essentially just buying themselves a $50,000 to $100,000 per year job. You generally only break-even. In any franchise system you have to own at last five locations to make it to millionaire status.


CASH FOR HEALTH is dynamically designed to give CASH FOR HEALTH doctors an incentive to live off their CASH FOR HEALTH pay increase earning $500,000 per year and to reinvest their $1 million profit in buying new CASH FOR HEALTH locations over 5 years.


H2O AS FRANCHISOR MAKES MONEY FROM THREE REVENUE STREAMS
1. Initial franchise fee...$500,000 (financing options are available)
2. 8% royalties per location.
3. 30% profit from CASH FOR HEALTH debit/credit card interchange fees. (In other issuer models paying for reward programs consumes 44% of the interchange costs, processing 13%, network branding 3%, and 35% covers cost of fund and profit margins.)

Monday, April 27, 2009

HOW MUCH DOES IT COST PER MONTH TO KEEP YOU HEALTHY?


CASH FOR HEALTH ORGANIZATION

PAY-FOR-PERFORMANCE PREVENTION MANAGEMENT 
$200 (min.) - $500 (max.) PER MONTH FOR ANYONE TO ENROLL        


CASH FOR HEALTH MANAGES ALL YOUR HEALTH MAINTENANCE COSTS WITH YOUR H2O DEBIT CARD AND YOU WIN CASH POINTS BACK BASED ON YOUR HEALTH PERFORMANCE! 

THE PROBLEM
Car insurance companies do not cover oil changes and routine maintenance for your car.  So why does combining insurance for routine health maintenance + catastrophic illness make financial sense? You or your insurance company cannot predict a heart attack with any accuracy the same way you cannot predict a hurricane's path.  We chase health solutions often after it's too late to solve affordably.  You can however prepare for health rather than illness. Health insurance companies do not provide "insurance".  They provide administrative services as third party billers. They do not provide personalized pro-active health maintenance plans designed for disease prevention and long-term wellness.  And with high deductibles we are left to fend for ourselves to navigate a myriad of health choices with no guidance for your individual needs.  

CASH FOR HEALTH IS THE SOLUTION
People love to win!  The dynamic CASH FOR HEALTH system is centered on empowering CASH FOR HEALTH members to reduce health risk and win cash for health improvement and maintenance. The CASH FOR HEALTH solution to smart health care is to test before, not after, you are sick.  CASH FOR HEALTH starts with a health plan based on facts.  Your facts.  If the test determines a specific health issue, or if you have a wellness goal, CASH FOR HEALTH designs a plan to solve the problem.  We take the guesswork out of health care. We simply reallocate the money you pay out now (perhaps as your "deductible") to cover a combination of health related services designed especially for you to achieve optimum health.  CASH FOR HEALTH is able to provide maximum value and best prices of services for our individual members working together with vendors as a cooperative group.   We transfer your monthly CASH FOR HEALTH payment onto your CASH FOR HEALTH member card (works like a debit card) that you use to redeem day-to-day health related services according to your plan; for medication, yoga, chiropractor visits, vitamins, CASH FOR HEALTH health coach visits, etc.  CASH FOR HEALTH membership also allows you to apply for catastrophic health insurance that makes sense.  Based on your assessed health risk level determined by CASH FOR HEALTH tests, you can select insurance based on a dollar figure to cover potential hospital visits or for chronic care. Chronic care CASH FOR HEALTH members are managed by a team specifically engaged in care to reduce risk for hospitalization and to manage costs cooperatively to be affordable for the long-term and to reverse disease.  
    
THE CASH FOR HEALTH SOLUTION: GET THE FACTS FIRST
To enroll in CASH FOR HEALTH, each applicant's premium will be calculated based on your individual health scores from a diagnostic blood test that will assess your current health status and your annual cost allowance for health maintenance and improvement (if needed).  Depending on your personal health score your monthly premium will cost between $200  and capped at $500, even for those with chronic health conditions.  Your monthly premium includes coverage for specific health services you will need on a daily basis, all redeemable with your CASH FOR HEALTH membership card.


WIN CASH FOR HEALTH CASH PERFORMANCE POINTS!
Similar to the American Express point system, as your health scores improve you win cash points back on your CASH FOR HEALTH member card that you can use to pay for any health related service such as gym memberships, yoga classes, food and supplements at participating stores, elective medical or spa treatments, payment towards catastrophic coverage, or for credit back toward your CASH FOR HEALTH monthly premium payment.


CATASTROPHIC INSURANCE
Based on real data from the annual blood test, CASH FOR HEALTH will make a risk recommendation and each member can opt-in to purchase annual catastrophic insurance based on a dollar amount.  Some people do not need $1 million in coverage yet current health insurance plans automatically assign this coverage to healthy people who overpay.  With CASH FOR HEALTH plans can be purchased to cover specific incidents; to cover $100,000 per year (one week in hospital) to $1 million per year (cancer care).   At the end of the year when claims are not made, a portion of your premiums can be rolled over into your CASH FOR HEALTH membership account as cash points which can be used to buy catastrophic insurance for the next year.  Chronic illness cases (extreme) will be eligible for government financial assistance and subsidies under CASH FOR HEALTH management.  CASH FOR HEALTH's job is to reduce catastrophic risk and bring members back into good health status.

THE ROSETO COMMUNITY MODEL
CASH FOR HEALTH's strategy for inspiring sustainable health performance is centered on community.  CASH FOR HEALTH's model is based on the successful micro-lending programs developed by Nobel Prize winner Mohammed Yunus, where borrowers are required to meet weekly with other borrowers to discuss common business problems and collectively develop solutions.   

In a similar social structure, CASH FOR HEALTH members with common interests will meet monthly in social groups (Circles) to share experiences, successes, and advice.  This peer support led by CASH FOR HEALTH coaches is the glue to the success of the CASH FOR HEALTH system.  Even those struggling with health issues can live long active lives as long as they are supported in a positive way.  CASH FOR HEALTH believes community is the cornerstone for long term health.    


In his book Outliers, Malcolm Gladwell wrote about a small town in Pennsylvania called Roseto, settled by first generation Italians.  Virtually no one there under 55 died of a heart attack, or showed any signs of heart disease.  It's wasn't due to their diet. The Pennsylvanian Rosetans were cooking with lard, instead of the much healthier olive oil they used back in Italy.  In fact 41 percent of their calories came from fat!  They did not get up at dawn to do yoga and run a brisk six miles. They smoked heavily, and many were struggling with obesity.  If it wasn't diet and exercise, then what about genetics?  No, not that either.  They tracked down their relatives who lived in other parts of the United States to see if they shared the same remarkable good health.  They didn't.  In Roseto there was no suicide, no alcoholism, no drug addiction, and very little crime. They didn't have anyone on welfare. These people were dying of old age. That's it.

Rosetans visited one another, stopping to chat in Italian on the street, or cooking for one another in their backyards. They had extended family clans that underlay the town’s social structure. Many homes had three generations living under one roof, and grandparents commanded much respect. They went to mass at Our Lady of Mount Carmel and saw the unifying and calming effect of the church. They counted twenty-two separate civic organizations in a town of just under two thousand people. There was a particular egalitarian ethos (all created equal) of the community, which discouraged flaunting success and instead teach and mentor to help the unsuccessful rise beyond their failures.  They supported one another to achieve their best.   

In today's accelerated environment, our bodies experience diverse levels of stress we were not originally designed for. Today we all need support to release toxins from pollution, preservatives in food, aches and pains from daily physical wear and tear, and emotional stress from long days at work and at home raising our families.  Our cells are designed to move around the body to transport important hormones, nutrients and oxygen that allows your body to function at it's best.  But stress on all these levels, physical, mental and emotional, inflames the cells and causes blockages to the system which creates disease. CASH FOR HEALTH Member Circles are designed to relieve stress on the body through talking and listening, connecting with other members and learning from their experiences, and collectively supporting each other.  


Tuesday, March 17, 2009

THE FILET MIGNON OF HEALTH PLANS

Most people can tell you how much a gallon of milk costs at the grocery store.  But how many of us know the price of a common antibiotic?  Z-pak is $70 for 5 pills ($14 per pill). Or how about an MRI?  About $750.  If Americans had to pay cash out of pocket for drugs and medical services at these prices do you think these companies would still be in business?  No.  But you are not their customer.  Doctor's who prescribe treatments and employers who pay for your health insurance are their customers.  Insurance companies pay doctor's $24 per insured patient, and half that ($12) goes to pay the doctor's office administrator to handle all the insurance company paperwork.  That's why the doctor can only see you for 10 minutes; he has to see 30 patients per day just to stay in business.  The only reason health reform is happening now is because employers can no longer afford to pay for employee health insurance at these prices and insurance companies are now FORCED to make change or lose doctors and employers as their customers.  

Now where do you fit into this picture?  You don't.      

This year 177.4 million out of 300 million Americans (59.3 %) have health insurance through their employer and 39.3 million Americans (27.8%) are covered by Medicaid.  Some state government health plans charge monthly premiums of $621.53 for individual coverage and $1,551.64 for family coverage.  Family coverage costs $18,619.68 annually.  That's more than a minimum wage worker’s annual pay of $14,500 per year.  Now keep in mind the state plan is rich in benefits which is why is costs so much. Yet many cities and employees believe their coverage is the norm or middle of the road when, in fact, it is the filet mignon of health plans.  But how many people are sick that often or actually guided how to use these benefits to improve their health?  Under these plans the customer has minimal out-of-pocket expenses or "co-pays" for health services, so they have no idea what health care actually costs. It's not our fault.  The system has us trained to not ask questions because "my insurance will pay for it". This lack of education leads to unbelievable waste and has snowballed into an avalanche that is killing Americans, slowly.  We are less productive at work, less happy at home, and we take this personally instead of collectively demanding better health services that we understand and can implement into our daily lives. Ten minutes at the doctor is not enough to educate us. So while smart people in Washington are scratching their heads to solve the health insurance problem, this enormous amount of money spent on filet mignon "benefits" literally goes down the toilet because people either abuse them or don't use them.  

CASH FOR HEALTH is the solution.


Tuesday, January 6, 2009

THE HEALTH INSURANCE PAPERWORK FACTORY. HOW MUCH $ OF YOUR PREMIUM GOES TO MEDICINE VS PAPERWORK?


That is the same price the Obama administration is spending this year on war
We hear about the cost for war on the news.  So why does this $200 billion cost for health insurance paperwork that comes out of American's wallets go under the radar?
How do we relate to that number?  By comparison, Bill Gates, the richest guy in the world is worth only $40 billion.  What can you buy for $200 billion besides a war?
The health insurance system proliferated in the 1940's when wartime wages were low and employers offered it as a perk.  It was a fringe benefit that could be expensed by employers; a cheap throw in. However, the structural administrative problem of paying the everyday medical expenses of those insured is at the root of rising unchecked health care costs.  
Never buy insurance for something you can afford to replace. Do you pay for routine maintenance on your car or home insurance?  
A good analogy of how screwed up this system is to ask what would happen if car insurance or home insurance paid for routine maintenance? Would it be a good deal to pay an insurance company every time you changed your oil or had your HVAC system quarterly maintenance done so they could pay the bill instead of you?  This is no different than going to your pharmacy to pick up medication and handing over your insurance card instead of your credit card.  Just think of all the extra steps and people involved that adds to the cost of the average prescription. And who pays for that?  Yes. You. Why?   
The quickest way to fix health care costs is to make health insurance have a minimum deductible of at least $5,000.00. If government wants to get involved with helping people who can't afford to pay the first $5,000 of medical expenses through a tax credit or direct payments, great. At least we could get back to a free market for routine medical expenses where people determine the optimal price they want to pay and doctors would not have to run a giant paperwork factory for routine tasks.  
Do we shop around for the best price for a routine doctor visit? No.
Do we shop around for the best price of a specific medication. Generally, no.  
Most of us just say "my health insurance pays for it."  After surgery have you ever asked for an itemized bill from the hospital?  Why not?  Isn't this America?  We are shoppers!  Why does health care fall into this black hole?  At least when I buy my Americano at Starbuck's I know why it costs twice as much as McDonald's coffee; ironically it's because Howard Shultz, Starbucks CEO, pays more for health insurance for his employees than on coffee to make all those espressos!   If we solve the national health care problem, even your coffee will be cheaper!  
Can you see the pattern?  How come the trillion dollar stimulus plan gets so much press, yet the trillion dollar per year health insurance industry has gone under the radar for so long?  We just continue to hand our money over.  Ask questions.  We waste $200 billion dollars every year in health insurance and doctors administrative paperwork costs; more than any other country.  Why? 
Here's the deal; no matter what, we are all going to pay for routine health maintenance anyway, one way or another, like changing the oil on our car.  But I do not want to pay for the doctor's and insurance companies costs for having to deal with each other and their costs to hire administrative people (on my dime!) to manage all that paperwork.  I rather pay the doctor cash!   And when I do, I negotiate, and ask for a discount for no paperwork.  
There are two components to the typical health insurance policy. The first is coverage for a catastrophic event or non-normal event. This would apply to issues where expenditures in excess of $5,000-$10,000 are involved when you get really sick or you need surgery or get some major chronic disease. This part of insurance is similar to car insurance or hazard insurance on a house. Yet just an overnight stay in the hospital is $7500.  This is covered so that if something happens, you are not wiped out financially. The premium for this portion of health insurance is arrived at by calculating expected chronic expenditures for a large group of people. For every 10,000 people a certain number will get cancer, heart problems, strokes, etc. in any one particular year. Average cost for treatment is x (around $100,000). So premiums for 10,000 people have to be high enough to pay expected claims plus cover insurance company overhead plus earn a profit.  

The second piece of insurance covers routine health maintenance. These include prescriptions, physicals, cholestoral checks, OB/GYN, dental etc. The insurance companies use the same routine. They figure how much the average person spends per year, put on additional funds for overhead, and add a profit. The problem with this part of insurance is that when you have routine annual expenses and you pay to have them covered by an insurance company, you have built in extra costs.

This is because now you have to pay for the costs for the doctor to deal with the extensive insurance company paperwork and the  insurance company in order to gain payment, you have to pay for the personnel at the insurance company who will review the doctors paperwork, you have to pay for the personnel at the insurance company who will process the check to the doctor, you have to pay for the personnel at the insurance company to keep track of how much they have taken in from you versus how much they have paid out. All this is bad enough. However, there are other insidious side effects.  

FORMS FORMS FORMS!
One, you were going to spend x thousand dollars per year on health care no matter what. When you get insurance to cover it, you are basically paying for the same stuff you were going to buy anyway but also paying the doctor's and insurance company's markup for dealing with each other and going around in circles trying to outplaster each other in paperwork.

Two, the doctor charges more because he has more expense associated with getting paid by the insurance company. 

Three, since "the insurance company is paying", there is no incentive for the patient to shop around to get the best price for the best service. The only assessment we use to find out what medication or a doctor visit costs is how much the insurance company will pay. The insurance company has little incentive to hold down what something costs because they are charging you for these expenses plus mark-up for overhead and profit in the premiums they charge you.

It is an indirect charge, but make no mistake, insurance companies night not know your health scores but they have forecasting models estimating medical inflation and the inexorable rise of their own fees. In fact the more you and the average person spend per year the more profit the insurance company makes per customer per year because their profit is a percentage of what is annually paid out.

This issue also applies to prescription medicine. How much of the cost of the typical prescription has to do with paperwork and profit instead of the actual medicine?
We need a system based on facts.  And we have the power to do it.  

Tuesday, January 8, 2008

A PAY FOR PERFORMANCE HEALTH CARE SYSTEM




Can health insurance premiums become a financial incentive to stay healthy?  

If you get one too many speeding tickets, your car insurance rates to go up. If you don't pay your bills, your interest rates on loans goes up. So how are health insurance rates determined?  What's the formula?  What are they measuring? Can you predict a car accident or a flood with more accuracy than predicting a heart attack?   

It made me wonder.  How exactly do health insurance companies come up with that "premium" number?  Your zip code? Your height and weight?  Your age?  What does that have to do with my current health status?   


How do health insurance companies make money? By hedging bets?  We hear in the news that to control rising costs of health insurance is to cut and cap costs.  Yet from a business perspective, how much money are health insurance companies losing by making bad underwriting bets based on archaic actuarial and probability models?  Given the information technology and diagnostic science available today, when batting averages, online poker, and Super Bowl Sunday have more precise analytical tools than what it takes to determine your health insurance rates, something here is totally out of whack.  Most of us bet around $400 per month that one day we are going to be unhealthy.  You hand that wager over to your health insurance company each month, and never question the price. Why? On a scale of 1-10, do you know how risky you are?  What exactly are the odds your health insurance company will have to payout a big catastrophic claim on you?  How many blind bets do these insurance companies make?

HEALTH DISCRIMINATION?  
Do you tell your health insurance company that you smoke one pack of cigarettes every day?  As long as you work for a company who provides health insurance as a perk, go ahead, smoke away.  Yet if I want to buy health insurance on my own and I had a cancerous mole removed, or have heart disease or diabetes in my family, these same companies assume you will cost them money and will either turn you down, or may charge you a $1000 per month "pre-existing condition" premium based on out-dated actuarial data of a large group of people.  Again, do insurance companies know out of that large group of people how many of their insured eat Cocoa Puffs every day for breakfast vs. oatmeal?  Either way, I do not want to be forced to pay a premium based on assumptions.  I want it based on fact.  I want a fair price for exactly how risk adverse I am right now.  And with that data I want to be rewarded with a lower premium for maintaining good healthy habits that not only enhances the quality of my life, it saves the health insurance company money on decreasing potential catastrophic claims.  Then just like when I get one too many speeding tickets and my car insurance rates go up, next year, if my health scores become risky, I'll pay more. This is called risk equalization in Europe. There is all this "talk" about prevention and wellness.  Let's act on it.  Let's put our money where our mouth is and see exactly how many people are acting on preventing illness. Or not.  Needless to say, a wake-up call to face facts is the first step to health.  No one wants to die. That is how you save money on health insurance and control rising prices.


SOLVING THE PROBLEM AT THE RIGHT END OF THE STICK.  
Pundits say that reducing costs while increasing access are irreconcilable issues.  That "incentives" for preventative care and treatments of chronic diseases will sometimes result in better health but will always result in more spending.  Why?  I respectfully disagree for the reasons stated above. Right now each insured is paying top dollar for a "pre-existing chronic condition".  In this proposed "pay-for-performance" free market model, why not allow an individual's current health status to set insurance prices and measure health progress.  Then empower each insured to choose how much, in a dollar amount, they can afford to insure their health management and risk. The riskiest cases may qualify to ask for further aid and choose a health maintenance program subsidized by the government.  



If we measured each insurance applicant before billing to assess exact risk and associated cost, insurance companies will profit simply by including everyone as a customer. Also, by aligning per person costs with an annual action plan to achieve health vs. blindly wagering top dollar to expect the worst, in less than 5 years this will turn the whole system around. To the positive end of the stick. We require an health incentive plan, not a health insurance plan.  Perhaps begin with the hardest to cover "pre-existing condition" cases that insurance companies won't touch. If we required a health assessment diagnostic blood test first to determine exact costs to get you healthy according to an annual schedule, well, now we have a real health "plan" to work with.   


Employers don't have to offer health insurance anymore. Relieve them from this paperwork mess.  Work environments are essentially communities or similar to a "village". For employers who create healthy work  communities, determined by the health data of their employees, will be awarded health incentive funds from the government.  Employers will use these as perks in the form of "health gift cards" to distribute to employees to use specifically for health care according to their individual annual plan. This is simply a reallocation of the same "tax benefits" employers get now, but this is not just handing over money.  This creates a dynamic "community" health plan for individuals based on positive action with rewards for positive results


COMMUNITY HEALTH GIFT CARDS!

Let's take the burden off employers and put the individual consumer in charge. Give individuals tax credits and incentives for improvements on their individual health performance.  Let's provide the insured health guidance and coaching. Like the Peace Corps, this will be a nationally organized, community based, health corps organization, perhaps franchised across the nation.  Individuals who participate in employer based health maintenance an wellness programs will then be distributed health insurance credit as a "health gift card".  


PAY FOR PERFORMANCE HEALTH CARE SYSTEM

Yes, technology to track health progress will make administrative process easier, but a blood test can empower any patient and health insurance company to pinpoint exactly how risk adverse you are, or no and base costs on real datat.  To qualify for health insurance you will take a biophysical diagnostic blood test each year and pay your premium according to real-time individual health data, not an arbitrary premium.  Let's give doctors real health data scores to work with to create an annual health plan for each "universal" insured patient.  And can insured's have an incentive to stay healthy to save money on insurance premiums?  Yes.  To start what if we took that same $4700 per year or $400 per month and invested it in a day-to-day health plan to bring your health scores to optimal levels.  The cost for the annual diagnostic biophysical blood test will be amortized into your monthly premium. Then your your doctor can use your annual health scores to map out a plan of action for the coming year to get your numbers in healthy range.  Then just like when I get one too many speeding tickets and my car insurance rates go up, if my health scores become risky, next year I'll agree to pay more.  When I improve next year, I pay less.  This will be a practical use of your annual premium, but now it becomes an investment in yourself; not a payment. Once you have real data to determine exactly what your costs are to bring your health scores into healthy range you can buy insurance for a price based on real cost; just like you do for your home.

Right now doctors only make money if you stay sick! This is because the current health insurance system pays doctors per treatment...the more tests and treatments they order, the more money they make.  One doctor told me he makes $24 for every health insured patient he sees. And $12 goes to his office management costs before he ever gets into the room with you, the patient. It is now a volume based business. He has to book 30 patients per day (1 patient every 15 minutes) to stay in business.  With this new plan, doctors will be rewarded financially by putting them on the prevention side of the fence rather than being paid on volume, per treatment. Under this pay for performance plan doctors with the most patients that show progress of getting health scores within range will help health insurance companies save money and allow them to offer lower premiums by reducing risk on the number of payouts on expensive claims. 


NEVER BUY INSURANCE FOR SOMETHING YOU CAN AFFORD TO REPLACE
Yes, it may be best to exclude coverage of health maintenance services with low priority or value.  For instance, your car insurance company does not pay for changing the oil on your car.  These common health maintenance services would be itemized in your annual health incentive plan that you receive when you apply for insurance.  In most cases for teeth cleaning or remedies for colds or minor infections, you will save money paying for yourself rather than paying for all the insurance paperwork involved with a co-pay.  Only buy catastrophic insurance and buy it based on a specific number.  The health status report from the diagnostic blood test will give you levels of potential risk that a hospitalization may occur and the price for treatment for various scenarios.  This will enable the customer to purchase insurance based on exact risk for their individual health status from $100,000 (covering an average cost for one week in the hospital) to $1,000,000 (for one year of cancer treatments).  When your health improves each year your annual investment in catastrophic health insurance can be reallocated to your annual health maintenance costs in "points" in a health gift card.  



Let's expand the system and manage it so anyone can apply.