How to create universal healthcare in 16 points or less
Free healthcare — myth or reality?
Every man and his dog knows that there is no such thing like a free lunch. There is always someone who pays the piper. Healthcare is anything but free. It is actually an extremely expensive proposition. Today everybody wants it but few countries can afford it. Term “universal healthcare” is what we are after. That means medical services for everyone, free of charge. So herein we’ll call universal healthcare a free healthcare. It sounds nice and everybody wants it, right?
How it started for me
Here is how free healthcare started for me. I was born into it. Just like that, being at the right place at the right time. It is not some amazing achievement since practically whole Eastern part of Europe leading with Russia has a free healthcare.
Still, you would be mistaken in thinking that free healthcare is reserved for socialist countries only. The UK has it, France, Italy, Germany and pretty much every country in Western Europe is enjoying free healthcare as well. So what is a big deal? It is a money eating monster and it will likely eat away hand feeding it, that is why.
Is it free healthcare that important?
About 34 years ago the wife and I were sitting in the garden, having coffee and cake with friends. We were discussing the possibility to move to another country. We had simple criteria and using it we built a short list of potential places to apply to. Here is a list:
As for the basic, acceptable requirements we had the following in mind:
- Low crime rate
- Universal healthcare
- Social security
- Good economy
- Good education system
Coming from society with universal healthcare we gave it a huge importance. A second place on our top list. We had it and could not imagine not having it, especially in the new country of residence. For us, having one child and having the second one during an application process, healthcare was an absolute must.
To make story shorter we choose Canada and after several unsuccessful applications Canada chose us as well. Canada fit all requirements. I am happy to say that sticking to the initial criteria was a good decision. Yes, healthcare was and still is that important. If you don’t have it you don’t know what you have been missing.
These days I work for a company that makes smart cards systems. One of the flagship products is an eHealthONE, a smart card-based medical records in the chip. In order to create effective solutions, we had to learn many aspects of healthcare. That came handy.
Free healthcare in making
Recently we received a request from a smaller nation located in the Caribbean. They are after modernizing a system of healthcare. We will not the name that nation here. I am not sure that if they would want it or not so we’ll continue without the name. In essence, the name is not that important but intention definitely is. This time request comes with a twist: not only they are after practical electronic medical records but they also want to introduce universal healthcare for all citizens at the same time.
Now that is a kicker of a very tall order! First of all, even the idea of it sounds very commendable and noble in every aspect. The actual execution of that idea is an entirely different issue. If it is a tall order for big and rich countries how can small nation even think about affording it?
Needless to say, we want to help. We’ll make a sale of our system and also help them to move to universal healthcare coverage for everyone. So who is “everyone”? Here are some stats:
- About 52000 residents
- 29200 of those people are employed
- 30% of employed have medical insurance, about 9000 workers
- 20% of all employed are Government employees, about 5500 workers. They all have medical insurance by default
One can see a problem. It is not terrible but it is noticeable. Yes, there are no many persons to insure but there are no too many people working. They are the ones to carry financials on their shoulders. Also, too many are employeed by the Government. Two more important numbers to consider:
- GDP 2017 = $945 Million
- Income per capita = $17000
We came up with a guidelines
We did quite a bit of research and looked into existing free healthcare models. Canada, Germany, UK, France, Russia … So we came up with 16 point plan Government should observe and follow in order to succeed:
- People must want it
- Who will pay for it?
- National budget must be in positive territory
- 3 months delay for every new entrant
- Do coverage in stages
- Establish a lifetime spending limit
- Strict control over spending
- Introduce personal participation
- Get competitive quotes from privately owned insurance companies
- Commission of 3 people to approve overseas treatments
- Medical services sub-contracting
- Find a competitive source of drugs
- Use international ICDC or ICD-10 medical codes
- Use electronic health records
- No dental coverage
- Hire outside manager to run the system
People must want it. First one is quite easy. Everybody in the right mind will want to have universal healthcare. Medicare is the third most important need in life. It comes after food and shelter so it’s not something to neglect.
Sickness is an unforgiving and non-selective problem. Everybody, at some point in life, is a patient and requires medical attention. When ill first thing a person wants to know is where to get medical services. The last thing the patient wants to think of is how he will pay for it. Notoriously expensive hospital services may ruin a day rather quickly.
Starting from myself I avoid doctors like a plague. Only if there is a knife sticking from my back or limb dangling on a thread I’ll go to see a doctor. That means my tax deductions for universal healthcare are a one-way street. I pay into it and almost never get to spend it. But I don’t mind at all!
I don’t mind paying into it and other people use the coverage. I always believe that nobody wants to be sick and that our society is on such a civilization level that it takes care of people in real need. Never forget that things can turn for the worse in the heartbeat, literally.
People seems to accept a concept of a car insurance. Not that they enjoy paying it monthly. One keeps paying and maybe will never need it. Others are not so lucky. They crash the car, get injured. There is insurance to pay for damages done. Concept of medical insurance could be perceived in the similar way. But it is much more personal and it touches everyone at any point of life.
When people are young they think they are indestructible and will live forever. Healthcare doesn’t fare high on their worries. That changes when they are in the mid-twenties. Then they build the family and run to the doctors with their newborns. After a person is 30–40 years old full weight of medical care importance presents itself. From that time until late life medicare is really very high on the must-have top list.
Who will pay for it? This is definitely an elephant in the room. The financial aspect of a noble idea like a universal healthcare can crash the whole scheme rather quickly. A first and most obvious source of funding is the existing taxation system.
In Canada individual earning about $40000 per year will pay about 10% of that in taxes that go straight to healthcare funds. Healthcare costs represent 11.3% of the GDP. In simpler terms, there must be tax percentage or fixed amount taken from every employee as a contribution for healthcare. This must be the universal rule with no exceptions, Government employees included.
The same or similar amount should be contributed by the employers. Good standing companies already pay medical benefits so re-naming it and organizing a new way would not be disruptive to the existing benefit plan model.
National budget must be in a positive territory. This is simple to understand. If country budget is already in the hole money for the universal healthcare is not happening. It will rather speed up financial train going downhill with no brakes.
3 months delay. There should be a 3 months delay for every person getting free healthcare. For the whole scheme that means from the startup of the day until the first claim is to be created, there must be a 90 days delay. These first 3 months are critical for the initial funds’ build-up.
For the individuals, there is also a twist. If citizen leaves a country for a period longer than 3 months when returned back there is no coverage for the first 90 days.
This prevents citizens who live abroad from hopping onto the airplane for the quick trip to the homeland to get under free healthcare protective umbrella. Those people actually live overseas, do not contribute to free healthcare scheme and if fallen sick can’t just expect to show up at homeland for the free fix. Canada has that simple rule. It makes sense and it is cost-effective.
Do coverage in stages. The system should be initially released with a limited number of services covered. It is a simple safety precaution that saves funds from depleting on every and any medical condition. Remember, no health insurance covers everything. There are always limitations built into policies. Like cosmetic surgeries, or an excessive amount of drugs. After 6 or 12 months of fund life, if found financially healthy additional medical services could be approved for everybody.
Establish a lifetime spending ceiling amount or not? This is a tricky one. Coverage could be an open end or capped with a maximum ceiling amount allowed. A strategic decision has to be made if the covered person is allowed to enjoy coverage no matter how long it takes and how much it costs. Opposite of that most of the US insurance companies impose a lifetime limit. If and when ceiling amount spent is reached there is no coverage any more. It is obvious that a very ill person could cost more than other 20 or more average individuals.
As with the previous requirement management could opt for ceiling amounts at least for the beginning of the fund. Live financials could prove fear of collapse unfounded and that limitation could be raised to a much higher level or completely removed.
Strict control over spending is an absolute must. What does that mean? Unless ministry of health directly owns and manages hospitals there should be a fixed price list for the medical services. Basically, it means maximum standard amount fund will pay for specific services rendered.
Doctor’s software has to be set to send claims according to that Government approved price list. If properly automated and regulated, medical claims could be easily be processed with no errors. Doctors could get paid in a very quick fashion and even by transfers to the bank account directly to save on costs. You know, even making payment costs money. Details like that are well solved in eHealthONE smart card system for both doctor and insurance software.
In Canadian healthcare model, the biggest expense is hospitals at 30% of all funds, medications at 16.4% and physicians at 15.4%. In one of my previous articles about travel, I pointed out to disproportion in costs for travel in different countries even that they are using the approximately same equipment and burning same oil to do it. Healthcare situation reminds me of that, quite similar.
Here is something of more drastic proportions. Average yearly pay for physician in (all figures in USD, Internet sources):
- Cuba = $7200
- Russia = $9600
- Italy = $84000
- UK = $114000
- Germany = $123000
- Canada = $160000
- USA = $195000
- Australia = $250000
A quick visit to calculator tells us that range between lowest paid physician and the highest paid one is more than 34 times! Call me stupid but that ain’t right. Do you honestly believe that Australian doctor is 30+ times better in any way that Russian or Cuban doctor? Remember those are physicians, not brain surgeons or specialists. That we will not even try to check since differences must be astronomical.
Check out Italian or UK doctor. I strongly believe that they all cure patients to the best of their abilities and I trust their abilities.
Still, I can’t get away from the feeling that medical professionals pay is a runaway train. Somehow it lost touch with reality and economics of doing a job and getting paid a fair value. I understand that geographical location, like the country itself and overall economy of that place make a great impact on the fact how wages are measured.
Lets put more things into perspective. Or this for the hip replacement procedure. It is about 1.5–2 hours operation:
- Russia = $4000
- UK = $12000
- USA = $40000
Again, startling differences. 10 times!
There is also interesting number of the life expectancy expressed in years:
- Cuba = 79.93
- Russia = 71.59
- Italy = 83.68
- UK = 81.16
- Germany = 81.44
- Canada = 82.56
- USA = 78.69
- Australia = 82.90
- St Kitts — Caribbean = 71.34
It is obvious that the quality of healthcare and the overall health of the population is not directly correlated to the amount of money thrown at it. It sure also has not much to do with the size of the country. For example the country of Slovenia has a population of only about 2 million people and life expectancy of 80.20 years. Or take a look at Island. 338000 people and life expectancy of 82.20 years. Nice!
Medical services are overpriced!
Overall conclusion here is that medical services are badly overpriced. The USA is leading bottomless pit. There are thousands of charts, indicators, and reports to prove it. Before doctors jump at my throat let me just add that endless overcharging under the premise of saving people’s lives will not serve anyone.
Being a doctor or nurse or therapist is a job. It is probably sometimes hard, long hours, requires knowledge and devotion. I could list 100 jobs that are hard, require skill, devotion, a lot of training … and pay 10 times less.
For the third time, I must use an analogy of runaway train. The medical profession and overall industry somehow transformed itself into a runaway train. Society is feeding it with money and with ever-increasing costs by mathematical certainty it will reach a breaking point. Practically that means that universal healthcare will collapse under own weight.
Where private insurance is involved rates will skyrocket and in the end, nobody will be able to afford any medical services at any rate. Hospital will lay off people and close wings or a whole thing. That will be a straw that broke camel’s back. Greed will ruin everything for everybody, how that sounds?
Introduce personal participation. There could be a small flat fee to be paid by the patient for every new procedure or event. A fee is there to discourage people from abusing a system by going to doctor’s office for trivial reasons.
Competitive quotes. There are 2 ways to handle the system operations:
1. Let existing insurance company do it
2. The government does it themselves
This kind of things every health insurance company does every day. Using statistical models they sell coverage and collect monthly contributions. They do everything from A to Z. It would be a no-brainer for the Government to ask for competitive quotes from insurance companies. It would be the same thing what they do now but on the large scale. Everybody would be a client.
We think that #2 option is how this issue should be approached. By going with privately owned insurance company means inserting another layer of service providers between the medical services and payer (Government). In the situation where Government is watching every dollar that would make things more expensive. Naturally, the insurance company is there for profit. They want to keep a difference between monthly fees paid in and bills paid out to medical service providers. Nothing wrong with that … but from an insurance company standpoint of view.
The thing is universal healthcare doesn’t suppose to be a profitable business. It is there to serve people and people only. In this case, socialist or communist run free healthcare system is better. They don’t expect hospitals to make money by overcharging their services. They never did and that’s that.
Compare them with basic schools. They are there for children’s education. School teachers get paid reasonable wages. There is no profit model applied and it shouldn’t be.
In universal healthcare situation, hospitals and elementary healthcare should be in a similar category. Reasonable costs would create environment where free healthcare would flourish.
If there is more money every excessive dollar is to be kept in the fund’s pool for a rainy day. Strict fiscal policy should prevent any transfers out of the pool for anything else but paying medical bills. To achieve efficient money management Government has to have own employees and accountants handling the claims and billings. Paying somebody else to do it is just not a responsible thing to do.
Commission sending patients overseas. Unfortunately, there will be times where local hospitals will not be able to solve complicated medical problems. Lack of technology or trained specialists will demand outsourcing services elsewhere. Commission of 2 physicians and one plan administrator shall be established to make a decision can and shall the patient be sent out for treatment. Good intentions and wishes are one thing and financial reality is another.
Overseas treatments. It would be wise to look everywhere to outsource medical services. We are sure that modern and capable hospitals and more importantly, capable specialists are available where you don’t expect them. Surely common language about reasonable costs could be negotiated, patients and money saved in the process. Administrators should scout surrounding islands and places that are 2–3 flight hours away for treatments. Maybe Panama, maybe Mexico, maybe Puerto Rico, even Cuba or Caymans have what is needed and privately owned hospital with specialists could surprise. In the hard times that are upon us, there may be business opportunity behind the corner. Automatically sending patients to the US may kill the budget quickly and ruin it for everyone.
Competitive source of drugs. Very similar to outsourcing medical services administrators of the system should scout the Earth for best medical drugs providers. Believe it or not Pfizer, Merck or Bayer are not the only ones that make medications. Many countries have developed medical drugs industry and again size of the country has absolutely nothing to do with it.
Actually, they are not bound to shareholders to produce a million percent markup on every tablet they make. Not only that, they make important drugs for way less but they make it better than big guns. For example, Hungary has quite developed medical drugs industry and more importantly they use natural substances wherever it is possible.
How about India? How about Russia? They must know a thing or two about manufacturing medications don’t you think? Antibiotic eye drops that cost 12 dollars in drug store may cost 39 cents there. Or heart pills or really anything. They’ll gladly take dollars and deliver the best products they have. Again, common sense and good business rules!
By automatically grabbing Merck order form and paying through the nose may deprive patients of life-saving drugs they could otherwise get.
Using Internationally recognized medical codes. That should be a must. Adopting electronic medical records, easy claims processing, and the overall process would benefit from the usage of ICDC and/or ICD-10 medical coding. Those codes are prescribed by WHO (World Health Organization). Our eHealthONE uses both codes.
Electronic medical records should be used to modernize administrative processes, speed them up, make them correct and portable. Patient visiting this doctor or that hospital should enjoy the availability of medical records any time, everywhere within the domicile system. Privacy concerns should be observed and protection practices followed.
Smart cards are the best and naturally selected media by every major medical system. Germany, France, Belgium, Austria, Taiwan … you name it and they have a national health card system for the population. Not only big countries have it but smaller as well, like Slovenia, Estonia, Croatia. The smart card based system is introduced, everybody has a card in the pocket, everybody likes it and it’s there to stay.
Dental coverage. Very rarely free healthcare covers for dental work. Preventive teeth cleaning or checkups yes but work not. Maybe children up to 10–12 years of age should have coverage. Universal healthcare administrators should look into this issue carefully in order not to break the budget on this issue.
Outside manager. New established universal healthcare should look into the option to hire a person who has nothing to do with existing Government, even if that means a taking a foreign person.
Reason for that is the position of the manager who will organize and run the whole system is most likely very politicized. Let’s say spoiled or also corrupted in many ways.
That person should not be in any way connected to any Government body or party. He simply has to be a impartial professional doing his job unimpeded by internal politics. Free of people who want to steer him or her into a specific direction, make favors or receive favors. There is just too much human pain and money at stake to allow rotten relationships to flourish.
Conversion to universal healthcare is sure not an easy task but somebody has to do it. It is much easier to sit on hands and do nothing. Inaction should not be an option.
Population sure can’t wait until stars get aligned in a perfect position. People get sick all the time and it takes organized effort to make healthcare better, less expensive and easier to get for everyone.
Results may be so marvelous and beneficial for everyone involved that no effort should be spared in getting free healthcare done!