Okay, let’s get the scary numbers out of the way. We spend $2.8 trillion each year on health insurance – $8,500 per American. This equates to our healthcare system being the 5th largest economy in the world, only behind the United States, China, Japan and Germany. Private insurance premiums are skyrocketing for small plans, large plans and individuals. The U.S. is $17 trillion in debt – actually it’s a hell of a lot more – so add an extra $40 trillion just for Medicare and Medicaid unfunded liabilities. Plus Obamacare, while noble in its intent, is causing and will result in many more problems than its helping.
Health insurers blame doctors, hospitals, defensive medicine and patient over-utilization. Doctors and hospitals blame the greed of health insurers and looming malpractice insurance costs. All three groups point fingers at the progression of chronic disease in America, and the lack of responsibility in exercising and eating right. We have a lackluster President and Congress, trying to put laws in place, in a best attempt to save face, keep votes and capture some small measure of political legacy.
None of the major players discussed have any real measure of contrition, nor do they want to be honest or responsible in any major way. Hence, we are in a major shit storm, with the protective umbrellas held either by those having no-deductible, fully-funded company insurance plans, or by the richest Americans who are apathetic to the severity of this mess.
And for those who tout ‘Single Payer/Universal Healthcare’ as the answer, for God’s sake shake yourself! Hillary and Obama failed at this, not because they were stupid, but because the for-profit system has grown too big to fail. C’mon guys, it’s a nasty game of musical chairs – what happens to all of the employees of insurers and their vendors/contractors with a single payer? What happens to all of the shareholders of all the publicly-held health insurers that can no longer sell insurance? Remember the people who freaked out over GM raiding their pension plan? That’s one company – now try an entire sector of industry with stocks widely-distributed in pension plans and mutual funds.
I’ve come up with a unique idea that can help to make a major dent in this problem. It puts a sizable part of the solution back into the hands of a select group of Americans – namely those living in their last year of life. It gives health insurers the opportunity to actually be the good guys, of sorts. It’s called the Transitions Plan – and it’s patented (well, Patent Pending anyway).
BACKGROUND: According to New York Times, the roughly 6 percent of Medicare patients who die each year make up 27 to 30 percent of all Medicare costs. While the numbers for private health payers are not made public, my inside information points to similar statistics.
Separately, studies show that each year 70% of all deaths occur due to chronic disease. Nearly three-quarters of that number comprises those suffering with heart disease, stroke and cancer. All told, nearly $1 Trillion or a third of all total yearly health payer payments made to hospitals and physicians are for a person’s last year of life.
This last year of life is where insurers can make a tremendous mark on our healthcare costs. Enter the ‘Transitions’ program.
THE PROGRAM: This disruptive innovation starts with ‘last year of life’ individuals understanding that, apart from their illness, they are a liability for private & public health payers, the other individuals they insure, and for the taxpayers. This realization is not a bad – actually, these people need to recognize that they have enough leverage on the dollars at play to become part of the solution. And separately, most Americans die with little or no money to leave family or charities.
Ask a chronically ill person or even an elderly person what they think about being kept alive for as long as possible. Many of these people are not as interested in quantity of life as they are in quality. Simply stated, people who are terminally ill come to realize that they are living on borrowed time and they want that time to be the best possible. Excepting those unable to think clearly and responsibly, seniors and others who suffer from life-threatening diseases should have a lot to say about their life and the direction they wish to take it in.
Dr. Ken Murray, Professor of Family Medicine at USC wrote an article entitled How Doctors Die. His premise is that because doctors know the limitations of their expertise and technology, many choose to forego end of life medical efforts. He states,
“Almost all medical professionals have seen what we call “futile care” being performed on people. That’s when doctors bring the cutting edge of technology to bear on a grievously ill person near the end of life. The patient will get cut open, perforated with tubes, hooked up to machines, and assaulted with drugs. All of this occurs in the Intensive Care Unit at a cost of tens of thousands of dollars a day. What it buys is misery we would not inflict on a terrorist.”
Here’s where the Transitions Program begins. It’s a system where health insurance companies identify terminally ill patients and in lieu of paying for their last year’s medical expenses, decide to offer these members the opportunity to ‘cash out’ for a determined, non-taxable amount of money.
Let’s say that Charlie Smith is a 78-year old man who has just been diagnosed with stage 4 lung cancer. Hypothetically, the average case lasts about 9 months and there is an 88% chance of death during this time. Between chemotherapy, lab tests, doctor visits, home health, pulmonary therapy and several possible surgeries, a typical health insurance company can expect to pay between $325,000 and $425,000.
Now for some innovation using the health insurer’s monies, and proper risk management.
The health insurer, ABC Insurance receives the patient’s initial diagnosis on a medical claim. It’s flagged and the case is passed to their medical management department. Medical management is French for consultants, experts, nurses and doctors hired by the health insurance company to determine if the medical claims they receive are reasonable and necessary treatment.
Medical management, in doing their job, requests medical records from the provider(s) who sent the claim(s) with the diagnosis. Once they receive the information and the diagnosis is properly substantiated, the health payer teams with an actuarial team to set an estimated valuation on the case. Let’s assume it’s placed at $400,000.
Now the health payer gets in contact with the patient and presents the offer for the transitions program. The letter reads:
“Mr. Smith, we at ABC insurance care about your health needs. Because we have recently received verification of your disease of stage 3 lung cancer, we want to make you aware of our Transitions Program. Here’s how it works.
First, the program is completely voluntary and if you choose to not use it, nothing will change with your current health coverage. This does not guarantee any payment for future medical services, as all claims must be evaluated for medical necessity.
However, upon your agreement, ABC insurance would send you a one-time financial payment in the amount of $225,000. This money is tax-free and is being offered to you in a non-negotiable manner. Once you receive the payment, the following would occur:
1) ABC insurance would no longer be responsible for payment for any treatment or services, directly or indirectly related to your chronic condition. These conditions include the following: XXX, XXX, XXX, and XXX.
2) ABC insurance would remain responsible for any treatments or services billed prior to your acceptance into the Transitions Program, so long as they are deemed medically necessary.
3) You could continue to see medical providers and have them bill services to ABC insurance, so long as such conditions are separate from those listed above. As always, payments for any medical services billed to us are considered and paid for when deemed medically necessary.
4) ABC insurance would continue to pay, on an as-needed and medically necessary basis, any palliative or ‘pain management’ care, associated with your condition. This would not include hospitalization, therapy or home health if related, directly or indirectly to your present condition.
Please note that you do not have to accept this settlement offer per ABC’s Transitions Program. If you do not answer this letter or call our office within 10 days, we will assume that you will not accept the payment of $225,000. A refusal of this offer means that you may continue to treat for your condition, and we will continue to pay for care determined as necessary for your condition.
What has just happened is a unique meeting of the minds between poor to middle class dying Americans and the health insurance industry. This is not euthanasia, and by clear choice, chronically ill patients can have at least one reason to view death as a less-morbid transition. In giving insureds the option to be financially compensated, health payers are shifting payments from the medical establishment, back to individuals who are taking clear control of their lives.
Imagine Mr. Smith having less than $20,000 of total savings and no insurance policy. He has a loving family who is in the lower income class. While $225,000 of tax-free money is not millions, it could make a difference to that family and perhaps their ability to afford healthcare, a home or even college.
What if Mr. Smith decided to take his entire family on a trip around the world as a memory-filled gift, in lieu of his slow death on a hospital bed with tubes? What if he paid off his grandchildren’s college loans? How about giving it to charity?
The choice to be made would obviously lie with the patient. Similar to the ‘Do Not Resuscitate’ (DNR) order, the responsibility for choice would come from the patient, or if mentally unable, might be deemed to come from his family, or appointed surrogate. Health insurers actually will have the ability to assist those who wish, to give back in a unique and meaningful way – as well as to help our current healthcare crisis. Perhaps a provision could even be attached relating to the effect of payout savings to other insureds’ premium costs.
People have always viewed death as painful. A part of that could be the fact that apart from the relationships and the memories, people DO enjoy giving and helping. Plus, at the bottom of it all, we have a major health crisis in our country where something other than higher tax rates needs to be offered. People constantly scream at paying medicine for necessary and needed care…perhaps letting the patient determine that need, rather than the doctors, might just shave hundreds of billions each year.
Please feel free to give me your thoughts on the voluntary Transitions Program.