We stand at the crossroads of two divergent healthcare options: a system of government-regulated healthcare and public assistance or yet-to-be prescribed private system with government supplement. Both have detractors and special interests, and we appear headed for a pitched political battle that may be waged for the duration of the Administration.
Based on this country’s history, there is a third and superior choice. We can create a regulated “Healthcare Highway” that produces efficiencies by pioneering a new way of care through a system of limited entitlements regulations and technology assistance. Unlike a government-centric approach, the Highway would make use of economic principles and market forces to drive the distribution of healthcare public goods.
It would enable private healthcare to continue largely intact and at the same time use consumer choice among the under-insured and un-insured to promote greater efficiencies across the entire healthcare industry. Regulation-wise, it would limit legal damages for participants in subsidized system and mandate payback for healthcare by those who cannot afford to pay with in-kid services. Finally, it would use information technology to provide access to “should cost” information, information technology-assisted fraud prevention and promote voluntary smart card.
Consider that over the last two centuries, our Nation has enjoyed world enviable growth because our Federal Government had the foresight to create the infrastructure needed to promote commerce and technological development. Examples include canals, railroads, vehicle highways, the Internet, cellular systems and digital TV as important infrastructures—connecting “highways” needed for American private enterprises to build commerce. In their time, each of these highways has produced market systems of exceptional efficiencies and prosperity.
As businessmen with experience in government, venture capital and industry (that includes the creation and growth of new businesses), we are convinced our government leaders can find a better way to reform healthcare than promised by the many ideas circulating in Congressional circles. Just as legislation created new standards to shift analog TV to digital TV, we as a Nation, have the opportunity to create a new “Healthcare Highway” with rules that allow businesses to be created, compete, fail and thrive.
In at least some circles, there are those who say we must raise taxes to take care of the poor and the unfortunate and give them “free” healthcare as good as the healthcare of our senators and congressmen. But consider the diversity of our transportation options, which includes walking, bicycling, buses, cars, trains, boats, ferries and airplanes. We do not guarantee a car to every American.
Each American chooses his or her own mode of transportation based on personal choices. Riding a bus is time-consuming, but government created the structure, not the economics of personal choice. Of the 15 million small businesses in the US, how many will continue to provide private employee health-care coverage, if they can improve their profits by relying instead on “free” government-healthcare for their employees? We doubt there are many.
Much like the principle of the English Commons, our critical national infrastructure is “public goods” that might be funded if voters alone make all of the funding decisions. Consider the financial chaos in California where voters have voted down nearly all tax increases and they want the state budget balanced even though there is a $15 billion shortfall. They also want lower electric bills, but they do not want more electric power plants. They do not want more electric power transmission lines, and yet they want more renewable energy. Healthcare, which has been a political football since the Clinton administration, is far too critical an issue to leave in the hands of citizen architects. We need wide leadership and a vision for the future.
We believe the problem can be solved with a dual-path “Healthcare Highway” akin to private toll roads and public roadways. The private path would be for individuals who are able and willing to pay for traditional corporate healthcare, and where legal recourse is allowed. For the most part, this path coincides with our current healthcare system, for all its strengths and inadequacies.
The alternative public path would be provided for the less willing, less able, and restricted portion of our population who either have no healthcare coverage or are under-insured. Persons under the public path would be subject to legal liability restrictions tantamount to legal tort reform and service payback rules designed to reduce the costs of services. In effect, under public care, recipients would relinquish the right to sue for certain legal (e.g. punitive) damages before receiving treatment under the government-subsidized system.
Any person who chooses not to receive care under these rules would not be treated. The benefit: eliminating the threat of costly lawsuits would allow doctors to work without fear of punitive awards, and no need for “tort” insurance protection. Quite likely, the lack of legal liability would also result in faster, more profitable reimbursement from health insurance providers.
Conversations with doctors lead us to believe that many might choose to work in a tort-free system for lower wages so they can help more people without the legal administrative burdens that come from practicing under our present healthcare system. We know that many doctors choose to become a military or public health service doctor on a pre-determined pay scale, where they typically make far less than their contemporaries and their legal risk is lower.
Many doctors are motivated by a simple desire to serve mankind, but our current system makes this impractical for too many. In essence, through our litigious habits, we have created a vicious cycle that raises the cost of practicing medicine while reducing the supply of doctors. Though we are an egalitarian society, economics makes it both impractical and impossible to treat people who can pay and those that can’t equally. As part of the healthcare highway system, we must create disincentives for the less fortunate to seek unlimited treatment and live unhealthy lives that raise the cost of their lifetime care.
Because most of the un-insured and under-insured do not have the funds to afford adequate healthcare, we should require hours of service by the individual or individual’s family in return for their care. Failure to perform the required public service would result in the loss of government-provided healthcare. Unfortunately, it is human nature to abuse any system where goods and services are free and unlimited. Without a way to restrain consumption of valuable goods and services at no cost, economic forces eventually create scarcity and unavailability for those goods.
Clearly, both paths of the healthcare highway would work best under transparent pricing—quite the opposite of what we have today. This could be solved easily with a “should-cost” website, similar to the auto industry’s Flat Rate Book, where anyone can find what they should pay in cash or public services for any health-care office visit, dental treatment, medical treatment, operation, or long-term procedure, such as cancer treatment. The should-cost website could easily pay for itself.
The site could also issue discount coupons for office visits that verify non-smoking, no drug abuse, exercise, proper eating habits and periodic check-ups. When consumers have the opportunity to know what things will cost them, they will change their behavior. The government-covered consumers will change their behavior when there are incentives and disincentives for behavior.
Taxing those who use and benefit from services would help fund our highway infrastructure, and there are a variety of ways to tax healthcare. For example, gasoline taxes help pay for our transportation systems. Advertising (market-based taxes) help for TV, radio and Internet services, whereas subscription (taxes) help pays for our cable, TV, satellite TV and satellite radio. Using public service as a type of healthcare fee is actually another form of taxes.
Just as federal and state governments provide for our safety and protect consumers from fraud, our Healthcare Highway must have systems to minimize the possibility of fraud. Technology capability exists today to monitor, analyze and detect fraud in Medicare, Medicaid and commercial healthcare electronic systems. Statistical sampling to identify fraudulent trends is insufficient, because citizen well-being is at stake. With 100% audit of all healthcare transactions, we would not only boost the trustworthiness of our system, but we would also discourage the criminal element that is likely to emerge when trillions of dollars of spending are at stake.
This is not the stuff of technology futures: we have the capability today to create voluntarily carried, biometrically protected healthcare records (backed-up in centralized data centers) including digital imaging for every person in America. If a government standard were created to ensure true record portability and not just privacy as provided by HIPAA (Health Insurance Portability and Accountability Act), the cost of healthcare quality as well as other costs could be improved. Among the many benefits are prevention of adverse drug interactions, rapid access of patient information by healthcare providers, accelerated claims processing and reduction of administrative costs. Not everyone would have to carry a national health-care card, but those who do would be entitled to system benefits and commercial discounts.
When our Defense Advanced Research Projects Agency (DARPA) created the Internet, no one could have envisioned what the Internet has become today. It has changed our life. As a nation, we have a similar opportunity to create the healthcare equivalent of the Internet by creating a foundation for commercial infrastructure that will meet the need for a vital public good through market forces and economics.
We ask President Obama and Congress to abandon the concept of a government-run healthcare program in favor of Healthcare Highway. As was true of the many highway precedents that have done so much for our Nation, we can best meet our needs by using governmental power to provide not services, but a platform to tap the limitless ingenuity and energy of the American people.
(Gil Lucas and Larry Kubo are graduates of the US Naval Academy and the Stanford Graduate School of Business who collectively have more than 40 years of business and government operations and management experience.)