Health Care Reforms Need to Be Good for Providers
as Well as Patients

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for Providers as Well as Patients"

The U.S. seems on the verge of health care reform. Many people on the state and national levels are talking about finding a way to cover the uninsured, but the uninsured are only part of the health care crisis. Providers are driven to distraction by managed care, their practices are threatened by low reimbursements from Medicaid and Medicare, and bureaucracy encroaches from all sides. Most health care reform proposals do not adequately address provider concerns. One proposal, Balanced Choice, focuses extensively on provider issues. Balanced Choice is a hybrid proposal that combines market forces with a single risk pool, and the resulting system protects providers from inadequate reimbursements and reduces third party managed care. To shape the future of their profession, providers would benefit from learning about Balanced Choice.

The Problem
Many of the leading proposals mandate that individuals and/or businesses purchase “affordable” insurance policies, partially subsidized by the government. While these would reduce the number of uninsured, they have serious drawbacks for consumers and providers. “Affordable” means an insurance policy with high deductibles, limited coverage, and aggressive managed care. The high deductibles and limited coverage make these policies of questionable value to consumers. Aggressive, third-party managed care is the bane of both consumers and providers. In addition, these proposals often expand programs like Medicaid without addressing the failure of government programs to offer adequate provider reimbursements.

Mandates also undermine the long-term stability of the health care system. The U.S. already spends twice the amount per capita as other industrialized countries spend on health care, and mandates further increase this high level of unsustainable spending.

Single payer proposals, on the other hand, offer a way to cover everyone, and decrease total spending. They eliminate the wasteful insurance industry and increase the portion of funding that goes to providers. Single payer advocates intend to adequately reimburse providers through a nonprofit trust. Providers, however, are unlikely to have confidence in any single system that completely controls reimbursements, and many providers would vehemently object to such a system.

Some health reform advocates hope that Medical Savings Accounts (MSAs) will restore career satisfaction and adequate financial rewards to providers by eliminating government and insurance interference with health care. A solution to the health care crisis must also benefit the entire health care system, or it is not sustainable. While MSAs can be beneficial to people who have them, they only help a few. Financially secure and generally healthy MSA participants avoid sharing the financial risk of health care with the population at large, leaving non-participants shouldering a greater portion of treating the population’s illnesses. The effect of these tax-deductible accounts is also uneven; high-income people receive a much larger tax benefit than low-income people. Moreover, because the MSAs are a pre-tax benefit, they also remove payroll taxes that are used to specifically finance Medicare. Taking the healthy and wealthy out of the risk pool, giving tax breaks that primarily benefit people with high income, and reducing funds for Medicare actually exacerbates the health care crisis; it does not benefit the entire system.

A Solution
Balanced Choice is a nonprofit trust, single-risk-pool system providing universal coverage. It has two payment Options. The Copay Option is similar to a preferred provider in-network arrangement with a small copayment. The Independent Option is similar to an out-of-network payment arrangement. In this payment option, providers may charge more than the Copay Option fees, Balanced Choice makes a base payment, and patients pay the gap between the base payment and the provider’s fees. Patients are assured that everyone can afford health care because in the Copay Option payments are waived for patients with low-income or catastrophically expensive illnesses.

Providers can have a mix of patients in each Option and decide what portion of their practice will operate under each Option. Unlike traditional single payer, there are no strict price controls. In the Independent Option, providers have protection from inadequate reimbursement because they can set their own fees.

A key feature of Balanced Choice is the base and gap payment system. Someone in a health care system needs to watch the costs. The onerous managed care company watches the costs with insurance-driven health care and the government controls costs in public programs. In Balanced Choice, patients watch the costs. When patients have the ability to pay a portion of treatment costs, they pay the gap between the base, which the Balanced Choice trust pays, and the actual cost. Gap payments, overall, are no higher than out-of-pocket expenses in many good insurance policies. Patients and providers have cost information readily available. Providers advise patients and the provider/patient treatment team make informed decisions with cost being one of the considerations.

Balanced Choice assures that the Copay Option has adequate funds for quality care. A Balanced Funding Mechanism requires that reimbursement rates are set high enough so that patients and providers voluntarily select the Copay Option for 60% of overall health care expenses. In other words, this Mechanism maintains provider Copay Option reimbursement at a level that providers, collectively, would find satisfactory for 60% of their services.

Balanced Choice reduces administrative waste. By removing the health insurance system that adds 15–20% to the cost of health care, it lowers the overall cost of health care. It relieves providers from the responsibility of hassling with a myriad of conflicting insurance plans. And by using consumer cost consciousness, it greatly reduces the use of third-party managed care to control costs.

Balanced Choice combines ideas from single payer and market advocates to create a health care crisis solution. For the sake of the future of their professions, providers need to learn about the proposals and be active in shaping health care reforms. Balanced Choice is a proposal that is good for providers as well as consumers.