J. F. Shumate

A Radical Approach to Our Healthcare Crisis

Let’s face it: we are not good at managing healthcare. It seems as though every patch the Government attempts only makes it worse. People pay exorbitant fees for care that costs a fraction in other countries. We can fix it, but it will take a radical plan. Read on for my plan.

The Government is up against an opponent that spent over $400 million on lobbyists in 2023. The opponent is the hospital-pharmaceutical-insurance clique. Their CEOs are paid in the millions. The bureaucrats get a nice pension. It’s a mismatch that private industry wins.

The Government should do what businesses do when they cannot get a service locally: outsource it.

Healthcare Is Better In Canada

The common perception is that healthcare in Canada is awful. But look at the numbers. Numbers don’t lie.

• Worldwide Healthcare Ranking
  • Canada #7
  • USA #10
• Longevity in Years
  • Canada 81.5
  • USA 76.7
• Annual Cost Per Capita
  • Canada $9,000
  • USA $15,000
• Percent of GDP
  • Canada 12%
  • USA 18% and growing

Here is one example of costs:

A year’s worth of Keytruda, a cancer immunotherapy drug, costs $191,000 here but only $112,000 in Canada. But that is the hospital cost. That year’s worth of therapy will cost a US patient over $1 million! It’s small wonder why over 50% go into debt collection. Cancer patient’s families are 5 times more likely to file bankruptcy.

Canadians live longer and their healthcare costs 40%. What am I missing?

How Broken Is Our Healthcare System?

Let’s start with Medicare. The Government does not manage Medicare. It is administered by insurance companies.

Insurance companies are required to spend at least 85% of premiums on care. Rates are set every year based on the past year’s expenses. The only limit on rates is what the market will bear; it’s a commission compensation system. Just like a salesman is paid.

Before setting rates, they negotiate prices with large hospital systems. Once set, the insurer issues its policy rates. However, hospitals are driven by executive bonus systems and physicians’ treatment decisions. Hospitals game the system by adding on services. This blows up the 15% profit for the insurer. The insurer’s response is to start denying coverage and delaying payments.

Whatever Happened to Physician-Owned Practices?

People buy insurance based on the premium versus their perceived need. When buying insurance, people typically look at the office visit co-pay. It’s the service they most often need. To keep the co-pay low, insurance companies cut the primary care practice reimbursement. This occurs every year until the physician can no longer afford his practice.

The Affordable Care Act effectively banned physicians from owning hospitals but cleared hospitals to own physician practices. Today, 60% of primary care practices are owned by corporations, half by hospitals. Hospitals use the primary care physician as a marketing arm. When a patient needs a diagnostic screening, they are referred to the hospital. Yet having it done at a free-standing facility would cost only 15% as much!

The Medicare Advantage Gouge

Preventive healthcare is a great idea. Kaiser Permanente’s HMO model was used by the Government to create Medicare Advantage.

The concept is to keep people healthier longer. Healthy people don’t need expensive treatments. Pushing a retired citizen’s major health crisis off 5 years saves money and helps the person live a better life. All good things.

Enter the insurance companies. They realized that the preventative health CPT codes could be expanded. Some started having nurses visit people at their homes to specifically find as many things to bill for as possible. The result? Insurers make almost $2,000 a year on Medicare Advantage patients, almost double for traditional Medicare patients.

Advantage to the insurers.

How to Outsource Our Healthcare to Canada

About 65% of corporations self-insure, covering about 100 million people. They allocate budget to cover typical illness treatments and then back it up with a stop-loss reinsurance policy for catastrophic cases. They typically hire a Third Party Administrator, known as a TPA. The TPA uses its own physician network or contracts with an existing physician network.

The solution is for the Government to hire Canada as the TPA for Medicare. That covers 78 million people and another 10 million military insured through Tricare. The Canada TPA then uses the existing physicians accepting Medicare as its network.

This could be done by an Executive Order, bypassing the stumbling block to reform, which is Congress.

Once Canada is our TPA, it is logical that self-insured corporations transition to it. Fairly quickly, over 50% of our population is covered by the Canada TPA.

Once this happens, hospitals will be forced to operate more efficiently. Canada TPA will insist on rates similar to Medicare and Canada’s pharmaceutical prices. States will likely fall in line next moving 72 million Medicaid participants. At the 40% savings to the national budget, governments can afford to move the 23 million uninsured to ACA. The last shoe to fall will be individuals buying their insurance policies.

Profit-driven insurance companies and highly compensated hospital administrators will be out of the healthcare business. Pharmaceutical companies will need to rebalance their prices worldwide as they lower prices here.

Could It Happen?

Our Government responds to crisis.

• Healthcare now exceeds spending on defense.
• The deficit is threatening our creditworthiness.
• Inflation is highly likely to return.

Our system will not be fixed by the current triad of insurance-hospitals-pharmaceuticals. Saving the system by using a Canadian TPA will mean everyone gets medical care at 40% less than present.