Seven Solutions to Healthcare Reform (Part 7 of 7)

To those that have endured our entire Seven Solutions to Healthcare Reformseries, I thank you. I will confirm President Trump’s statement was 100% correct, “healthcare is complicated.”

Healthcare is so complicated, that President Trump is one of eighteen other United States Presidents who have tried to expand, reform or fix healthcare in America – totaling over more than 100 years. Therefore, if we tried to talk about healthcare reform in an abbreviated basis, seven blogs were the least we could do.

As a teaser in our last blog, we mentioned that, “if we were advising the President, we would advise he start with our seventh solution first.” Here is what we wrote as the seventh solution in our “Death of Obamacare” blog as we forecast back in November 2016.

7. Allow “free market” competition into the healthcare process where it makes sense, and the cost of providing healthcare services, goods, and products can bring meaningful cost savings while maintaining quality of care.  

Most people in the U.S. seem to think there is a “free-market” in healthcare, there is not. I will highlight a few cases below, and propose a more “national” solution to help create more of a free-market in healthcare. If we are right, it will translate into better care, lower cost, and true, less restrictive competition based on price and quality.

First, we must go back to the U.S. Constitution and Federal Statues. The United States Constitution has an effective Interstate Commerce Clause – it is in Article 1, Section 8, Clause 3 of the U.S. Constitution – this Clause gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”

Historically, this has been a fundamental tool used by Congress to make material changes in a wide range of areas. From equal rights and segregation, to aviation, automobiles, occupational safety and early segments of commerce in American life.

Why is that important to healthcare? That is a great question!

First, though programs like Medicare are national in scope and regulations, and large corporations are excluded from state insurance and benefits supervision via The Employee Retirement Income Security Act of 1974 (ERISA), each state controls their own healthcare.

The fact that states control healthcare is important. It is important if you want to practice medicine. All states have laws that control the practice of medicine. So, you can’t easily go from state to state, or provide services “interstate” as there is no effective reciprocity.

Nearly all states require the same thing. All the boards and medical school requirements are national however, the doctors must apply for, pay and transact at a state level.

Why is this so important?

In one case, this allows for what we think would be an explosion, telemedicine. For example, a world-class expert would have to be licensed in both California and Florida just to consult with a patient. This is absurd!

In the era of airplanes, internet, iPhone, Skype, AND cloud-based EHRs, why limit where a doctor can practice medicine? In another example, national health insurance companies cannot sell healthcare policies “across state lines.” Not only does the company need to be qualified and regulated in their home state, but also they must be in every other state they conduct business. To make matters worse, the broker or agent that handles the policy must also be registered and licensed in the state they work and the state they sell in or process a health policy. This is nearly unheard of in most other industries.

Does Apple, Amazon, Ford, IBM, and nearly every other commerce company need to comply with state rules in manufacturing their products and services? You will hear that there is safety concern in the case of healthcare, and prevention of fraud. This is not a free-market. We are not the developing world and nearly all the state requirements are duplicates of each other. Why can’t a doctor based in Miami, Florida offer telemedicine to a patient in Los Angeles, California? Additionally, states regulate the customized mandates each state has for healthcare insurance in their state. These mandates have increased the cost of care and have been driven by special interest groups and lobbyists.

There is an industry we can look at, and maybe copy some of their interstate abilities – banking. We would not have national banks, like Bank of America, N.A., CitiBank, N.A. or Wells Fargo, N.A. today if they were “regulated” in each of the 50 state and territory levels. The complexity and compliance cost would be astronomical.

We would propose that healthcare providers be allowed to choose just like banks, if they want to be regulated at the state or federal level. These “N.A.” (designated national association) insurance companies, could provide healthcare insurance on a national level, with national pricing and with one regulator.

We are confident that the cost of healthcare insurance overall will be reduced and access would increase. You would have both state and federally chartered or regulated insurance providers.

The third example, we can talk about is the monopolistic power of states requirement for certificate of needs (CONs) for hospital, ancillary and even procedures to be expanded.

In many U.S. states, a hospital wanting to expand their services must petition to the state for approval, and its competitors could file against the petition. This can and does apply to building of diagnostic centers such as MRI centers.

In our home state of Florida, hospitals are effectively guaranteed a region of service, that they effectively have total geography supremacy. In some places, there is a shortage of hospital beds, and in other places there is huge surplus. In the past, the U.S. Justice Department has also expressed concern that this system is restricting trade, and that it could be a violation of federal anti-trust laws.

It is an illusion for anyone to think that we have a free-market in healthcare today. If there was a free-market in healthcare, we would have a great deal of competition – costs would go down and quality would go up. Healthcare will not be “fixed” until we remove all the variables.

If we were to use the internet, the huge benefit of cloud access and eCommerce to transform healthcare, like eBay, PriceLine, Google, Netflix, Uber, and the tens of thousands of other companies that have disrupted their own industries, we are confident that cost would go down, patients would receive better and faster care, and finally we would put the patient at the center of healthcare.

As we noted at the beginning, no single bill of Congress (no matter how many thousands of pages) can fix our generational problem. No single Congress can fix it, and likely not even a two-term president. We must begin by laying the solid foundation, and at the same time, not destroy what we already have. Any solution that cuts care, puts even more pressure on providers, and/or takes affordable healthcare from millions of people, is not a solution. More on that in a future blog.

– Noel J. Guillama, President