Recent Advances in Virginia — The American Health Care Plan

Author: 
John A. Lanzalotti, MD
Article Type: 
Report from the States
Issue: 
Spring 1996
Volume Number: 
1
Issue Number: 
1

Early last year, the Governor of Virginia, George Allen, signed into law the nation’s most comprehensive and integrated health care reform Bill to date. The State Legislature of Virginia passed this Bill, which is based on the American Health Care Plan (AHCP), unanimously with strong bipartisan support. The Virginia Medical Savings Account Act (VMSAA) took effect in Virginia on July 1, 1995.

The AHCP is essentially a second generation medical savings account (MSA) concept in that it contains a unique coordination of MSA money and payments from a restructured indemnity insurance plan which will be combined in the MSA and used by all patients for paying all health care expenses.

The traditional or first generation model seems to be intended only for those who are currently covered by employer based and owned insurance. This model has gained wide support by many conservatives who feel that this plan would be a step in the right direction away from government and/or third party controlled medicine and would be sufficient to correct market distortions since it is also a step toward a free market. Accordingly, the Republican majority in Congress has included MSAs as part of its budget proposal not only for those with employer based insurance but as an alternative for those currently eligible for Medicare.

Several criticisms have been leveled against MSAs as defined in the current Republican Bill. None of the criticisms now being leveled against the traditional MSA concept apply to the AHCP. The AHCP through the VMSAA is designed to generate sufficient experiential data to show savings in the public sector with MSAs. The redesigned insurance product called for in the AHCP is coordinated with MSA funds to allow money to grow in the MSA in the face of catastrophic and chronic illness and allow the working poor to build personal wealth through MSA savings which can be used to exercise personal responsibility in health care needs throughout their lifetime obviating the need to go on Medicaid at retirement. Under the AHCP, insurance is privately contracted for by the patient and when the insurable event occurs the insurance payment is used to fortify the patient’s MSA from which all medical expenses are paid. The consumer now pays for all care personally.

I believe comprehensive reform at this time that involves a paradigm shift utilizing MSAs coordinated with a redesigned high deductible insurance is the only way to avoid the extremely likely possibility of an eventual government controlled, single-payer system when many of the current reform initiatives such as managed care begin to fall.

To that extent, the American Health Care Plan was specifically designed to achieve this paradigm shift, effect comprehensive reform in both the private and public sector as quickly as possible, return to the exclusivity of the patient-doctor relationship for the purpose of allowing the physician to make our system of health care work in the best interest of the patient, eliminate the perverse incentives and dependence on government money, develop experiential data from MSAs in the public sector on the state level, and avoid any pitfalls possibly exposed by the current criticisms. At the very best, the criticisms may not be valid but at the very worse, the AHCP completely disarms our opponents. In addition, the AHCP should be considered to be a strategy for effecting reform from our present circumstances to the final product of the reshaped market that is functional and level.

The AHCP is also extremely versatile in that it can be used either with government money, as an interim strategy to phase out government financing or completely without government money, eliminating government controlled health care financing altogether. The latter would be desirable for several reasons. First, medicine has transformed itself over the past half century from the essential patient-doctor relationship into a detached, corporate culture of callous disregard for the patient in the form of managed care. This transformation has taken place under the influence of large amounts of government money made available through public funded health care, grants for medical education and research, and subsidies to hospitals.

The influx of this money has been a double-edged sword. On the one hand, this money has helped to educate many first class physicians and has helped to contribute to America’s technologic excellence. On the other hand, this money has encouraged big business techniques, and a large expensive bureaucracy. It has caused medical inflation so the cost of health care delivery as well as education and research are at a point where we can no longer pay for it under our current financing mechanisms. In addition, we are now burdened with the perverse incentives created by law in government programs and by the policies of the private insurance industry which have encouraged the wasteful use of resources, overutilization and a lack of resourcefulness. Of course this behavior has resulted in increased micromanagement, policing, rationing, and third party involvement which have of course driven total health care costs even higher and has precipitated our current cost crises.

Health care which was traditionally mediated by the Church,(1) supported by the voluntary contributions of the community, and rendered by dedicated persons, has been completely subverted by the government because the costs have soared beyond the possibilities of individual contribution. Now that we have danced to the piper’s tune in the form of accepting government money, we must now pay the piper in many ways we may find unacceptable.

Removing health care from the control of government and the insurance industry can be accomplished in either of two ways. First, would be through a slow process of incremental changes in federal and state law generated by political activity. The other method, which would be immediate, would be to return health care to the Church/charity. This would necessitate equipping the Church/charity organizations to deal with the challenges of present day urban poverty and disease. I believe this can be accomplished relatively quickly without the need for additional legislation by implementing a financing mechanism through the Church/charity. In fact, there is a pilot project, organized by Drs. John and Alieta Eck, doing just this at the present time in Perth Amboy, New Jersey. The AHCP is ideally suited for this purpose.

It would be necessary to avoid the expensive and dysfunctional health insurance products currently generated by both the government and the insurance industry. It would be much easier to create a redesigned insurance product within the parameters of the moral authority of the Church/charity, much as a large company designs the parameters of their own health plan. Basic to this concept is the avoidance of replacing the government and insurance bureaucracy with a Church/charity bureaucracy. Church/charity members(2) would voluntarily choose to have their employer purchase their insurance through the Church/charity plan rather than through a commercial plan. If this MSA/insurance product were to be designed along the lines of the AHCP,(3) it would be highly competitive with current commercial products. It would most likely be favored by both employee and employer because of its portability, low cost, expanded choice, and innovative risk pooling/segmentation and underwriting. Profits generated under this new plan would be used to help pay for the health care of the poor in the form of insurance premiums and MSA funds.

 References

 1. All three of the major Western religions, Christianity, Judaism, and Islam, consider the care of the poor and medical care to be a part of their religion and a responsibility of their community. These traditions are centuries old.

2. This applies to Synagogues and Muslims as well as charitable organizations for those not claiming religious affiliation.

3. Lanzalotti JA. Solving the American health care cost crises. J Med Assoc Ga 1996;85(1):15-18.

Dr. Lanzalotti practices Plastic and Reconstructive Surgery in Williamsburg, Virginia. He is also Vice-Chairman of the Board and Policy Director of the Jeffersonian Health Policy Foundation, a Virginia-based group dedicated to research and education. He is the author of the American Health Care Plan, a comprehensive, market-based plan for health care reform, which formed the basis for the Virginia Medical Savings Account Act. His address is 136 John Tyler Highway, Williamsburg, VA 23185.

Originally published in the Medical Sentinel 1996;1(1):31-32. Copyright©1996 Association of American Physicians and Surgeons (AAPS)

 

 

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