A New Way to Lower the Costs of Healthcare?

Healthcare continues to get more expensive in America. The reasons I've heard for why it continues to get more expensive are endless: the “Baby Boomers” are all getting older and overloading the system, malpractice premiums are sky rocketing as juries hand out bigger and bigger awards to plaintiffs, and doctors saddled with loads of debt from medical school have to charge high prices to make ends meet are just a few.

Whatever all the factors are that are driving up the costs of healthcare, there is one ultimate causation that will continue to make healthcare expensive no matter how much we focus on solving all other problems. It is the simple fact that people continue to get sick. If this one central problem could be overcome or reduced, the costs of healthcare would plummet.

Think about it. How much have you paid to get better from smallpox, polio or the measles? Most of us didn't pay anything to help us recover from these horrible diseases. We may have paid a simple fee to receive a vaccination but that was it.

Now, we all know that vaccines to every illness we could possibly face are a long way off and not realistic in our lifetime. But the basic concept behind vaccines are not so far off. Vaccines belong to a realm of medicine that we don't focus on enough today. That realm is called “preventative medicine.”

Preventative medicine, simply put, is trying to stop people from getting sick in the first place rather than treating them once they are already sick. There are many types of preventative medicine available: vaccines, as already discussed, give you immunity to certain diseases; other procedures, such as mammograms and colonoscopies detect problems early on when they are easy to treat and the likelihood of survival is high; perhaps the simplest example of preventative medicine is living a healthy lifestyle, thereby decreasing your susceptibility to conditions like diabetes and heart disease.

So, if all of these types of preventative medicine are available, why aren't they more widely used?

The biggest reason, as you've probably heard before, is that doctors have no incentive to practice preventative medicine. Indeed, doctors get paid for helping you when you are sick, not for keeping you from getting sick in the first place. There is no surer way to put every doctor out of business than developing a universal vaccine for every illness.

The other big reason why preventative medicine isn't practiced is because people are unwilling to do what is necessary to practice it on their own. We all know we should eat healthy, exercise often, have regular check ups for colon and breast cancer, wash our hands and do all those other things, but we don't do them. We're either too lazy or in too big of a hurry to practice the preventative medicine that could greatly reduce our healthcare costs and prolong our lives. And so, between the way doctors are currently incentivized to treat us and the way we treat ourselves, it seems likely we are doomed to a continued high dependance on a healthcare system that seems to be getting ever more expensive.

As dark as this prediction is, the way I see it, there is a simple a solution that could make the widespread use of preventative medicine a reality. It would, however, require a basic restructuring of how doctors are viewed in America and the things they focus on.

As I have already mentioned, we currently look as doctors as experts at healing you once you get sick. If we ever want to start using preventative medicine, however, we need to start looking at doctors as experts that keep you from getting sick in the first place. And, we need to start paying them to keep us healthy, rather than to fix us when we're broken.

How could we do this? Well, right now when we get sick, we call up any old doctor, schedule an appointment, get a diagnosis and receive a prescription or procedure to make us better. Then, we go on our way and never see that doctor until the next time we get sick. In fact, we might not even visit the same doctor twice in our lives. We can keep bouncing from one doctor to another to fix us whenever we're broken.

This has got to stop. We need to stop treating doctors as mechanics that fix broken vehicles, and start treating them as full time athletic trainers working to keep us in prime competitive condition.

Here's how: you should go get a bunch of your neighbors together and buy a doctor. Furnish him with a clinic, and then tell him that you and your group of neighbors will pay him $200,000 a year to keep you healthy and treat you should you get sick.

This would change the doctor's incentives overnight. He would know that healthy people visit the doctor a lot less than sick people. And, since he has a guaranteed salary now, the best deal for him would be to work as little as he could and still collect all that salary. The way to do that would be to do his utmost to keep you healthy and out of the clinic so he could spend more time on his houseboat and at the golf course.

I think the primary things the doctor focused on and the way he went about his business would change substantially. Rather than waiting for you to call saying you had a high fever and a headache, he'd be calling you to come in and get your flu shot months before flu season. Rather than waiting for you to show up at his office worried about a strange lump you'd found, he'd be scheduling regular check ups to find those lumps before you did. Rather than waiting for to be wheeled into the hospital experiencing chest pains, he'd be checking your cholesterol level and putting you on a healthier diet.

Again, there are two great parts about this. By preventing problems before they happened and finding issues before they got out of hand, the doctor would be saving himself loads of time in the long run. And, all the while he'd be collecting his steady, substantial salary. The other great part is that you wouldn't be paying any more money for this preventative medicine. You'd pay your up front fee and that's it. And, should a substantial problem arise, the likelihood of it being found and handled early on would save you thousands of dollars in the long run.

Obviously there are lots of details that would have to be worked out for a system like this to work. But, I think the basic idea is solid. We know that doctors aren't incentivized to keep you healthy but rather to treat you when you get sick. We also know that the vast majority of us don't have the willpower to practice preventative medicine on our own. Why not, then, start paying doctors to be responsible for keeping us healthy? Pay them to have the willpower we don't have. Pay them to keep us from getting sick and not try and salvage our wrecked bodies once it is already too late.

Now, before I close, let me give you one more detail before I forget about it. In addition to every member in the group paying their share of the doctor's salary, each group member should pay a certain amount into what we'll call the “general insurance fund” every year. To make this simple, let's say everyone pays in $1,000. That money is what would be used to pay for the actual “things” needed to treat you with. To cite examples I've already used, it would pay for flu shots, colonscopies, etc. It would also pay for any treatments that you ended up needing, such as an antibiotic for a throat infection, surgery for your torn rotator cuff, or radiation therapy for cancer your doctor detected early on. It is also important to point out here that some years you would use hardly anything out of the $1,000 you paid into the insurance fund and other years you would use far more than you paid into the insurance fund.

So far it sounds like the health insurance you have right now. But here is how it would be different: if, at the end of the year some of the money your group paid into the insurance fund was not used, it would go to three different places. First, half of the unused money would be rolled over into the insurance fund to protect against big problems in the future; a rainy day fund if you will. Over time, this rainy day fund would get bigger and bigger and offer you more and more protection.

Next, one fourth of the left over money would be refunded to you the client each year. The kicker on this is you would only get one fourth of the $1,000 you paid in at the beginning of each year. Therefore, if you actually had to use $2,000 out of the insurance fund that year, you wouldn't get anything. The reason to do it this way is to incentivize you to be as healthy as possible. Doing it this way will help you realize that if you follow your doctor's advice to eat healthy, exercise regularly and come in for all of the appointments he sets with you, it will pay off at the end of each year in refunded cash.

Finally, the last fourth of the surplus insurance fund money would go to the doctor. That means, the healthier he keeps you and the less he has to spend on expensive medicines and procedures to keep you healthy, the fatter bonus he gets at the end of each year. In other words, it is one more incentive for him to keep you healthy. Also, this would encourage your doctor to find inexpensive but still effective ways to treat you when you do get sick. Under this system, he would be more likely to negotiate for lower prices with the surgeons he sends you to and to find less expensive brands of medicine to treat you with.

So that's my idea. What are the problems with it? Why wouldn't it work? How could it work better? Would it be a realistic way of lowering some of the costs associated with healthcare? What are your thoughts?

When the world is your home people pooh on your floor

Contrary to popular belief a lot of planning and consideration went into my decision to move into my car. I suppose the real genesis came in October of 2010, when I realized that between my $200 a month car payment, my $250 a month rent payment and my $50-100 a month utility payment, my monthly net income of $550-600 dollars left me with little or no wiggle room. The moment I realized this the dream of saving $300 a month by moving into my car was born. Since then, I have planned, weighed costs and benefits, and scouted out suitable nightly parking places with a thoroughness that I believe merits respect. My diligence notwithstanding, there have been several things that have surprised me in these first few days.

1. I have way too much crap. After living in Africa a Honda Civic seems like a roomy place. While there I often saw 8-10 people packed in a car comparable in size to my own: one driver, two people in the passenger seat, five people in the back seat and two in the trunk. It is amazing, therefore, that my person can barely squeeze into my car simply because I have so much stuff. Thankfully, this predicament has lead me to make an important change in my life: I'm a much better packer now. Things that are rarely needed but still essential find their place on the floor under and behind the front seats of the car. More frequently used items like clothes and gear merit a spot beside or on top of the mattress that covers the folded down back seat and extends into the trunk. They are neatly packed to optimize utility and provide a “narrow strip of land” to sleep on. Finally, food gets shotgun. A package of Oreos currently serves as my copilot.

2. The world is my home. Before I left for Africa, my good buddy Nick Romano came up one weekend unannounced to spend a couple of days with me. He was surprised that I didn't have a place for him to stay, being unaware that I was executing a trial run of living in my car. Later, when we were discussing those few days together Nick commented that when you live in your car the community where you live automatically becomes your home; the library is your sitting room, the school gym your bathroom and the movie theater your entertainment center. I think this is true. The disturbing part about this is that when the community is your home, the community is free to do whatever they would like to it. Today for instance, while I was at the park filling up my water bottles, I noticed a little kid walking out of my bathroom. Graciously, I didn't yell at him for failing to ask permission before using my accommodations, but I was very put out when he announced to his young friend that was about to enter the facilities after him, “somebody pooped on the floor!” Honestly. You'd think people would have more respect when I let them come in my house.

3. Necessity is the mother of invention. I have always considered myself to be a fairly innovative individual (using the thick plastic bags my school books came in as gators being just one example...) but living in my car has revealed the new levels of genius I am capable of. For instance, as great a company as Honda is, their engineers failed to realize that when you fold down the back seat of a Civic, there is about a six inch drop from the plain of the folded down seats to the plain of the trunk. While I am sure that is fine for normal use, it makes sleeping on a mattress that covers both areas very uncomfortable. To remedy this problem I simply placed a two foot piece of plywood over the drop. While there is still a bit of bend in my mattress the result is substantially more comfortable than before. I am sure Honda will be contacting me for the design soon. More tricky than that, however, is figuring out how to maintain airflow through a hot and stuffy car at night without letting a swarm of mosquitoes in. Luckily, my three months in Africa provided me with the solution. Before leaving I bought two square yards of mosquito netting. By shutting pieces of mosquito netting in the top of my rear doors and letting it hang down over the open windows I effectively allow a nice breeze to flow through the car while the mosquitoes remain outside the vehicle. You'd think this would come standard.

I sure am learning all sorts of great things at college this year!