So Here’s an Idea


The Mechanics







Simplicity and Transparency






An Improvement, Not a Revolution






12 thoughts on “So Here’s an Idea

  1. Alan – ABC’s David Muir reported tonight (10/13/17) that millions are going to lose their PREMIUM subsidies because of Trump’s plan to end Obamacare cost sharing subsidies.

    But wouldn’t Trump’s plan scrap the subsidies paid to insurers to help them absorb oop costs for lower income people, not the premium subsidies given to ACA Marketplace buyers?

    It’s hard to believe that ABC would actually flat out LIE.

    PS – sorry to write thus under “So Here’s An Idea ..”. I know it’s off topic, but hoping you’ll start a new blog on this subject. Thanks

  2. Are we addressing out of pocket risk to the consumer with this approach? Although you purchase a plan that fits what YOUR provider is charging, the higher costs come with all of the ancillary providers around your primary care. When people start in with the “I don’t care what it costs” attitude during a pants-on-fire moment…..we have unlimited exposure.

    What am I missing? Once his out of pocket is met and he start hitting the 600% providers……. Does the patient pay the overage and because it is above the purchase percentage (covered amount)? Is there truly an out of pocket max in this scenario?

    Paula Wilson

    • Good questions Paula. Thank you for them and the feedback. I envisioned out-of-pocket requirements continuing beyond the satisfaction of deductibles and co-insurance — but only if a consumer goes to a more expensive provider. So long as you stay in the virtual-network created by your plan (a 400% benefits plan creates a virtual network of all providers at 400% or less) the you pay nothing after meeting deductibles, co-insurance and co-pays. Going to a, say, 425% provider would result in a payment obligation, just like going out-of-network does today.

      This isn’t much different than what happens today. Even if you hit your maximum out-of-pocket for out-of-network providers an out-of-network provider can still balance bill you for the difference between what the carrier paid and what the provider charged. This just quantifies ahead of time what that balance billed amount might be.

      As for specialists, labs, etc. — providers could offer a range of companies and the consumer could choose one who charges what the policy covers (e.g., 400% of the CMS schedule). If we want to complicate things, carriers could offer 400%/600%/500% plans — the first number is what they cover for physicians; the second for hospitals; and the third for ancillary services. But it’d be nice to keep it simple and just have one number.

    • Hi Alan – I won’t pretend to understand all the ramifications of your idea, but I think that injecting simplicity and transparency into this market will have a powerful and positive impact. Any time a consumer can easily assess the cost of a service in relation to the value received, the power of free market dynamics will do magical things. What we have now is a market (if you can call it that) where the participants have imperfect knowledge at best. Your concept would light up many of the dark places where market distortion occurs and allow participants to make more informed decisions.

      Two additional elements that would strengthen the free market dynamic are increased adoption of consumer-driven plans and an objective method for rating provider quality. When consumers can understand the real value of the services being provided (via transparent pricing and understandable quality measures) and are using their own dollars to pay for services, the market will be vastly improved. There’s a lot of talk about wanting to bend the cost curve. Putting knowledge and the purchasing decision and responsibility into the hands of the consumer is a great way to start.

      These are big concepts and who knows if they can be implemented, but kudos to you for starting the discussion with a creative idea.

  3. Alan,
    This is exactly why I consider you a mentor. Another great idea and really so simple.
    It reminds me of the Automobile sales industry. When they became regulated for new car sales and had to disclose everything, they went to pushing the leasing of cars because they did not have to disclose the money factor. It allowed them to hide dollars in the sale and not have to disclose to the consumer. One time when I was leasing a car, I was actually told that they couldn’t tell me because they didn’t know and it was a number in the computer. Sounds like a carrier or a doctors office when you are trying to find out a cost or reimbursement.
    I am happy to get behind this idea. It’s easy, doesn’t cost anyone anything other than disclosure and could once and for all deliver consumerism.
    Well done Mr. Katz.

  4. Transparency, with or without pricing controls would be an improvement. I think all pricing should be published today. Medicare is the best known price, so using that as a standard makes sense. But then you have those who will be much higher than the standard, so will the medical community be willing to establish a standard price or will they just start billing for more services as mentioned above? The actual volume also has to be taken into account, or you’ve just shifted the problem to another problem. To affect volume, best practices have to be implemented across the board, but that is a much larger problem because medicine can be so subjective and the patient is not knowledgeable about the services they are “buying”. I find a lot of improvement can be made simply, just by looking at the current system. For example, when a doctor calls in a lab order, it has no date “to be done” on it. That leaves it up to the patient to remember to schedule it at the appropriate time, or they accidentally do it too soon, too late or never. Wouldn’t it be easier to just add a date to the lab of the time frame when it can be done, and then the lab/doctor can send a reminder or not, but at least the patient isn’t getting useless lab work or showing up to an appointment unprepared and requiring a second lab/appointment. I know this is a small thing, but all of the little things are adding up.

  5. Hey Alan, great idea. I’ve been very recently talking about this same concept with some colleagues up here in Sacramento. I really like the idea of judging or comparing a contract as a multiple of what CMS pays. I think it’s a missed opportunity that we are not already doing this. It would be difficult to use this tool for HMO plans or ACO models, but I imagine there would be a way to compare it against the Medicare Advantage model to be able to get an “apples to apples”. I also think that if we want to throw single payers a bone…or perhaps go even deeper on reform, we could potentially look at a federal stop-loss program. Something akin to the US Government reinsuring a specific stop loss for all 300+ million americans. Then the private insurance companies would sell fully insured IFP and small group products with a limit of say…$50,000 or $100,000–maybe the limit changes based on income. Large employers could still self-fund to the limit as well.

    In my humble opinion, a federal reinsurance program coupled with your idea of reference-based pricing would be a good kick in the pants for healthcare reform.

    • I wouldn’t call a federal, national stop-loss program a “bone.” It’s a substantial reform. Plus, it would be fun to see Congress debate raising the stop-loss limit during Republican administrations and lowering it during Democratic administrations. Of course, single payer advocates will claim it fails to “save” the cost of greedy insurance companies and the overhead of competing health plans. So while they might view it as a start, they’ll be far from satisfied. But it’s an interesting concept. Thanks for putting it forward.

      • It would be “fun” to watch the Reps and Dems play rollercoaster with the stop loss limit? You are one sick puppy. I’ll make the popcorn. 🙂

  6. Alan, I think that it’s a GREAT idea! It addresses the root problem of high cost medical insurance which is high cost medical care. I suspect that if your proposal were to become law that providers may find clever ways to maintain revenue, such as billing for more services… Still, I love the fact that it moves the conversation away from proposals that will not reduce the cost of care but would make matters worse, such as buying across state lines; reintroducing medical underwriting and expanding high risk pools; or, severely reducing benefits to below Bronze level, etc.

    Your idea is a great one. How will you promote it and how can agents help?

    • Glad you like the concept, Bruce. Thank you. First step is to flesh it out with more comments and suggestions. Then it will be circulating to opinion-shapers and decision-makers both in the industry (e.g., NAHU, CAHU) and beyond. I’ll keep you posted.

Comments are closed.