Anyone who has been sick or injured or had someone close to them suffer an
injury or illness in the past 10 years, whether or not covered by some form of insurance, is well aware of the expensive,
unresponsive and unreasonable nature of our present health care delivery system. North Dakota is no exception. If you have
read the itemized bill from a hospital, doctor, or clinic, you have doubtlessly been outraged and flabbergasted by items such
as $10 for two Tylenol pills, $25 for disposable tissues, $900 for a 40 minute surgical procedure (plus a separate bill for
$360 from the anesthesiologist), $350 for a day in hospital, $90 for i.v. fluid (sugar/salt water)...
These costs are certainly outrageous, but the hospitals/ clinics/ doctors, even the
honest ones, are compelled to charge them because of the way the present system is set up. Costs can be controlled only if
the system is changed, and to do this, we must first understand the problem
Analysis of the problem
The high cost of medical care in the US is the result of a combination of many interacting factors, including
but not limited to: federal and state regulations interfering with the doctor patient relationship; the high cost
of malpractice insurance due to the laws that allow jury trials and unlimited awards for malpractice claims, most of which
are settled out of court; inflation; the high cost of a medical education; the extensive large-scale abuse
or fraudulent use of medicare/medicaid, insurance fraud, unnecessary tests and medical procedures, the high
administrative costs for billing and compliance with regulations, etc. and above all, billing itself, the attempt
to cover operating costs by assigning a value to the services provided and billing the insurers, the government, or the patients
themselves for amounts far in excess (to the tune of several hundred per cent) of the real value or cost.
The main villain
is the billin', and no plan that allows billing in any form can successfully contain costs.
Other factors may also come to mind, but these in my view are the most important. I do not believe all doctors
are greedy exploiters seeking to profit from the misery of others (although that is actually what they do). Rather they for
the most part wish to serve suffering humanity while receiving compensation commensurate with the sacrifices they have made
to become doctors. It is the present system which makes them appear to be vultures.
The experience of Germany suggests that socialized medicine could work --if the conditions here were the same
as there (they are not) --but the failure of such a system in England and Canada, not to mention the abominable system of
the former Soviet Union should make us extremely cautious about adopting such a system, especially a federal one.
My proposal would, it is hoped, eliminate the sources of abuse and extra costs and would still provide 100%
coverage of all North Dakotans.
I believe the answer lies in requiring all hospitals/clinics who wish to participate in the program (that
is, to receive funding from Blue Cross of North Dakota, which would be the only insurer and would be responsible to a state
authority) to constitute themselves as [private] HMOs (I am not referring to HMOs as presently understood as ghastly profit
driven medical factories which seek to cut costs at the risk of denying adequate treatment by synthetic-drug oriented physicians
who treat symptoms instead of causes, but rather to the old idea of maintaining health by preventive examinations and recommendations
and treatment of the sick while the well pay)
HMOs (health maintenance organizations) differ from hospitals and clinics operated in
the usual way in that they are aimed at preventing illness and/or catching it at an early (and less costly to cure) stage.
There is no incentive to postpone seeing the doctor until the condition worsens because the cost is the same regardless. The
HMO charges all members a fixed monthly fee, usually paid to Blue Cross or other insurance company, based on the estimated
per-patient operating costs of the system, and are remunerated by the insurer at a fixed rate per month regardless of how
much or how little was spent on care during said month. There is therefore a great incentive toward efficiency. There are
also few if any additional costs because the employees of the HMO (including doctors) work for salaries, not fees, and outside
services that the HMO cannot provide itself are contracted for at a fixed annual rate, again regardless of the degree of usage
of said services.
The main difference between HMOs and the commonly practiced forms of medical care is philosophical. Regular
doctors/hospitals /clinics/insurers aim to provide services to the sick and make a profit (at least not to lose money) in
so doing from the sick or their insurance company. Insurers gamble that the premiums they collect will exceed their payments
to the health care deliverers (and if they do not, rates are raised and coverage is narrowed). The people try to make minimal
use of the available facilities in order to minimize costs (deductibles) and keep premiums low until the illness becomes serious
and costly to treat due to neglect. Tort lawyers lurk on the periphery ready to sue if a patient is not totally satisfied
with the outcome of a treatment. Doctors/ hospitals are compelled to carry malpractice insurance and to leave no stone unturned
to avoid such suits, including costly unnecessary diagnostic procedures and laboratory tests. The result is the present mess
in which no one is satisfied except the tort lawyers and insurance companies. We have the best (technically) health care system
in the world but we can't afford it; we have a choice of paying exorbitant insurance premiums or going bankrupt if we get
sick. It is patently unfair that the sicker we are the more it costs us and the less choice we have (in our desperation) of
forms of treatment. It often winds up a as a choice between death/disability and bankruptcy/heavy debt.
The philosophy of HMOs, on the other hand, is that the well should pay and the sick should be treated
as early as possible. They profit from keeping people well, hence their emphasis on preventive care and early detection. And
when a member gets sick all the care he needs is provided until he is well again. The HMO receives a fixed amount monthly
for its operating budget, and all it has to do to maintain a profit is control costs.
Once the HMOs are constituted, all residents could be assigned to the HMO nearest their home (the HMO's in
the cities could possibly operate small feeder clinics in the small towns/rural areas). Once an estimate of the costs of operating
each HMO and the number of persons in its catchment area are known, the average monthly premium can be computed, and at the
present time it would probably run less than $40 per person per month.
The premium would be covered as follows:
Social Security retirees: bill Medicare for the premium
Persons on welfare: bill the medicaid system at the rate of $40/mo per person or have
the State Blue Cross do so (alternatively, deduct up to 7% of the total TANF entitlement to the family involved, make up the
difference by billing medicaid).
IHS (Indian health service) clients: bill Federal Government
Unemployed, indigents, migrant laborers: state funding of insurance premiums
Working poor: deduct 7% of income to pay on premium, make up difference by state funds.
Working non-poor: deduct 7% of income up to full premium for all dependents per month
for example: a man and wife with 4 children earning a total of 1000 per month would pay $70 per month, the
state would pay $140.
If they were making 3000 or more per month, they would pay $210, the state nothing.
Drug Addicts: enable persons addicted to opioid-containing pain medication to obtain the
amount if the needed gratis from their local clinic, either by injection or as a pill taken in the dispenser's presence.
This would prevent the now rampant abuses of doctor shopping and illegal activities by these victims of bad medical practice,
making it possible for them to continue working without fearing withdrawal symptoms. At the same time they could be offered
treatment to get rid of the addiction if and when they are willing to accept it. Medical hemp (aka marijuana) should
also be legalized and dispensed by the system gratis.
Self-employed: pay full premium or up to 7% of income, whichever is less.
Wealthy: pay full premium as members of system or remain under private care at their
In other words, no doctor, hospital, or clinic could bill Medicare, Medicaid, or Blue Cross, there
would be no further possibility of fraudulent billing, padded billing or excess billing which now drives up the cost of government-sponsored
medical care and insurance premiums, and there would no longer be a motive for such billing created by the need to assure
a cash flow for operating expenses which plagues nearly every medical facilty
The premiums could be paid automatically to state Blue Cross which would make monthly payments to the HMO
to pay its expenses.
Of course, this system cannot work if malpractice insurance remains so high. It is therefore urgently necessary
to take all malpractice claims out of the hands of the courts and submit them to a state constituted board of examiners to
decide the merits of the claims, the degree of fault if any, and the value of the loss, if any. No doctor will have to carry
malpractice insurance for work done in the HMO. The rules will be such that, e.g., if he is found to have actually been truly
negligent, he will be notified and fined a nominal amount the first time. If two or more such incidents occur within a stipulated
period, he may have his license temporarily or permanently suspended or be required to take remedial training. If a true case
of malpractice is found by the board of examiners, the injured party will be compensated out of a state malpractice fund,
again on the basis of the degree of fault and the actual monetary value of the loss, nothing for "pain and suffering" which
are part of the human condition. At the same time frivolous lawsuits (those undertaken expressly to scare the defendant into
an out-of-court settlement to avoid legal expenses which would be higher than the settlement itself) must be harshly dealt
with, including disbarment of attorneys who knowingly undertake them.
This system will save money in numerous ways;
1. The Insurer will save in knowing exactly how much will come in and go out each month and year based on
population statistics and in not having to maintain a large clerical work force to scrutinize billing and fee schedules. There
will be no billing, no doctor fees, all doctors working for the HMO will draw a salary.
2. The HMO (medical group/clinic/hospital combination) will not have to bill patients or assess costs of supplies
and procedures and doctors' fees. It will be free of the majority of accounting costs and costs of compliance (with insurance
regulations), also of losses due to failure to pay and collection costs for delinquent medical bills.
3. The people (members) will report for care and treatment as soon a sickness arises, thus encouraging prevention
and early treatment without fearing a catastrophic medical bill, thus actually in many cases reducing the time and costs of
treatment. The clinics will be required to remain open 24/7 to treat walk in patients who would otherwise have to seek costly
emergency room care.
4. The doctor will be assured of an income acceptable to him without fearing a lawsuit or paying exorbitant
insurance premiums, freeing him to practice medicine as an art, not a gamble.
To those who object that the patient cannot choose his doctor, I would respond that nothing would prevent
the member doctors of an HMO from having private patients who choose not to be under the system or would keep doctors in private
practice from joining the local HMO and bringing their patients "in" with them. As a member he would then receive a salary
instead of charging his patients fees, but little else would change. The other main objection, that hypochondriacs, psychosomatics
and Münchhausens would abuse and overload the system could be resolved easily by having such persons, once identified, receive
psychiatric counseling, again within the HMO context. The one legitimate objection that may be raised is that the HMO will
be reluctant or hesitant to provide adequate care in some cases in order to make the bottom line look better. This problem
can be dealt with by assuring that additional legitimate expenses of an HMO will be covered once their necessity is documented,
by having an inspector general/independent auditor periodically review the records of the HMO and interview a cross section
of patients. The profit level of the HMO could be pegged at, say, 6 or 7%, with profits above this level mandatorily reinvested
in improvement of the facilities.
Chiropractors, osteopaths, acupuncturists, homeopaths, and holistic healers could either be associated with
the HMO or have a contract with it for services and be paid at a fixed annual rate or on a patient-treated basis. This will
require them and their idiopath colleagues to learn to cooperate for the good of their patients. Likewise, laboratories, anesthetists,
and other specialists not associated with the HMO would enter a contract with the HMO for their services at a fixed rate,
the key point being that no one may bill the HMO: all services will be on contract.
One can easily calculate that for an HMO organized from one hospital and, say, three walk-in clinics, employing
20 doctors of various specialties, plus nurses, nursing assistants, maintenance personnel, and clerical personal totalling
200 persons, with a catchment area of 20,000 people, the monthly payments of premiums to Blue Cross would be $700,000, amounting
to $8,400,000 per year. Assuming the doctors were paid 75M per year (very reasonable if he has no malpractice premiums to
pay and employs no nurses/secretaries), the total salaries for doctors would be $3,00,000 per year, and perhaps $2,500,000
total for other personnel. This would leave somewhere in the neighborhood of 3,500,000 to cover operating expenses of the
hospital and clinics,including services contracted for. Since this is a hypothetical case, it would be pointless to break
it down further, but it would seem, at first glance, that this should be enough.
I estimate that the cost of providing medical care would be cut by 75% (to one fourth of its present level)
by enacting this plan, and it would provide 100% coverage for the residents of the state.
Incidentally, this plan as outlined above is not my idea nor even original. It is essentially similar to the
plan proposed by the President of Harvard Medical School in a recent Phi Beta Kappa Newsletter with the one important distinction
that it insists that each state devise its own plan, while the gentleman cited above calls for a federal (nation-wide) HMO
plan. Federal involvement would double the cost of the plan and impose yet another layer of bureacracy and regulations. The
only federal involvement should be to pay the premiums of those whose medical bills the Fed.Govt. would otherwise be obligated
to pay by law. If the federal government really wants to save money, this would cut its expenses by 90% (my estimate). Assuming
the state has 100,000 people "entitled" to federally paid medical care (AFDC, Social Security pensioners) and pays 600 per
year in premiums for each, the total annual bill to the federal government would be 60 million. If one tenth of this number
presently receives care in a given year the government is billed something like 1.5 billion.
One final note: AIDS should specifically not be covered by this system. There should be mandatory screening
of all members at the time they join an HMO and those found HIV positive should be quarantined by law or even isolated in
a sanatorium until they die or are cured as a result of future research. If the number of AIDS victims, now approaching 10,000,000,
were to double, care for them would bankrupt not only the system described here but the entire country as well. AIDS is an
epidemic which the government, cowering to the Gay lobby, has failed to name as such. This situation should be rectified and
the truth about AIDS told: it is a highly infectious disease spread not only by sexual contact and intravenous needles but
also by sneezing, kissing, hand contact, even mosquito bites and toilet seats, and there is no such thing as safe sex (outside
of monogamous marriage).
If we are to adopt such a system, the state legislature must enact and the governor sign the following:
1. Make Blue Cross of North Dakota the only health insurer and assign it the responsibility of paying operating
costs of participating HMOs. Prohibit any form of billing for medical services.
2. Notify all members of the health care industry that future Blue Cross payments will be made only to HMOs
after the cut-off date and give all hospitals, medical groups, doctors, clinics, a term of, say, six months to reorganize
as HMOs and calculate their total monthly operating costs.
3. Establish a medical malpractice board and define conditions for filing a claim and punitive measures. Make
malpractice lawsuits against HMOs unlawful (prohibit courts from hearing any such suits).
4. Enact legislation for deducting premiums from paychecks of wage-earners. Register all residents of each
state and assign them to the HMO most convenient for them (allowing freedom of choice).
5. Negotiate with Federal Dept. of HHS to pay premiums of Medicare and Medicaid recipients rather than their
This system may be called, for lack of a better name, the
NO BILLING H.M.O. SYSTEM to distinguish it from other proposals now being considered
by the various state governments and the Federal government. If you feel it should be adopted, please distribute copies and
contact your state legislators.
A.M.Hegland if you wish to contact me for any reason my e-mail is email@example.com