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Blueprint for an Effective and Sustainable Healthcare System

America innovates medical devices, procedures and pharmaceuticals for the world. We offer the best medical treatment system in the world, but that is only as good as being the best at putting out house fires after they have started. Fire prevention is cheaper and more effective than fire recovery. The same is true for healthcare. Our healthcare system is broken. [1] Fixing our healthcare system requires addressing the underlying causes. Many of these causes are related to prior action by our government.

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Many people do not understand our healthcare system or why it is so complicated. This brief explanation is intended to provide a common frame of reference. In our generally capitalist democracy, buyers and sellers come together to trade. While the specific goals of the buyer and seller are different, their broader goals are aligned. Alignment means that if the seller achieves their goal, to sell a product, the buyer also achieves their goal, to buy a product. Unfortunately, in our healthcare system, there are more parties involved in the transaction than just the buyer (patient) and seller (provider). In addition, in the usual transaction, there is only one relationship subject to government regulation. In the healthcare transaction there are five relationships and each one is subject to government regulation. [2]

Healthcare Reform 2010

The accuracy of the documents linked below is not confirmed, but is presumed because of the authors' reputations. Any opinions presented by the authors do not reflect the opinions of the Yuba-Sutter Healthcare Council or its Members.
Provisions - NAHU (2.4M)
Timeline - NAHU (200K)
Summary - CMA (300K)

The federal web site:
two parties, one relationship four parties, five relationships

While the healthcare provider wants to give the best care and the patient wants to get the best care, the goals of the other parties, employers and insurers, are not aligned with either the patient or the provider. In fact, the goal of the insurer, to spend as little as possible on clinical care, often conflicts directly with the goals of the patient and the provider.

goals aligned goals conflict

In our current healthcare environment, we cannot negotiate to the center of a table tilted heavily in favor of the health insurers whose goals are counter to the optimal healthcare transaction. That will only continue to promote a dysfunctional healthcare system. At best, it puts off the collapse of our healthcare system for a short time and benefits only a fraction of those it intends to help. At worst, it makes the needed reforms harder to achieve. As a result, we must first recognize where we are and identify what we want our healthcare system to look like in the future. Identifying the difference between the two (a "gap analysis") can help us to map out a plan for effective and sustainable reform of our system.

Below are the core problems which we must resolve to achieve an effective and sustainable healthcare system. The Possible Solutions do not pretend to be the best or only options. They are offered to suggest one possible general direction based upon the principles referenced at the end of this document.

Quality Limitations

Timeliness is reduced by unnecessary insurance company delays

Patients do not regularly seek prevention or screening services

Patients want freedom to choose, but are reluctant to accept the consequences of their choices

Providers may only give best care about 55% of the time

Limited data sharing and duplication of tests

Insurance policy variations make it difficult to select a policy or understand what is covered

Health insurers offer hundreds of different policies with very different coverage rules. As a result, it is difficult for patients to understand what is covered and what is not. Sometimes they receive huge healthcare bills due to a misunderstanding of their complicated coverage. While a public insurance option may not be the only or best way to resolve this, there is a need for every American to have a basic level of coverage at an affordable price. In order for this to occur, there must be overt recognition that affordable insurance means the plan cannot cover everything. We cannot support magical thinking that costs will somehow be paid if the premiums are inadequate for the coverage offered. We can permit people to have both a basic plan and either pay for non-covered services themselves or purchase supplemental plans (like Medicare supplements) which cover the additional services or costs.

Possible Solution: There needs to be a national consensus about what constitutes a basic minimum health plan that ensures that every American has access to quality healthcare. In order to be affordable, the plan will not be comprehensive, might cover preventive services and have a high deductible, and it must be available to everyone regardless of pre-existing conditions. To be able to offer everyone insurance, everyone must obtain coverage. Otherwise, adverse selection (where only those who are sick purchase insurance) will make this basic, minimum plan unaffordable. The federal Department of Health and Human Services is developing standard plan language for qualified plans and standard plan documents, with details down to the level of font size, that should have a positive impact on this ongoing problem.


The Emergency Medical Treatment and Active Labor Act of 1986 (EMTALA) siphons resources

Unreasonable expectations

Improved technology

Unreasonable Tort Law

Fiscal Crisis

The Medicare Sustainable Growth Rate (SGR) is bankrupting healthcare [6]

ACA is expanding the healthcare safety net, but there may not be enough funding to meet the expanding need

Insurance companies have antitrust relief while providers do not

Insurance companies take too much of the healthcare premium for bonuses and dividends

Insurance companies are incentivized to violate contracts and systematically underpay providers

Rising healthcare costs will harm the general economy

As Albert Einstein has said, "We can't solve problems by using the same kind of thinking we used when we created them." Finding the solutions needed to ensure an effective and sustainable healthcare system will require a new way of thinking about healthcare and a new process for reform, ones we have not tried before. We recommend that this new thinking involve first identifying our core principles through consensus and only then trying to define the policies which promote and support the principles. This is why the Yuba-Sutter Healthcare Council has identified our key principles for effective and sustainable healthcare.

A government led consensus process might lead to a core set of principles that are different than ours, but they must be equally actionable to drive rational policies in support of the principles selected. How we solve the healthcare crisis will depend upon whether we agree to start with basic principles or whether each party simply continues to lob demands at the others. Once we identify our core principles, some of the policy choices will be clear and others will require lengthy discussion. Despite the passage of ACA, there remains much to improve in our dysfunctional healthcare system. We encourage everyone to ask Congress to consider this new approach to healthcare reform. Please contact us with any thoughts you wish to share or any questions you wish to ask.

Adopted August 2009, updated March 2011

  1. "Why Not the Best? Results from a National Scorecard on U.S. Health System Performance"
  2. "Healthcare Reform: from Problem to Crisis to Solution"
  3. "Computerized patient records improve practice efficiency and patient care"
  4. "Bringing evidence-based best practices into practice: more than 600 Minnesota physicians put EBM to work"
  5. personal communication, California eHealth Collaborative
  6. Comparing the SGR and MEI
  7. "AMA meeting: Delegates renew efforts for antitrust relief"
    "Antitrust Laws a Hurdle to Health Care Overhaul"
  8. "Failing to Correctly and Accurately Pay Claims to Health Care Providers"
  9. Healthcare Principles of the Yuba-Sutter Healthcare Council

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