An Alternative Approach to Providing Universal Care

Carolyn McClanahan, M.D., CFP

We are on the cusp of significant change in health care policy. Although the ACA was a workable solution
to reduce the number of uninsured in this country, the lack of bipartisan support and the complexity of
the legislation led to inefficient implementation and made the ACA an easy target in election cycles.
Additionally, the cost reduction measures included in the legislation were secondary to the goal of
expanding coverage, resulting in continuing rise in the cost of care and complexity in obtaining coverage.
Proposals in providing health care coverage focus primarily on insurance schemes. What is often forgotten
in these proposals is that for insurance to work efficiently, it must follow the law of large numbers. The
purpose of insurance is to cover catastrophic or rare events. Health insurance in this country is basically a
reimbursement program and we pay an inordinately high cost to insurance middlemen for the privilege
of this system when it comes to primary care services.
Most illness is common and chronic, is not insurable and can be easily handled by a good primary care
workforce. Primary care is all that is needed by the majority of our population. By providing early and
easily accessible care, population health can be greatly improved and costs reduced down the line for
more serious illness. A strong primary care system provides better care at significantly lower cost than
systems which are not primary care focused.
In general, the Democratic Party prefers universal coverage through a single payer system. The Republican
Party wants a system based on free market principles. The political divisions in this country are wide which
creates difficulties in implementation of a pure system based on one set of principles. The Republicans in
power would benefit from a bridge that guarantees a base of care acceptable to members of the
Democratic Party when implementing their preferred insurance scheme.
Community Health Centers (CHCs) have long had bipartisan support although their funding has been
haphazard and they are experiencing increased bureaucratic burdens that reduce efficiency. By expanding
and fully funding CHCs and allowing any citizen to receive their primary care free through CHCs, the
Republican Party can create a relatively inexpensive safety net that will allow them to implement their
free market proposals and provide the majority of Americans with the care they need.

Important Big Picture Points

The U.S. currently spends $9,990 per person per year on health care in this country.
o According to the OECD, 49.4% is paid for with public dollars - $4,935 per person per year.
o The average OECD country spends $3,814 per person per year on health care TOTAL
including all public and private dollars.
o Taxpayers alone pay more in this country for health care than most countries pay total
for health care. Showing taxpayers a system that will reduce taxpayer cost and provide a
base of care for everyone will increase the chance of broad support.

Given our spending, we do not have the health to show for it. Overhead, waste, focus on treating
illness late instead of providing early care and prevention, and the lack of a strong primary care
system are the reasons for this disparity.
o The United States has a great system if you have a rare or serious illness or trauma, but
not if you have common chronic illness such as diabetes, hypertension, or asthma.
o Our fee for service system has disproportionately rewarded procedurally based
specialty care. The result is the decimation of primary care over the past fifty years.
o Spain introduced a strong primary care measure in the 1980s a community health
center within a 15 minute radius of everyone. This dramatically improved health care
measures. Now Spains cost of care is about $3,153 per person per year total.
o By keeping people healthy with easy access to primary and acute care, we can improve
health and productivity of our work force.
o A strong community health system will improve our countrys ability to quickly respond
to epidemics and bioterrorist events.
Primary care is not an insurable event, as everyone needs basic health care. Unlinking primary
care from the insurance system can improve care at a reduced cost and simultaneously reduce
the cost of insuring catastrophic illness.
People in this country want choice, and they fear a single payer system will take away choice. An
ideal system for the U.S. would provide at least basic care for everyone, while at the same time
preserving choice this will increase productivity, reduce future health care spending, and allow
innovation in health care for which the U.S. is known.
The overhead for health care systems in other countries is 5 to 15% of total health care costs. In
the United States, overhead is 25% to 30%. Of the $3.2 trillion that we spend on healthcare in this
country, $800 to $960 billion went to overhead. If we could cut our overhead to 15%, we would
save approximately $320 billion per year. By simplifying primary care access, overhead can be
reduced significantly. This would easily pay for a comprehensive primary care program.

How will care be delivered?

In this proposal, everyone can receive their care free at a CHC, regardless of income or other insurance
status. There will be no eligibility determinations people can just walk in the door. Although anyone
could receive care at a CHC, people could choose to get their care elsewhere and pay for it directly.

CHCs will be paid directly by the government based on patient population, not fee for service.
CHCs will be required to provide a broad yet well-defined range of services in a patient centered
approach. This includes evening and weekend hours, urgent care, telemedicine, group visits,
mental health care and pharmacy services. Centers will be clean, modern, and comfortable.
The electronic medical record will move from a focus on billing to a focus on telling the patients
story, so the records will be easier to use and truly useful for patient care and research. Physicians
will spend more time on patient care and less on charting and administrative work.
Patients will still be required to have catastrophic health insurance coverage purchased privately
or through Medicaid or Medicare eligibility. The policies will be guaranteed issue, but costs should
be significantly lower because they will only cover care that is not available through the CHC.

Basic specialty care will be available at CHCs, but specialists within the system will be salary based.
They will serve as consultants to primary care providers and may not always provide care directly.
One consultant can theoretically serve many patients through multiple community health centers.
If a patient develops a serious illness and requires extensive specialty care, expensive treatment,
or hospitalization, they will access their catastrophic policy.
Catastrophic policies will not be medically underwritten, will be priced based on area utilization
charges only, and will provide essential benefits not considered primary care.
People can buy more extensive private coverage that may be priced based on multiple factors
such as age, benefits, and area utilization charges. These policies will not be medically
underwritten but will require a continuous coverage provision to be issued and only offered
during an open enrollment period.

By providing a base of health care through CHCs, many choices of care will be available:

Receive base care through a CHC and buy private catastrophic insurance.
Those who do not wish to receive care through a CHC can pay for primary care out of pocket and
buy private catastrophic insurance. Individuals can also choose to have some services provided
by the CHC and pay for care out of pocket when they desire to see a private provider. Health
savings accounts can be used to pay for primary care.
Low income individuals can receive care through a CHC and Medicaid for catastrophic care.
The elderly would receive care through CHCs or pay for primary care out of pocket. Seniors would
no longer be required to pay for part B, part D, or Medigap policies. If they are dissatisfied with
CHC services, they can use money previously dedicated to premiums to pay for primary care
directly. Catastrophic coverage will be provided by Medicare. If they are unhappy with the
coverage provided by Medicare, they can buy additional coverage on the open market.
Whether insurance is sold through employers or a large individual market is a political decision.
However, tax treatment of policies should be congruent. Plans will have a floor on what is to be
provided. Deductibles can vary which would factor into policy prices. Richer plans with more
benefits and lower deductibles can be purchased at a higher cost. Cost sharing of the deductible
can be offered for lower income individuals.

Cost to Provide Basic Primary Care to Everyone

There are currently 323 million people in the United States spread across 124.6 million households.
Community Health Centers provide primary health care at a cost of $516 per patient per year for medical
service and $439 per patient per year for dental services. They currently serve 25 million patients but have
the structural capacity to serve 50 million patients. Many centers also provide dental, mental health care,
vision and pharmacy services. The average cost of care including these other services is $763 per patient
per year. However, this number does not take into account that only two-thirds of centers provide
comprehensive care including mental health and dental, so the cost will actually be higher to provide all
these services.
CHCs are managed more like private practices, and because they take Medicaid, Medicare, and private
insurance, they also have the headache of increased costs due to inefficient billing practices. By removing

CHCs from traditional payer models, costs could further be reduced. In private practice, billing is
responsible for approximately 14% of overhead.
For purposes of this illustration, we will use a yearly cost of $955 per patient per year. This is a total of
medical and dental cost which will mitigate the effect of the average total cost due to centers that do
not provide the additional services.

Costs if all 323 million people in this country fully utilize CHCs for health and dental care: $308.5
billion per year.
Costs if only 50% of the population utilize CHCs for health and dental care: $154.2 billion per year.
Costs to provide only medical care to the entire population: $166.7 billion per year.
Costs to provide medical care only to 50% of the population: $83.3 billion per year.

There will be expenses in building infrastructure and rebuilding the primary care work force. However,
this is a fraction of the cost of the $1.5 trillion taxpayers put into the health care system today.

Revenue Sources

The need for premium tax credits will go away. It is estimated the federal government will pay
$27 billion in credits and $7 billion in subsidies for 2016. Cost sharing subsidies are expected to
remain approximately the same for low income individuals but the premium tax credits will no
longer be applicable secondary to significant reductions in policy pricing.
$250 billion per year in tax revenue is lost by tax credits for employer based coverage. Because
insurance costs will decrease significantly, the revenue lost by this tax credit will decrease
proportionately. Alternatively, the government could totally remove health insurance premiums
as a tax favored item or remove medical expenses as a 1040A deduction.
Approximately 11% of Medicare payments are for physician services and another 27% are for
Medicare Advantage payments totaling $240 billion per year. Part of this payment is for primary
care services and can be diverted to CHC services. These numbers are factored after offsetting
receipts to Medicare.
The federal government covers 62.8% of Medicaid costs which equates to $334 billion per year.
There will be significant reduction of the $98 billion paid for acute care services and $142 billion
paid for managed care plans since these will no longer cover primary care.
Because the cost of insurance will be significantly decreased, fewer people will object to the
individual mandate which will support guaranteed issued policies. Currently, Medicaid pays $18.5
billion to cover DSH payments to safety net hospitals to cover uncompensated care. These
payments will no longer be required.

Sample Case Studies

A 33 year old develops a sore throat. Because she has easy and early access to a community health center,
it is quickly identified as strep throat and treated. She avoids the potential complications of a peritonsillar
abscess which would require hospitalization for drainage.
A 53 year old develops chest pain and goes to the emergency department. He is admitted and it is
discovered his chest pain is gastrointestinal in origin. This admission is covered by his catastrophic policy.
His primary care physician at the community health center is notified of the admission and kept in the

loop of his patients status. The patient is referred back to his community health center for continued
treatment of his gastrointestinal disorder.
A 68 year old has multiple medical problems including chronic renal failure requiring dialysis, heart disease
and diabetes that is difficult to control. He receives the majority of his care through a community health
center. Without the need for referral, he regularly receives dialysis supervised by a nephrologist. His
nephrology care is paid through Medicare. The community health center doctor regularly consults with
the cardiologist and endocrinologist to manage the patients comorbid problems.
A 52 year with multiple chronic medical problems old does not want to receive care from the community
health center. She attends a minute clinic for minor acute illnesses but prefers to see a cardiologist
directly for management of her hypertension and heart disease, an endocrinologist for management of
her diabetes, and a podiatrist for her diabetic neuropathy. Because these services are considered primary
care, they can be excluded from catastrophic policies. However, she could still have the option to buy an
insurance policy on the open market that covers these items although it will likely be very expensive.

Barriers to Change
This proposal will likely be opposed by providers of specialty care and require significant change in
operation of insurance providers, hospitals, and administrative services.
This will also require significant change in care delivery for community health centers and primary care
providers. They will need to provide top notch service and care to regain trust in their care. They would
also need to offer broad services to improve population health.
We will also need to significantly increase the number of primary care providers. Incentives for entering
primary care, reduction of pay discrepancies between primary care and specialty providers, use of
technology, community health workers, and telemedicine, and requirements for training in community
health centers can alleviate the human resource shortfall.
This proposal has many political barriers as the majority of people are cemented in Democratic or
Republican ideology. The election of Donald Trump, Jr. may remove these barriers as he is looking for a
plan that will contribute to infrastructure, provide health care to all and implement free market principles
the Republicans desire. Now may be the time to present this alternative model of care.