By Dr. Brenda Fitzgerald
Medical costs are increasing at a rate five times general inflation. Some Georgians cannot even buy medical insurance coverage. The rest face increased costs for insurance and often decreased choices. We are paying a lot more for someone else to tell us which doctors we may see and which pill we may take.
Industry and government both consider rapidly increasing medical costs an enormous problem. The Georgia Legislature, however, can change this state of affairs this year. By enacting good medical legislation, lawmakers can save tax dollars on Medicaid and state employee insurance while improving both of those plans. In addition, their actions can change the general medical economy for the entire state so that all of us can save insurance costs and increase control over our health.
To transform Georgia’s medical system so costs increase at a reasonable rate and people gain control of their medical lives, the Legislature must make five changes simultaneously.
1. Widespread consumer-based health plans
2. Real access to medical cost information
3. A safety net for medically uninsurable Georgians
4. Improved Medicaid spending with disease management
5. Improved medical safety with medical malpractice reform
The state of Georgia has the largest and most widely distributed number of employees of any employer in the state. Every county from Appling to Worth, Dade to Camden, has teachers, bus drivers, administrators, janitors and cafeteria workers that use the state insurance system. They, like everyone else, are dealing with increased “contributions” and decreased choices.
Currently, about 1 percent of companies have offered consumer health plans. A 2004 Mercer study indicates that 73 percent of employers are likely to offer these plans by 2006. The basic design is a pool of money for routine health care and an insurance policy for major or unexpected costs. Health Savings Accounts, where the employee funds routine costs, are the most tax-advantaged plans because the employee contributions to the plan are not taxable income, the account accumulates tax-free, and it is spent tax-free on qualified medical expenses. By contrast, Health Reimbursement Arrangements have an account that is tax-free but supplied by the employer, not the employee.
Both plans are combined with a high-deductible insurance plan for big expenses. The money in both these accounts can now “roll over”, meaning money that the employee does not spend accumulates. This money can be used for expenses like Lasik eye surgery or facelifts, or for extra protection like long-term care insurance.
Median spending on medical care in 2000 was $720, including doctor visits, drugs, dental care and hospitalizations. That means half of us spent $720 or less for everything in 2000. Even if you need the enormous costs of an appendectomy one year, surgery is not necessary every year. The account can grow. The real issue becomes wise spending, which saves money.
Louisiana State University Healthcare Network saw a 28 percent decrease in total costs with such a plan; Scientific-Atlanta reports saving about $1,000 per employee in two years. Ronald Bachman, a Principal at PricewaterhouseCoopers, recently testified to the Georgia Senate that expected savings could be 20 percent with a good consumer-based plan.
Unlimited choices, decreased costs: Georgia needs that. State employees deserve that. The Georgia Legislature should make sure they get that.
To spend health care dollars wisely, people have to know how much things cost. A recent study in California found that a routine chest X-ray could cost between $120 and $1,159, a complete blood count between $47 and $547. Georgia Legislature should require health facilities and pharmacies to provide costs online, as well as a printed list of costs on request for those without computer access.
Patients should be able to spend their money on doctors they know and trust. The “network” of doctors should be any physician who agrees to give cash discounts to those with medical accounts and to provide the cost information before the visit or service.
Consumer-based plans work for most patients. Those with medical problems that preclude purchasing insurance – estimated to be less than 1 percent of the total market – need a state-funded high-risk pool. If the Georgia Legislature provided this, it would not only solve the problem for the medically uninsurable but also stabilize the small-group health insurance rates so everyone could obtain coverage.
Two difficult and problematic aspects of the total health care picture are the state-funded Medicaid program and medical liability. Though difficult, both are so integrated into the fabric of total health care in Georgia that they must be addressed.
Medicaid provides for the financially indigent as well as the blind, aged and disabled – Georgia’s most vulnerable citizens. The best way to improve their coverage is to provide focused disease management systems. Such innovative programs in Florida and Washington improved health, reduced hospital days, and saved millions of Medicaid dollars. Similar programs should be instituted in Georgia.
Today, injury by medical negligence is as likely as it was 30 years ago. Despite the increasing money for awards and the increasing cases, the current medical liability system has not made us safer. To decrease medical negligence and improve patient safety, we need a mandatory medical review panel of medically qualified experts to evaluate the standard of care and prescribe continuing medical education if the standard of care was not met.
The problem is large but the solution is in sight. A thoughtful and coordinated approach by the Georgia Legislature can cure the medical systems woes in this state and provide leadership for the nation.
Dr. Brenda Fitzgerald is an OB-GYN and the chairman of the Board of Governors of the Georgia Public Policy Foundation. The Foundation is an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.
© Georgia Public Policy Foundation (January 28, 2005). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.