Single-group, multi-payer system has benefits

Universal healthcare does not equal nor require single payer. It is the constitution of the entire population of a state, insured together as a single group, that is required for healthcare insurance to result in universal, equal access to providers of patients’ choice. And, since there is a single payment schedule for everyone, there is an absence of financial incentives for providers to deliver care to some in preference to others; no rating of premiums for pre-existing conditions or genetic background; minimization of premiums by maximization of the size of the insured group; and minimization of administrative complexity and cost since there is a single administrative process.

Replacing the current methodology, insurance companies would bid by “Dutch auction” to insure a percentage of the total costs of health care for the entire state population.

Insurance company A bids to insure 60 percent of the total health care costs of the state’s population at a basic premium of $300 per person per month. Company B bids to insure 40 percent at a basic premium of $360 per month. The premium to be paid for each resident of the state is the weighted average of the premiums that were accepted, in this case $324 (0.60 x $300 + 0.40 x $360 =) $324.

Insurance company A receives a total payment of ($300 x 0.60) x the number of people in the state. Insurance company B receives a total payment of ($360 x 0.40) x the population. The total of the premiums paid is $324 x the state’s population, of which $180 x the state’s population is paid to company A, and $144 x the state’s population is paid to company B. Companies A and B are responsible for respectively 60 percent and 40 percent of the total covered medical costs. They have received (rounded) respectively 55.6 percent and 44.4 percent of the total of the premiums. This preserves the integrity of the bidding process.

Multiples of the basic premium, less than 1.0 for ages likely to require less medical expenditures and greater than 1.0 for ages likely to require more medical expenditures, assure that resultant premiums are actuarially sound and encourage willing participation by all ages of the population.

This single-group, multi-payer system is compatible with any degree of publicly funded premium support desired by each state. Medicaid waivers can be used as needed to reduce each person’s premiums, already minimized by the group size, to an acceptable level.

When single-group, multi-payer is adopted by multiple states, it will be possible to determine “in the real world,” the utility of various medical interventions, providing a mechanism for the continual improvement in health care.

This approach converts the right to health care into the reality of health care while reducing the overall costs to their minimum possible. JOEL SPALTER, M.D.

Fayetteville