The political rhetoric over the Affordable Care Act (ACA) continues. The Supreme Court will weigh in this year on the legality of the bill. However, the government only needs to look inward to find a template for a program that will reduce costs, increase coverage, and is based on private insurance.
TRICARE is the health insurance program used by the military to cover active duty service members, retirees, and dependents that do not have access to military treatment facilities; clinics and hospitals. Because it negotiates advantageous rates with private insurance companies who administer the program, TRICARE can serve as a blueprint to lower the nation’s health care costs.
This is not to be confused with Veterans Administration (VA) facilities that offer medical service for veterans; TRICARE along with other private insurance is considered the first insurer if a veteran is not disability rated.
There are three programs under the TRICARE umbrella: TRICARE Standard, TRICARE Prime, and TRICARE For Life. Standard is a program that allows for complete doctor choice, requires no enrollment or premium, and requires the insured to pay 20% of the approved fee. Prime is similar to an HMO. For a low annual premium; the current annual premium for a family is approximately equal to the monthly premium of most employer programs, the insured uses an approved doctor and pays a low co-pay. For Life is the TRICARE supplemental insurance for Medicare and currently requires no premium as long as the insured is enrolled in Medicare part A and B. I believe these programs could be easily adapted for general implementation.
TRICARE is administered by private insurance companies on a regional basis. Companies are chosen through a competitive bid process. The Department of Defense pays the costs, but outside of contract award and setting reimbursement rates, there is no other government involvement.
As of 2009, the average per employee cost of health insurance to employers was $3,341. This cost rose approximately 10% in 2010 and continues to increase. Government cost per insured in 2011 for TRICARE Standard was $3,584. For TRICARE Prime it was $4,202. These amounts are close enough to be considered equal to what employers paid into their plans. At the end of 2011, there were approximately 132 million employed persons in this country of which 20 million did not have health insurance. The total number of uninsured is approximately 47 million.
What if the Department of Health and Human Services or State Insurance Commissions established similar systems paralleling TRICARE? Private insurance companies competitively bid. If desired, two companies, offering slightly different plans, could be chosen. Employers, instead of paying $4,000+ per employee to their current provider, would pay what I’m certain because of the size of the contract and competition would be a lower amount, to the approved company. If the TRICARE model were consistent, an employee’s contribution should be no more than $1,200 - $1,500 per year. While I could not anticipate why an employer would not want to use the approved (or one of the approved) providers, employers would have to be allowed to still chose another provider. Employees would also maintain the right to obtain their own coverage, but again, I could not anticipate a reason they would want to if the contracts were negotiated properly.
There is one caution. Reimbursement rates must be fairly established. TRICARE reimbursement rates are tied to the Medicare rates. Given the current failure of Congress to correct the Sustainable Growth Rate calculations that are used to set those rates, a different reimbursement schedule would have to be set.
Private health insurance, low employer and employee contributions, and increased coverage. A proven system exists. TRICARE works for those covered by it. It provides a blueprint for the solution to our current health insurance crisis.
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