With the declining birthrate, healthier lifestyles, and life-prolonging medical discoveries, the percentage of older people in our society is set to increase astronomically. Currently about 32% of the population falls into the 50+ category; a number that is expected to increase by 33% over the next two decades, at which point the 50+ cohort will be the largest single age group. An aging population will bring about a tremendous demand for healthcare services, which will drive up the cost dramatically.
The situation gets even more complicated when one considers that an aging population means a reduced work force. Fewer workers will be contributing to social security funds to care for those no longer working. And, with improvements in healthcare, particularly in geriatrics, the demand for these services will skyrocket, resulting in a shortage of services and a dramatic increase in costs.
A new strategy is needed that anticipates this increase in demand and lays some solid groundwork to avert a disaster of major proportions.
Many experts advocate a Canadian-style government healthcare monopoly to deal with the increase in demand for health services by an aging population. In my opinion that would be a recipe for disaster, as it would accelerate the rate at which costs increase and levels of service decline. On the other hand, a total free-market system would likely have similar results, as the wealthy would have ready access to health services, while those less fortunate would find themselves in dire straits.
Rationally speaking, a blend of the two systems would likely bring about the best results. The framework for such a system would incorporate the best of both government-run healthcare with private medical services and produce a hybrid system that isn’t entirely public nor entirely free enterprise-based.
A basic assumption would be that the system should include a user-pay element, which could be indexed to income. The basic framework of this program could be a health insurance program. The insurance would be offered by the private sector on a for-profit basis. The difference is that no patient could be denied a necessary medical course of treatment based on profit considerations. The insurance companies offering coverage would have their profits capped at a given percentage, with any profits above that percentage earmarked for a reserve fund for possible future lean years.
The financial and corporate structure of the companies offering this insurance product would be unique in that they would be structured more like bond issues than corporations. In other words, the stakeholders in the company would be guaranteed a set return on investment paid annually and assured by the government. The companies would operate under a strict set of guidelines to ensure that no single entity or group could gain a controlling interest of the company. The executives’ salaries would be indexed not to exceed a given multiple of what the lowest employee earns.
The insurance providers could grant generous discounts to policyholders that opt for a healthy lifestyle. Conversely, they should also be allowed to rate policyholders based on unhealthy lifestyle choices, such as smoking, obesity or other high-risk behaviors.
Policyholders would be free to go to the healthcare provider of their choice. No healthcare provider could refer a patient to a facility in which the healthcare provider is a shareholder, as that would constitute a conflict of interest. Malpractice lawsuits would not be brought before a jury by trial lawyers, but would be adjudicated on the basis of a predetermined set of awards, depending on the severity of outcome. This would ensure that malpractice insurance premiums would remain at a manageable level.
Unlike the Canadian government monopoly model, healthcare providers would not have a cap on their income. However, a series of checks and balances would be in place to ensure that physicians’ billings are on the up and up.