American Catastrophic Health Insurance (ACHI)

The U.S. healthcare system has fallen prey to an ideological tug-of-war. On the right, the battle cry is free markets. Conservatives argue that healthcare costs are out of control because, among other things

• Most consumers no longer pay for the medical services they receive at the point of service
• Insurance companies do not have to compete across state lines
• Excessive medical liability concerns coupled with fee-for-service payment plans have forced providers into excessive over utilization practices.

On the left, the rallying-calls demand a public option. The Progressives argue that free markets unjustly exclude the poor from receiving adequate health care. They contend that healthcare should be a right afforded to all equally and that only the central government can fairly deliver and administer that right.

The opposing ideologies reject compromise for fear it would erode their basic premise and hinder their competing visions of the American dream. The decades-long debate has resulted in a healthcare system that over time has replaced most of the cost controlling benefits of a free market system with sporadic, ill conceived and ineffective government regulations that force good people to behave in bad ways and bad people to behave in even worse ones.

Americans vociferously participated in the recent contentious debates that pushed healthcare legislation through the Congress in 2009 and 2010. Those on the right, to this day, do not know what the legislation contains or how it might affect them in the future. They simply know they do not trust the proponents of the Patient Privacy and Affordable Care Act (PPACA) so naturally they oppose it. Those on the left, to this day, do not know what the legislation contains or how it might affect them in the future. They simply know they trust the proponents so naturally they favor it. The reason no one knows what the 1,500-page legislation involves is that the law only left placeholders for much of the regulations. The law requires that the Secretary of Health and Human Services define those regulations by 2014 - well outside the watchful eye of Congress. Regardless of the strengths or weaknesses of the PPACA legislation or of the final rules that have yet to be written, most concerned Americans, regardless of ideology, agree that the tactics employed by our elected leaders was an eye-opening disaster that further divided the American people along ideological lines.

The Americans United Party has studied the ideological objectives of the political left and right and the needs and desires of the average American from both patient and taxpayer perspective and concluded that a new approach is needed to achieve what all can agree should be our united healthcare objectives.

Healthcare objectives:

• Quality: Become and remain objectively and subjectively the worlds best medical delivery system for medically necessary care. Catch phrase: The right care at the right time at the right place for the right cost.
• Access: Provide the world’s best medically necessary care to all legal residents.
• Cost: Reduce total healthcare costs to less than 10 percent of GDP and thereafter maintain costs at the rate of inflation.

Some Stats:

Healthcare costs in America follow the 80-20 rule. Namely, in any given year, roughly 20% of the patients consume 80% of the healthcare costs. Much more must be done to improve the care while reducing the costs for the chronically ill and catastrophically injured.

Prior to PPACA, 83% of Americans had some level of health insurance. 86% of those with health insurance obtained that insurance from their employer or a government program.

Of the 17% of Americans without health insurance (306 Million X 17% = 52 million), about half had the resources to purchase insurance but had chosen not to. The remaining 8% or 26 million Americans were without health insurance although many were eligible for Medicaid.

Prior to PPACA, 50% of the American population had their health insurance provided to them by the taxpayer. (30% by their government employers (Federal , State, Local), 20% by Government run programs (Medicare, Medicaid, Veterans Administration, other government run programs). Again, prior to PPACA, it was estimated that the aging baby boomers entering the ranks of Medicare recipients would have elevated that percentage to 60% by 2025.

It is too early to tell how the health insurance payer mix will shift under PPACA.

Job Burden:

Employer paid health insurance adds 12% to the cost of base labor and is a significant reason why America is losing jobs to foreign competitors. The Americans United Party has identified and labeled the entire collection of non-business related business costs as the Job Burden. Our Position Paper entitled “How to Create Jobs” illustrates why we must eliminate our employers from the roles of health insurance provider and transfer those costs to the Safety-Net retail sales tax. The AUP has a saying – Unless you are a healthcare provider, insurer or involved in a related medical field, “Business has no business being in the healthcare business”. The sooner we can free our employers from the costs of healthcare and other job burden costs, the sooner they can start to rehire American workers.

Ideology:

The purist political left wants the federal government – the taxpayer – to pay some portion (all?) of a patient’s health care costs (single payer). Under their vision, provider fees would be fixed by the central power. In essence, providers would work for the central payer. The AUP contends that a single payer solution may cover all Americans but will do so by reducing quality and quantity and result in large scale rationing of medical services and long wait times that could produce devastating delays in care.

The purist political right wants a 100% free-market solution with minimal government intervention. They address the health care needs of the indigent with programs similar to food stamps or other types of vouchers for health care. These programs are difficult to administer, fraught with fraud, waste and abuse and carry a stigma that shames the poor throughout the healthcare system.

The Americans United Party takes a uniquely different approach. The AUP wants a system that requires people to be responsible for their own medical care up to a “catastrophic” point based on their income (tier 1). Once medically necessary care costs exceed a household’s respective catastrophic level, they are covered by a taxpayer-funded payer model (tier-2). As part of the Safety Net, tier-2 would be funded by the Safety-Net Retail Sales Tax and not by U.S employers.

In tier-1, people decide to self-insure some or all of their exposure and/or contract with an ACHI certified state-run or free-market private health insurance company. Tier-1 will cause most people to “shop” for value based on their specific needs and thereby reduce total costs by forcing downward pressure on prices and utilization. The significantly reduced upper limit exposures enable the private health insurance industry to tailor their products to large groups of individuals at significantly reduced risks and costs.

American Catastrophic Health Insurance Plan (ACHI):

The American Catastrophic Health Insurance plan is a catastrophic, retail sales tax funded health insurance plan that replaces the U.S. employer based health insurance model, restores cost-containing free-market principles, reins in medical malpractice and over-utilization costs, enables interstate competition between health insurance companies, and covers all U.S. domiciled residents not covered by Medicare.

Plan Highlights:

• Catastrophic Insurance: (High Deductible Health Plan) based on Income:
• Covers all U.S. domiciled legal residents not covered by Medicare:
• Replaces Medicaid:
• Annual Coverage Limits: None:
• Lifetime Coverage Limits: None:
• Exclusions and limits for pre-existing Conditions: None:
• Replaces the Employer Based Health Insurance Model:
• Sales Tax Funded via Safety-Net Tax.
• Two-Tiered Private/Public Payer Model:
  o Individual (or private insurance market) covers below catastrophic level (Tier 1)
  o ACHI covers 100% of Medically Necessary amounts above catastrophic level (Tier 2)

• Provider fees based on a Diagnosis Treatment Plan (DxTP) vs. Fee for Service:
• Publishes Lower of Average or Median prices (LAM) for medical services:
• Provider publishes their fees along side LAM lists:
• Provider supplies patient with Price Quotes prior to treatment:
• Provider supplies patient with Care Warranties:
• Provider supplies patient with After Encounter Report:
• Covers 100% of Primary Preventive Care below LAM:
• Offers incentives to patients who receive primary preventive care:
• Offers incentives to patients who receive care at costs less than LAM:
• Grandfathers any benefits in Employer Based model that exceed ACHI benefits: (Pays differential directly to employee)
• Standard LAM Prices for non-responsive patients
• Provider self-Insured Malpractice Insurance
• Best Practices and Continuous Process Improvement
• Living Will and Medical Directives
• ACHI Banking System used in Fraud Detection and transaction processing

The following chart shows examples of co-payment amounts or percentages and annual maximum Out-of-Pocket costs based on household income.

Household Income	Example Co-Pay: % and $ per event: Dr/Emer/Hosp/Rx-Brand/Rx-Gen	Annual Max % of Household Income	Out-of-Pocket Annual Max $ Income * (Income * .000001)
0-Poverty Level (12K)	50%/$500 / $100/ 50% /$10	0-1%	$0-$120
$12,000-$20,000	50%/$500/$100/50%/$10	1-2%	$120-$400
$20,001-$30,000	50%/$500/$100/50%/$10	2-3%	$400-$900
$30,001-$40,000	50%/$500/$100/50%/$10	3-4%	$900-$1600
$40,000-$50,000	50%/$500/$100/50%/$10	4-5%	$1600-$2500
$50,000-$60,000	50%/$500/$100/50%/$10	5-6%	$2500-$3600
$60,000-$70,000	50%/$500/$100/50%/$10	6-7%	$3600-$4900
$70,000-$80,000	50%/$500/$100/50%/$10	7-8%	$4900-$6400
$80,000-$90,000	50%/$500/$100/50%/$10	8-9%	$6400-$8100
$90,000-$100,000	50%/$500/$100/50%/$10	9-10%	$8100-$10,000
$100,000-$150,000	50%/$500/$100/50%/$10	10-15%	$10,000-$22,500
$150,000-$200,000	50%/$500/$100/50%/$10	15-20%	$22,500-$40,000
$200,000-$250,000	50%/$500/$100/50%/$10	20-25%	$40,000-$62,500
$250,000-$330,000	50%/$500/$100/50%/$10	25-33%	$62,500-$108,900
$330,000 +	50%/$500/$100/50%/$10	33%	Income(0.33)

To compute your annual ACHI household deductible, multiply your annual income by the product of (your annual income times .000001).

For the purposes of ACHI, income consists of the following income sources submitted to the IRS as required by law.

• W2 (Wage and Salary Line 01)
• 1099 (Interest, Foreign Dividends, Pensions, Royalties, Contract)
• Foreign capital gains

Example 1: Your annual ACHI household income is $50,000. Your annual household deductible would be $50,000 times ($50,000 X .000001) = $50,000 X 0.05 = $2500. $2,500 is the maximum amount you would have to spend in the current year for your immediate family/household for any medically necessary treatment. You could chose to self-insure the entire $2,500 or contract with an ACHI certified Health Insurer to cover some or all of your $2,500 annual risk. Any medically necessary expenditure above $2,500 will be covered 100% by the ACHI plan. The ACHI deductible formula assumes that a family with an annual household income of $50,000 reaches the catastrophic level if they have medical costs that exceed $2,500 during that year.

Example 2: The following year, your salary doubles to $100,000. Your annual household deductible would not double but rather would increase four fold. $100,000 times ($100,000 X .000001) = $10,000. In this case, the formula assumes that a family with an annual household income of $100,000 reaches their catastrophic level if they have medical costs that exceed $10,000 during that year. This assumption by the plan may or may not be true. It becomes the responsibility of the policyholder to consider their particular situation and choose to self-insure their remaining risk or contract with an ACHI-Certified Health Insurance company to cover some or all of their remaining exposure.

Example 3: The following year, your salary more than triples to $330,000. Your annual household deductible – catastrophic amount – would rise to $108,900. ($330,000 X ($330,000 X .000001)). In this case, the formula assumes that families with an annual household income of $330,000 reach their catastrophic level if they have medical costs that exceed $108,900 during that year. This assumption by the plan may or may not be true. It becomes the responsibility of the policyholder to consider their particular situation and choose to self-insure their remaining risk or contract with an ACHI-Certified Health Insurance company to cover some or all of their remaining exposure.