Two steps to fixing health care – back to the future

Think 1965!

We screwed up health care and set it on a course of escalation by changing the game on reimbursement for expenses incurred. 

That’s a big part (but not only factor) of the story about rising health care costs. There are two ways to fix that and in the process get both patients and providers to think about costs while introducing competition where it belongs; within the health care system. 

First: return all reimbursements to a fixed fee schedule (with bundled hospital payments). The fee allowable by insurance to deliver a baby and all related care by the physician will be say $2,000. Patients then determine if they are willing to pay more. Physicians then compete with a lower price or extra services, of if measurable, higher quality ratings. 

Second: we eliminate all provider networks; no participating doctors;  patients can see any doctor they wish knowing that the reimbursement they receive will be $2,000 and any difference is their responsibility.  

Health insurance administrative costs drop significantly. There is total transparency between health care provider and patient. The same type of fee structure also applies to services such as MRIs, lab work, x-ray ps and scans, etc. in other words back to the way most plans operated in the 1960s. 

Of course, the fee structure would be adjusted geographically and periodically to account for inflation. Fees would be negotiated between health insurers, government (fee structure would apply to Medicare and Medicaid as well so no payer is subsidizing another) and regional medical organizations. 


  1. Go ahead. Set it up. Pilot it in a location. Capture metrics. Nothing in current law or regulations precludes you from innovating – or, if there are limits, there are also waiver provisions in PPACA.


  2. I think you are right. Bring back Major medical plans too. That is what the high deductible plans were from what little I can remember. HMOs were being pushed in the year 1980’s when first started working so I might have it wrong.

    My only question is what was broken with the health insurance of the 1960’s & 70’s that they changed things? It is a little before my time.


    1. Nothing was broken except people paid more out of pocket (little or nothing in premiums) and they wanted more generous benefits.


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