4Reboot Healthcare: Focus Resources on Patient Care, Not Red Tape

Unnecessary complexity is the original sin of the American healthcare system. American healthcare is a bureaucratic tangle that lets millions of Americans fall through the cracks, distorts incentives by providers, payers, and patients, and is grotesquely inefficient. No one designed the current system; it is a hodgepodge of programs and attempted fixes that no longer serves the common good. The COVID-19 pandemic has exposed the weaknesses of a disjointed regulatory and payment framework while revealing the dedication of healthcare professionals within it.

Curing American healthcare requires structural changes to overcome each of the following flaws: intolerable cost (almost twice what other developed countries pay); incomplete coverage (in part attributable to cost); bureaucratic overload (diverting caregiver time and contributing to burnout); and a culture of fear and self-protection (compromising patient safety and professional pride, and also driving up costs).

Simplifying the framework will liberate professionals to focus on care and health, avoid expensive red tape, and remove the main cause of stress and frustration. A simpler framework will liberate providers to use their common sense, and aligns incentives for prudent choices for both patients and providers. The new healthcare structure should include the following changes:

• All care caused by COVID or other pandemics should be paid for directly by the federal government. Instead of fee-for-service paperwork, providers should bundle their care into periodic statements of services provided. Government should protect against overbilling and fraud with regular audits.

• For all other care, Congress should create a powerful financial incentive for patients and payers to choose a capitated care provider—in which one healthcare system provides all services for a fixed annual fee. To further minimize paperwork, a base plan should be standardized across all providers, available for enhancement but not reduction. The current fee-for-service model consumes several hundred billion dollars in reimbursement red tape, and skews incentives towards more care.

• To better align patient incentives, require meaningful co-pays for non-preventative care and mandate transparency in pricing. The co-pays should be reduced for those with lower income.

• Reduce regulatory burdens with a simplified framework that focuses on goals, not prescriptive inputs and compliance. Regulation should also prioritize patient safety, and secondary goals such as privacy should be less prescriptive, with moderate sanctions. Striving for perfection in all categories diverts resources and attention away from patient care.

• Create expert health courts to adjudicate malpractice disputes. Special courts should make rulings on standards of care as a matter of law that doctors and patients can both rely upon. Unpredictable jury-by-jury determinations have infected healthcare delivery with debilitating fear and costly defensiveness.

• Provide a healthcare safety net for all Americans not covered by other plans and programs.

• Innovation will often conflict with the regulatory status quo. Periodically, a special healthcare commission should evaluate the culture of healthcare delivery and recommend adjustments to adapt the regulatory and reimbursement framework. Longstanding rules disallowing telemedicine, now reversed because of COVID-19, look almost medieval in hindsight.