IMPROVING THE HEALTH CARE SYSTEM
Executive Summary

The attached proposal calls for a small new payroll tax similar to Medicare that will pay for all hospital services not currently paid for by Medicare and Medicaid. The services covered are both inpatient and outpatient? including a11 diagnostic? therapeutic and surgical. By relieving everyone; employers, individuals and local governments from the costs of hospital services? the remaining costs of physician services and other costs such as home care and durable medical equipment will be affordable. Current City and County Governments and other social service programs will continue to assist low income uninsured people obtain physician services and medication? but relieving them of the often catastrophic costs of diagnostic and hospital services will make their programs economically viable. This proposal does not provide for free or low cost physician services because the demand and resulting cost would be prohibitive. Payment for emergency room physicians is also excluded because emergency departments would become the primary care provider for anyone who wanted to avoid paying for physician care. Eliminating the hospital cost component from insurance premiums should also contribute to more employers offering coverage to their employees for the non-hospital services.

Claims payment for hospitals under this plan will also be consolidated to the current Medicare fiscal intermediaries using the same payment methodologies, DRG7s and APC's used for Medicare claims. This will allow hospitals to substantially reduce their staffing for verification of insurance benefits since all patients are covered and staffing for the billing activities since all bills will be submitted electronically to only one claims payment facility. Hospitals will also be able to eliminate their costly managed care departments because there will be no contracts to negotiate or manage. Insurance companies can reduce their staffing whichs has been dedicated to authorizing care and processing claims for hospital services. These savings will hrther contribute to premium cost reductions. Plans to control over-utilization of hospital services are included in this proposal.

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