Inexpensive health care reform: the mathematics of medicine.

There is data to support the hypothesis that US healthcare reform will require systemic changes in their delivery system rather than a segment-by-segment approach to improving individual components such as administrative or pharmaceutical costs or illness-by-illness programs such as comparative effectiveness or disease management. Mathematically, personnel costs provide the largest potential for savings. These costs are reflected in utilization rates. However, when governments or insurers try to control utilization, shortages or dissatisfaction ensue. Therefore, reform should be structured to encourage individually initiated reductions in utilization. This can be facilitated by changing from employer-paid comprehensive group policies of variable coverage to a three-part, standardized, individually purchased, group policy with a targeted deductible and co-pays that provide disincentives to over-utilization and incentives (refunds on unused contributions) to reduce utilization. There will be a public health policy (maternal, infant, and immunizations) that will be very inexpensive and not subject to any disincentives, a catastrophic policy with a deductible and enhanced but diminishing co-pays, and a Health Savings Account that pre-positions funds to cover the deductible and co-pays. These changes will lead to a reduction in administrative costs. The excess capacity created will provide care for the currently uninsured. Savings will be refunded to individuals thereby generating taxes that can pay for needed subsidies. Reform can be inexpensive if it puts the mathematics before the politics.