Loanocare

Everyone is talking about health care.  What if the health care gurus discovered our ingenious system of financing legal education?  Fast forward to September 2012, when we may hear the following prime-time interview.

Katie Couric:  Americans are at loggerheads over the best way to finance our health care system.  To explore that challenge, I’m talking with Dr. Thomas Cooley.  Dr. Cooley is a respected MD and policy maker who has proposed an innovative health care financing program.  Is that right, Dr. Cooley?

Thomas Cooley:  That’s right, Katie, but I can’t take too much credit for the idea--it’s based on a tried-and-true government program.  The American public has shown that they greatly prefer debt to taxes or insurance premiums, so I’ve designed “Loanocare.”

Couric:  Why don’t you give us the basics.

Cooley:  Sure, the design is simple.  Any American who wants health care arranges for treatment.  The doctor or hospital will decide how much treatment is necessary and how much to charge.  As soon as the health care provider submits the bill, the government will pay the balance—no questions asked.

Couric:  Wait a minute.  Won’t someone review the charges to see if they’re reasonable—or maybe try to negotiate with the health care provider?

Cooley:  Not at all, that’s one of the strengths of this system.  The doctors and hospitals know what their patients need and how much it costs.  Loanocare will cut out all of the government bureaucrats and insurance adjusters.  We need to eliminate the expensive middleman—excuse me, middle person.

Couric:  But won’t doctors and hospital administrators be tempted to inflate bills to pad their own salaries?

Cooley:  Of course not.  These are respected professionals with a sense of responsibility.  And the hospitals are nonprofits; they’re not in this to make money.  Plus, the hospitals and other providers compete with one another in an open market.

Couric:  Open market?  Isn’t the number of health care providers limited?  Won’t doctors and hospitals be able to follow the leader on price? 

Cooley:  We might see some of that but I wouldn’t worry too much.  Mayo and the other top-rated hospitals have room for only a limited number of patients.  Other deserving patients will rely upon local and regional providers.  If a patient pays top prices at a neighborhood clinic, she actually benefits:  The patient gets the psychic boost of feeling that the care is as good as at Mayo.  

The overall outcomes from a local clinic may not be as good as at the top clinics, but the prices make the patient feel that she has a chance of getting the same cure that a top clinic would provide.  Most patients, of course, assume that they will be among the lucky few who get top outcomes from the lowest-ranked providers.  So everyone gets that psychic boost!  It’s fool-proof.

Couric:  Let’s talk about who pays for this treatment.  What happens after the government pays the bill?  Is that covered by taxes?

Cooley:  Not at all.  As I said up front, the American public wants no more taxes.  Instead, the bill becomes a debt that the patient owes the government.  Every patient will be able to borrow up to $20,500 in medical costs per year at 6.8% interest; additional amounts will be available at 7.9%.  Patients will repay either type of loan over ten years.  Interest, of course, will accrue from the day the government pays the health care provider.

Couric:  Those are pretty high interest rates.  How will patients be able to repay those loans?

Cooley:  The rates aren't high at all!  If you compare them to credit card rates, you’ll see how low they are.  Imagine, for example, that you’re suffering the acute pain of an inflamed gall bladder.  My clinic will remove your gall bladder for $10,000.  But rather than pay anything up front, you’ll pay just $115 per month over ten years.  This is an investment in your own future; it’s one you can’t afford not to make.

Couric:  But some patients might have trouble paying even the monthly amount, especially if they have other health care problems that come up.

Cooley:  No problem.  We’ll include an “income based repayment” alternative for those who can’t make their regular payments.  Patients will be able to stretch out their repayments over twenty years, according to a schedule tied to their income.

Couric:  But the clinic gets paid up front, right?  It’s the taxpayers who bear the risk of nonpayment.

Cooley:  That’s correct, Katie, but there’s no real risk for the taxpayers.  We know that patients who invest in their health prosper over time.  Even if they’re still sick and unemployed nine months after treatment, they’ll get better at some point.  Or they can find alternative careers that allow them to earn high incomes while bedbound!  As patient incomes increase, so will their monthly payments.  This could be a real money-maker for the government.

Couric:  I assume if the patient runs into serious difficulty, he or she can discharge the loan in bankruptcy.

Cooley:  Certainly not!  If we allowed patients to discharge health care loans, they would have no incentive to find all of the good jobs available to the chronically ill.   Debts owed under Loanocare will not be dischargeable in bankruptcy.

Couric:  What happens if patients can’t pay back the full amount of their debt, even under income-based repayment?  Won’t the taxpayers have to pick up the tab?

Cooley:  Oh, no, that’s yet another strength of this program.  If Congress decides that income-based-repayment won’t balance the books, it can revoke that option and enforce the original ten-year loan terms.  If the patients can’t make those payments, they’ll basically be at the government’s mercy.  The government could, for example, allow those patients to keep their income only up to the poverty line—taking everything else as loan repayment. 

Couric:  It seems like Loanocare will hobble many citizens with a lifetime of debt they can’t repay.

Cooley:  Katie, you really can’t put a price on your future; you need to invest even if the fees seem high.  We have outstanding health care institutions in America.  Even our night clinics and unaccredited hospitals are first-rate.  All of our clinics survey their patients annually to determine outcomes.  I can assure you that every health care provider in America has patients who leave the office alive.

Besides, you have to remember that Americans hate taxes and insurance premiums:  they would much rather incur debt.  Loanocare responds to that basic American instinct.

Couric:  One last question, Dr. Cooley.  We all know that hospitals care about their U.S. News ranking.  Won’t Loanocare encourage hospitals to raise their prices so they can bring in more dollars to buy things that contribute to high rankings?  Not every hangnail needs to be treated with laparoscopic surgery, but it seems like every community hospital wants the resources to compete with Mayo.  Won’t Loanocare just fuel that competition?

Cooley:  On the contrary, Katie, these rankings benefit many patients.  Doctors and hospitals are eager to serve patients with the best blood pressure, cholesterol, and blood sugar numbers.  We know that those patients have better long-term outcomes, which improves a health provider’s rank.  Doctors and hospitals will discount rates for these patients.  If you’re really healthy, you might get a free colonoscopy! 

Legal education has blazed the trail for us here, both in tapping unlimited federal loans and in discounting prices for the people who will end up with the best outcomes.  It’s an unbeatable combination.