1. Coverage via the NHMO would be paid for by the government from tax revenues, and would cover all citizens. A citizen may opt out of the coverage and receive a credit on his tax return, but only if he can demonstrate equal or better coverage under a private plan.

2. Those covered under the NHMO are entitled only to those treatments, services, medicines, etc., that are not currently protected under US patents. Since US patents are good for no more than 17 years, after which the item protected becomes public domain, this means that the NHMO will provide services considered state-of-the-art 17 years in the past. As a result, the program will not have to pay the exorbitant prices demanded for sole-source products or treatments; typically, all products and treatments provided will be available as generic products at cut-rate prices.

3. The medical professionals working within the NHMO shall not be subject to malpractice lawsuits. Complaints may be filed with authorities and medical personnel reprimanded or fired for incompetence, negligence, or other errors, but they cannot be held financially liable for damages.

In other areas, the NHMO will operate the same way a private HMO operates: there are copayments of a few dollars here and there to prevent widespread misuse of the services; and, a patient cannot be reimbursed for treatment by a specialist unless referred by a general practice physician except in cases of emergency.

Note that the NHMO is not prohibited from providing services covered under patents; it is simply under no obligation to do so. If a patented treatment can be provided at reasonable cost, or will result in a savings over generic treatments, the NHMO may elect to use them. However, it is necessary to legally stipulate that the NHMO is not expected or required to resort to recently-developed treatments, regardless of the nature of the case. If a patient insists on such treatment, he must pay for it himself or with private insurance.

Establishment of such a system would have many effects. For one thing, the coverage -- although not the latest and greatest state-of-the-art -- will still be more than adequate for all but the most unusual cases; health care was simply not that primitive 17 years ago.

The cost to taxpayers will be minimal, since the provision prohibiting malpractice lawsuits will get the lawyers off the payroll. The costs of actual service, once the litigation is removed, will be considerably lower than what we are accustomed to here in the US.

Many patients will object to the inability to sue their doctors. For them, the solution is simple: opt out of the NHMO, and obtain health coverage under a private insurer.

There will undoubtedly be a rapid proliferation of "supplemental insurance" programs that cover the things the NHMO does not -- the latest medicines and treatments, etc.

I'd like to suggest that, with any luck, the NHMO could be privatized. Rather than establishing a huge government bureaucracy, the best way to instigate such a system would be to provide the legal framework, establish a small government bureaucracy, and contract the NHMO services with private organizations.

The effect on the private medical business will be extensive. One would expect that a high percentage of the existing private medical providers will be absorbed into the NHMO, and the government would actually not have to build many buildings or train many people to establish this system.

The private providers that survive on their own will do so by providing truly excellent service. There will be no benefit to trying to provide cheaper service than the competition, since the NHMO is providing free service. The only thing that will keep a private company afloat is to provide service of a caliber that people are willing to pay for. The provisions in the NHMO (no patented treatments, etc.) as well as the nature of any government enterprise (rampant inefficiency, corruption, poor service) should make this fairly easy to do, and the private industry that survives should rapidly develop into the envy of the entire world.

Once established, the NHMO will probably provide an alternative method for doctors and other medical professionals to gain experience and establish a practice. Presently, a doctor undergoes a residency, after which he normally tries to land a steady job in a hospital or clinic somewhere. With a NHMO established, he could begin his career working for the government's health program. The pay might be lower, but there is no need for malpractice insurance (expensive for a new doctor). Once he has established a track record as a competent practitioner, he will be able to get malpractice insurance for a reasonable rate and enter into private practice.

I would like to make one thing perfectly clear: the employer should not be responsible to pay for any of this. Just how the employer got lined up to pay for most of the health care proposals that were discussed during the Clinton administration, I dunno, but it was a classic travesty of our political system: "Let's vote ourselves all this good stuff, and make somebody else pay for it!". Politicians should have been impeached for the suggestion. Many employers provide health coverage as a benefit to their employees, but they certainly are under no moral obligation to do so. Democratic suggestions that they are would have tempted me, if I were an employer, to drop such benefits on the grounds that they were misleading the public.

After establishment of the NHMO, employers may opt to provide supplemental insurance as a benefit, but I doubt it will be popular. Even if they do, it will be much cheaper than the full coverage they are providing now. And most individuals are likely to save a considerable amount of money over what they are presently spending on insurance and medical services. These savings should more than offset the increased taxes necessary to pay for the NHMO described.

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Of course, if you have questions or comments, you are welcome to send e-mail to me at palmk@nettally.com.