States have struggled with it. Hospitals pray their patients won’t fall over it. Software makers are grinning over it, like the Cheshire Cat.

The massive rock paperweight that keeps our medical records in an ever-growing stack is fossilizing. Fast. As a result, congress, President Obama and insurance providers are shaking hands, creating partnerships and evaluating vendors to send our medical records into the cloud. Poof! Just like that…Up, up and away goes the latest results of your cholesterol test to that great big server in the sky. Paperless healthcare is supposed to create lower healthcare quotes for consumers. But will it?

“We’ve proven that paperless documentation can save costs for one of the most documented segments in the healthcare industry,” says Gerry Stone, founder of Redoc, an electronic medical records software company that specializes in documentation for physical and occupational therapists. “Believe me, if it works for Physical and Occupational rehab, it will work for the rest of healthcare.”

Stone has a point. He built his software platform from scratch 14 years ago, when electronic medical records were but just a glint in Bill Gates’ eye. Since physical and occupational rehabilitation is usually prescribed by health insurance plans to those who injure themselves on the job, Workers Compensation claims (and in the case of post-65-year-olds, repeated Medicare reimbursements) require an average of one hour of a therapists’ time filling out forms after each session. Stone has managed to reduce the hand-driven process of jotting down billing codes and treatment notes down to mere minutes by designing a simple interface of drop-down and text boxes, key shortcuts and the like. That was w-a-y before big Goliaths like Siemens, SAS and open-source companies jumped into the tepid waters of paperless healthcare.

Now that the President has essentially mandated paperless medical practices, the Cloud is gonna get a lot more crowded now. But how soon is now? Depends on who you ask. Software companies are courting their respective Congress persons and the President is waiting for the sky to open up and accept the first pile of medical paperwork. So far, there doesn’t seem to be any protocols drafted to guide how the information is documented, where and how it’s shared and who backs it up and how often. By the time the paperweight gets lifted, the ACLU and other privacy advocates will have their say on how private medical information is managed.

And what about HIPPA (Healthcare Insurance Portability and Accountability Act)?  When the medical records pile shifts to the servers, we’ll probably have an even L-O-N-G-E-R paper form to read and sign at the pharmacy counter. Figures.

Last year, a representative from Texas was the true Republican maverick in the presidential race. Ron Paul may not have won the nomination, but he is still bringing his unique libertarian perspective to Congress’ table. His proposals for healthcare reform are no different. He recognizes that the current health insurance situation is untenable, but is against governmental involvement. Recently, he presented several intriguing bills to the House of Representatives.

1. The Comprehensive Health Care Reform Act of 2009 would give Americans a 100% tax credit on their health care costs (e.g. prescriptions, hospital stays, doctor visits). Health Savings Accounts (HSAs) with high-deductible health insurance plans would also be tax-free. Low-wage employees who don’t file tax returns can have the credit refunded against their payroll taxes, so the bill would help those who need it most afford healthcare. Currently, only medical expenses that reach over 7.5% of an individual’s income can be deducted.
2. Dr. Paul’s Coercion Is Not Health Care Act of 2009 would forbid the government from enacting a health insurance mandate. There has been some speculation as to the legality of such a mandate. Congressional Democrats, along with the Obama administration, believe that it has to be part of healthcare reform legislation. Their view is that universal coverage must include the young and healthy in order for the insurance pool to afford covering those with pre-existing conditions. This interference in the free market is anathema to Paul. Incidentally, if there is no public option, such a mandate might not be necessary.
3. Finally, his Freedom From Unnecessary Litigation Act of 2009 would save money through indirect tort reform. This act would establish so-called “negative outcomes insurance”, which would pay off if a patient’s medical treatment goes wrong; it would also offer a tax credit to make the purchase more affordable. The goal is to decrease some of the unnecessary (and costly) testing done in order to avoid malpractice liability, as well as lessen the need for hospitals and physicians to carry billions of dollars in insurance.

As Paul is himself a doctor, his views on the healthcare industry are worth listening to. His opinions tend to be shortchanged in the House because he doesn’t walk in lockstep with either party’s platform, giving his bills little chance of passing.  However, many Americans–who fear socialized medicine, yet acknowledge that we need more affordable health insurance as soon as possible–could find something to applaud in his plans.

Behavioral psychology could be used to encourage young individuals to sign up for the health insurance plan of their choice. An article in the Washington Post describes the challenges of mandating people to buy health insurance. In order for healthcare reform to succeed, those Americans who can afford it must buy insurance. This is especially true of the younger demographic, since young adults are generally more healthy as a group. Including them in a larger pool of health insurance buyers should lead to lower costs per person. However, it is very hard to get a notoriously present-focused group to think about the future–and the possibility that they might need to use health insurance sooner than they expected. Health insurance for students is available, but many don’t take advantage of it; and what about those who aren’t attending college?

In the long run, paying insurance premiums for years when you’re well will probably end up being worth it when you get sick. But rational economic self-interest tends to take a backseat to social norms and the amount of effort required to do something. Experts speculate that minor inconveniences prevent people from taking part in government programs. By streamlining the application and insurance process through default enrollment programs that use a person’s tax payments to automatically pay for premiums (similar to corporate 401(k) plans that make you opt out as opposed to opting in), as well as a heavy publicity effort and community support, the federal government can make sure that more young adults buy health insurance. Studies have shown that if you want to encourage people to take a particular action, you need to make it as simple and effortless as possible.

Penalties for not buying insurance are imperative. They make the mandate more effective, while attempting to ensure that the federal government isn’t stuck covering subsidies for only the oldest, unhealthiest individuals. Unfortunately, the penalties in the most recent Senate proposal; max out at a $750 fine, and wouldn’t reach even that level until 2017. Some people may decide to pay the fines instead of paying for individual health insurance, since a fee that small isn’t discouraging enough. Getting young adults to buy a health insurance plan now is very important.

Three years ago, Massachusetts was one of the first states to dip a toe into healthcare reform. It was actually a Republican governor, Mitt Romney, who signed the bill into law. The Massachusetts health insurance mandate requires everyone in the state has to be insured, similar to several proposals in Congress. While the government offers subsidies to those who are ineligible for existing state programs but still unable to afford individual health insurance, people who are able to buy insurance but choose not to will be penalized. The Obama administration shares Massachusetts’ stated goal of expanding health coverage to as many people as possible, but has paid surprisingly little public attention to their results.

How has their experiment worked? In terms of insuring more Americans, the state has seen success. The Washington Post reports that while 85% of the nation’s residents have health insurance, 97% of Mass. residents are insured. However, costs have continued to increase and some services (such as dental and hospice care for legal immigrants) have been cut. Supporters of a nationwide public option point to Massachusetts as an example of why it’s necessary: the state government-run insurance programs (such as Commonwealth Care) spend less than similar programs nationally, but for-profit insurers are set to increase their premiums by 10% next year.

Others, such as Romney, believe that the state’s success in getting nearly all of its residents insured without a public option proves that it’s unneeded in any health care reform. Coordinated care, which reimburses physicians based on the outcomes of their patients as opposed to how many procedures they perform, is what he suggests to control costs. Unlike the current health insurance system, coordinated care would discourage doctors from performing needless tests, while encouraging care that prevents future conditions that are more expensive to treat.

(Image: Norman B. Leventhal Map Center at the BPL under CC 2.0)