The transition of the new presidential administration has been a whirlwind, knocking people off their feet and leaving them breathless. One issue that hangs in the balance is the fate of the Affordable Care Act. Republican dominance in Washington makes the repeal of the health care plan likely. It will have an impact on a vast number of Americans, many of whom are rightfully concerned about the future of their health care.
Those of a more libertarian bent, though, are gleefully anticipating the possibilities of a more-free market system of health and medical care. You probably think we already have something like that, and that’s why health care is so expensive, right? Wrong. There are a lot of reasons for the high price of a doctor’s visit, but none of them has anything to do with a free market.
The common nightmare vision of free market medicine, it seems, is of fiendishly evil capitalist dogs taking advantage of poor, ignorant people desperate for medical care. On the contrary, the beauty of capitalism is that transactions are voluntary. You can fire your doctor if you don’t like the way he talks down to you and pats you on the head. You know that, right? Oh, wait, you can’t? Because there’s not another doctor on your plan? Okay, yeah, see, that’s not the free market thing. Let’s try something different.
Senator Rand Paul introduced a replacement plan on Jan. 25 that included some intriguing market innovations. One of those included extending the insurance related employer tax deduction to individuals, a blessing to the self-employed and small business owners.
The ACA set a high floor for coverage, requiring all plans to offer a wide range of expensive benefits. That may be replaced with a more a la carte insurance concept, allowing consumers to choose the plans that work for their needs. That could include the choice to go without insurance, or to opt instead for an inexpensive catastrophic coverage policy. In addition, the replacement plan would include the ability to buy insurance across state lines, increasing competition and driving prices down. Remember, competition is your friend!
Senator Paul’s plan would expand Health Savings Accounts, allowing larger tax-free contributions, as well as removing other limitations. HSAs could also be used to for more health expenses, including insurance premiums. That would also increase the portability of insurance, since it wouldn’t be tied to your job.
Senator Paul’s bill includes an amendment that would allow individuals to pool together to buy insurance, reducing the cost of all in the pool. This can include churches, civic groups, or groups formed specifically for this purpose. A similar provision is offered for the benefit of small businesses.
Much of the cost of medical services is related to the amount of regulation, bureaucracy and paperwork required, much of which only ultimately serves to enrich the already rich.
After his own hospital experience, Reason writer John Stossel pointed out, “… hospitals are largely socialist bureaucracies. Instead of answering to consumers, which forces businesses to be nimble, hospitals report to government, lawyers and insurance companies.” Later, he summed it up, “When the customer doesn’t pay, customer service rarely matters.”
Some recent trends – high deductible insurance plans and Health Savings Accounts – have patient-consumers asking important questions: Do I really need that test? How much will it cost? Are there alternatives? It’s also possible to see in areas such as Lasik surgery and plastic surgery. Since patients usually pay for these services, the pricing is transparent and the customer service and quality of care tend to be on point.
Operations like the Surgery Center of Oklahoma offer a refreshing change to the face of medicine. The Surgery Center is completely physician owned and managed. The pricing is completely transparent – go look it up on the website – and includes surgeon’s, anesthesiologist’s and facility fees, so there are no nasty surprises in the bill. And they can offer deeply discounted services, because the Surgery Center of Oklahoma only takes cash.
When Oklahoma County made the Surgery Center an optional covered benefit on its plan, the county saved more than $200,000 on scheduled surgeries in the first month. The Oklahoma Council of Public Affairs went on to recommend Oklahoma adopt the same reforms statewide, projecting a savings of over $20 million in a year.
For more everyday health care needs, there is direct primary care. Direct Primary Care, DPC, works somewhat like a gym membership: Patients pay a monthly fee to cover all primary care services. This model gives patients more access to doctors and cuts down on the wasteful and costly bureaucratic burden. The Direct Primary Care Coalition estimates that 40 percent of primary care revenue goes to claims processing and insurance company profits. Senator Paul’s proposed changes to HSA rules would allow them to be used for DPC memberships fees.
Direct primary care doctors see fewer patients, and so are able to spend time to get to know them, creating a better doctor-patient relationship, and patients benefit from more preventive and comprehensive care. Patients with chronic health problems such as diabetes certainly benefit from receiving more consistent care.
Qliance, a DPC group based in Seattle, provides care for over 25,000 patients. With Qliance patients needing fewer ER visits, fewer specialist visits and fewer surgeries than those with more traditional insurance, as well as each patient saving almost $1000 per year, look for those numbers to keep growing.
The future of health care ultimately could look pretty bright, even without the Affordable Care Act. One of the greatest benefits of the free market is that there will always be a vast and varied garden from which to choose, a place where you can find something for everyone. The market itself is a laboratory of innovation, where new ideas and technologies rise and fall in response to you, the consumer.
