The Problem With Health Care Costs May Be Insurance

health-insurance

Bloomberg has an interesting article about concierge medical service, which are basically doctors who work strictly for cash. It’s become an important source for care for people without health insurance, and it proves that health insurance may be the problem with health care costs.

Or, at least, the way we’re doing health insurance, which really isn’t insurance at all (more on that later).

An anxious woman in her mid-40s showed up last winter at Atlas MD, a family doctor’s office in Wichita. She had lost her job as a restaurant cook, and along with it her health insurance and her home. She needed to see a doctor.

Atlas MD isn’t a free clinic. It’s a concierge medical practice, which means you can’t get an appointment unless you pay cash. Atlas MD’s two physicians, Josh Umbehr and Doug Nunamaker, don’t accept insurance. Instead, they charge most of their adult patients $50 a month for unlimited visits. They also offer free EKGs and biopsies and cut-rate prices on prescription drugs. Two-thirds of their patients have insurance but feel the fee is well worth it for personalized service, including house calls, the doctor’s cell-phone number, and quick responses to e-mails and Twitter messages. The rest of Umbehr and Nunamaker’s clientele are uninsured. For those patients, Atlas is the only way of seeing a family doctor regularly. Contrary to those who say concierge doctors like themselves are getting rich by focusing on personalized care at a high price, Nunamaker and Umbehr, who are in their early 30s, contend that they can grow their practice by appealing to a broader clientele.

In this age of $200/month smart phone bills, $50/month for your doctor doesn’t seem at all unreasonable. There are additional costs for procedures and such, but there too we can see that cutting insurance out of the equation and letting care be a transaction strictly between doctors and patients can lower costs dramatically. Last month I posted this video from Reason about a cash-based surgery center in Oklahoma which charges patients a fraction of what traditional hospitals charge.

Conservatives have long argued that the problem with health care costs is a disconnect between consumer and cost. Price signals are an important party of any free market in that they help shape the decisions consumers make. But health insurance, especially health insurance provided by a third party like the government or an employer, obscures those prices signals.

Think of it this way: Those of us who pay the electric bill and heat bills work hard to make sure lights are turned off in empty rooms, and that windows and doors are closed against the heat/cold. We do that because of the price signals we get from our utility bills. Others who aren’t paying the bills – like our children, for instance – are a lot more lax.

In fact, I’d argue that the comprehensive health insurance most Americans enjoy which covers everything from regular doctor visits to major surgeries, is the result of a lack of price signals in the market. Comprehensive insurance coverage isn’t insurance at all. It’s pre-paying for your medical costs to a third party which, of course, inflates the cost so that they can take their slice of the pie.

Auto insurance is real insurance in that auto insurance doesn’t cover routine maintenance. When you get new tires, you pay out of pocket. When you get an oil change, you pay out of pocket. When you run into a tree, that’s when insurance kicks in.

Why shouldn’t health insurance work that way? It would be a lot cheaper to pay out of pocket for regular check-ups, and minor issues, and save insurance for major issues.

That would bring price signals back to the health care market, and lower prices. Sadly, we’re going in the opposite direction. Obamacare mandates that all Americans have comprehensive health insurance, through an employer for most Americans, or they and/or their employer pay a fine. Or, more accurately, a “tax” since that’s the basis the Supreme Court used to uphold the law.

Obamacare will make health care and health insurance more expensive, but free market health care could make it more affordable.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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