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.

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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  • camsaure

    Not to forget some of those whom have free healthcare going to emergency rooms for very minor problems in order that they don’t have to wait in waiting rooms. Why should they do otherwise? Someone else (taxpayers) is paying for it.

    • http://sayanythingblog.com Rob

      Buy they wouldn’t have to do that if health care were more affordable.

      • The Fighitng Czech

        These people know that free is cheaper then affordable. They have no interest in these kind of ideal. I personally applaud these Doctors.
        I know why the politicians are always pushing Health insurance, instead of affordable health care, But really, the more we could eliminate insurance claims on anything but the catastrophic needs. Everyone would would win, (except for the Politicians , and the insurance companies, that is)

      • banjo kid

        remove hospitals from the stock market and the costs will go down .Back in the day hospitals were funded by rich people and small donors alike . `the buildings them selves were dedicated to this one or that one because they donated the money to build it , it was a community endeavor . Shortly after they were on the stock market the prices went up

  • Guest

    This was more or less the same idea of the New Yorker Article “The Cost Conundrum,” which Rob objected as liberal propaganda. So by extension… SAY ANYTHING BLOG IS LIBERAL PROPAGANDA!!!

  • yy4u2

    Looks like insurance companies need to unionize so politicians will be more apt to help them from losing their jobs.

    • banjo kid

      I think hospitals are unionized already , getting them off wall street would solve a lot of problems. I could be wrong but most all public employees are union so I figure hospitals are also .

      • yy4u2

        I said that in jest. Pols are “so concerned” with keeping jobs while Obama and wrecking crew keep knocking them down and blaming conservatives…especially if the company/employees were unionized.

  • banjo kid

    Most item’s that are free or reduced cost become very expensive over time. My father was a union man and he said back in the early sixties that the health insurance will cause prices to climb higher as people find they can get free care . The unions missed the boat by allowing the insurance to become a free benefit, if the people have skin in the game they tend not to over use it. kid with a bump on the head or a bloody nose becomes a 500 dollar visit to the ER. The hospitals when they went on the block at wall street they began to please stock holders so the cost went through the roof. I can remember when hospitals were non profit , it did not mean every one worked for free but they did not have a thousand people with their hands out .

  • ‘Tom Crawford

    Blue Shield of California seeks rate hikes up to 20%

    http://www.latimes.com/business/la-fi-blue-shield-rates-20121213,0,6546740.story

  • Richqqq

    When Obamacare makes most doctor services rationed, concierge care will become very popular.

  • judy morris
  • LastBestHope

    “The Patient Protection and Affordable Care Act, which Obama signed into law
    more than 2 1/2 years ago, is expected to extend health coverage to more than 30
    million uninsured Americans. Those who enroll in Obamacare starting in October
    would be covered by insurance from Jan. 1, 2014.

    About half of those newly insured individuals would purchase private coverage
    from online exchanges at federally subsidized rates. Ultimately, the number of
    people finding coverage through exchanges is expected to reach 26 million,
    according to the nonpartisan Congressional Budget Office.

    (Note: As of 12.13.12, only 15 states have agreed to join the Feds in setting up “exchanges”. This makes the Feds responsible for all costs associated with implementing ObamaCare. Federal coercion of the states to force their particpation was part of the original legislation… but was struck down by the SCOTUS in their July 2012 ruling.)

    The remainder would be covered by expanding the Medicaid program for the poor
    to cover all adults earning up to 133 percent of the federal poverty level, or
    about $15,000 for individuals and $30,600 for a family of four.”

    Can anyone explain how this massive new entitlement program, to be run by the ever efficent federal government, saves US money now?, in 5 years? in 10 years? Ever? And remember rmy tax paying friends, this mess is in addition to, not in lieu of, Medicare and Medicaid.

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