Never Too Much of a Bad Thing

by admin on 06/19/2011 1:29 PM

As costs have grown more and more over time, the legislative answer from both Republicans and Democrats has typically been to attempt ‘reform’ to these programs and insurance offerings. Each decade has seen attempts at reform which have generally added to the programs’ complexities and become fodder for lobbying. Certain treatments became mandated as part of insurance coverages, others excluded and costs continued to escalate.

Enter the Affordable Care Act. The debate over ‘Obamacare’ was an obvious political football, however very few democrats or republicans actually argued over the government’s role in healthcare or in the coverage guidance it mandates through federally regulated insurance plans.

In fact, Republican Representative and Vice Presidential Nominee Paul Ryan stated “we will restore the $716 billion raided from Medicare to pay for Obamacare”. Obama and likeminded democrats defended this move as a way to shift cost from one government program to another, in effect moving money from one ‘pocket to another’.

In the end, neither side’s points address the actual reason for exponential cost increases or the diminishing role of physician-patient relationship in medicine. The third party ‘buffer’, whether government agency or insurance company, creates inefficiencies and incentives for increasing costs and decreasing quality of care.

The Answer? Boob Jobs

There is a model functioning today in medicine with consumer and doctors dealing directly with one another and prices being determined in a market.

Cash-pay medicine is everywhere. Botox®? You pay cash. Breast Augmentation? Cash. You go to whichever doctor you think is the best. He has to treat you right otherwise you’ll go to a different doctor. Good plastic surgeons are booked out weeks in advance, new doctors or unsupervised ‘medipass’, they advertise on Groupon.

Friends will say “But what about high-cost procedures? Surely a heart surgery isn’t a breast lift.” This is true. However, surgical procedures that are covered by insurance or Medicare/Medicaid are grossly overpriced as hospitals are forced to cover costs related to regulation (think of all those bookkeepers and Medicare-compliance administrators) as well as the cost of unpaid ER visits, among many other things. Cash-paid treatments tend to be much more price-elastic as competition forces prices down and increasing market entrants offer the same services for lower prices.

In addition, financing options are usually available for elective medical treatments, which is not possible with Medicare/Medicaid treatments due to regulation and a lack of demand as no one in their right mind would finance a treatment that they can get “for free” from Medicare.

Cash-pay medicine is something consumers want and something doctors want too. Patients hate their HMOs, as the service stinks. It’s the medical equivalent of the DMV, and rightfully so. What does an HMO, with its government-sanctioned monopoly, have to be ‘nice’ or provide good service?

Markets that serve their customers well grow over time. For example, “lifestyle medicine” is growing a projected 15% annually. Physicians are flooding into this market as ‘managed care’ (the term given to insurance/government managed healthcare) continues to squeeze doctors for longer and longer hours with less and less compensation. A report by George Washington University recently looked at over 9,000 recently graduated doctors, and fewer than 25% chose to become a primary care physician. Doctors are voting with their careers, turning away from the managed care world and seeking out specialties where they can directly interact with patients with less overhead and higher margins.

With all this growth in direct, cash-pay medicine and high demand from doctors to go into fields of medicine without the headaches and overhead of insurance and government control, what can this mean for the rest of medicine, what can we learn?

Back to the Future

There’s a place for government and insurance in healthcare, but it should not be in the middle of the patient and their doctor. The possibility of fraud, overutilization, skewed incentives, career dissatisfaction for doctors and lack of medical innovation makes state-of-the-art, quality care impossible. While it’s too early to see what will come of Obamacare, it’s very likely to do little to stem the tide of cost and poor patient care. Like its many well-intended predecessors both democrat and republican, it’s unlikely to improve the situation much.

Only a system that incentives doctors to treat patients’ right and charge reasonable prices will be sustainable.

In some parts of the country doctors are now practicing “concierge medicine”. You feel that scratchy throat? You pick up the phone and call your doctor. Within an hour or two they show up knocking on your door. They treat you in your own home. Heck, they even give out their cell phone number in case of emergencies. They don’t take insurance, not PPO or HMO nor Medicare, but they do take cash or credit. They even bring their little black bag with them.

Someday soon it may no longer be called “concierge medicine”, it may just be called “medicine”.

To be concluded in Oct 2014 HPUSA
Read the entire article . . .

Feedback . . .
Subscribe MedicalTuesday . . .
Subscribe HealthPlanUSA . . .

Government is not the solution to our problems, government is the problem.

– Ronald Reagan

Leave a Reply

Your email address will not be published. Required fields are marked *