Tuesday, July 30, 2013

"Cash-Only" Medical Practices Highlight the Virtues of Free Market

CNN Money's Cash-Only Doctors Abandon Insurance System, which I was alerted to via FIRM, opens with:

Fed up with declining payments and rising red tape, a small but growing number of doctors is opting out of the insurance system completely. They're expecting patients to pony up with cash.

These doctors are also fed up with the loss of control of their practice, having to act against their own judgement to conform to insurance guidelines. Cash-only surgeon Kevin Peterson stopped taking insurance in 2005 because "'The insurance industry took over my practice,' he said. 'They were telling me what procedures I could do, who I could treat -- I basically became their employee.'"

Steve Hargreaves, the article's author, focuses on a doctors practice named AtlasMD. By cutting out the middle man, AtlasMD was able to negotiate much lower prices for medical services:

By cutting out the middleman, [Dr. Doug] Nunamaker said he can get a cholesterol test done for $3, versus the $90 the lab company he works with once billed to insurance carriers. An MRI can be had for $400, compared to a typical billed rate of $2,000 or more.

Likewise, Peterson is able to offer hernia surgeries, including anesthesiologist and the operating room, for 67% off standard rates. 

Most of AtlasMD's customers carry high-deductible, catastrophic health insurance to cover major illnesses.

The percentage of doctors who opt out of the traditional insurance system is small but growing, having risen from 4% to 6% just from 2012 to 2013, according to surveys cited by Hargreaves.

This trend irks the egalitarians. Notes Hargreaves:

Kathleen Stoll, director of health policy at the consumer advocacy group Families U.S.A., fears that doctors who switch to a cash-only model will drive away the patients who can't afford a monthly membership fee or thousands of dollars for an operation." They cherry-pick among their patient population to serve only the wealthier ones," Stoll said. "It certainly creates a barrier to care." She's also concerned that the limited scope of the discounts these doctors negotiate for services outside their purview may not cut it if a patient comes down with a really serious illness.

This type of thinking is what led to the problems that these doctors seek to escape from. Stoll drops the context; the massively politically corrupted healthcare payment system that has evolved in America. The current insurance system drives a wedge between the consumer and the payer, for the altruistic purpose of redistributing wealth to pay for the healthcare of some at the expense of others. All of the problems of American healthcare stem from the altruist premise that everyone has a "right" to healthcare.

Stoll worries about "the limited scope of the discounts these doctors negotiate for services outside their purview." But if all people were personally responsible for their healthcare expenses, and all medical providers dealt with their patients on that basis, all medical products and services, including insurance, would be subject to negotiation--i.e., price competition. One cannot cherry-pick the very limited current cash-only market and conclude that that is what a fully free market would look like. AtlasMD hints at laissez-faire. It is not laissez-faire.

I left the following comment:

"They cherry-pick among their patient population to serve only the wealthier ones," Stoll said. "It certainly creates a barrier to care." 

Only the wealthy? Americans now spend over $3 trillion, or 20% of GDP, on healthcare--almost $10,000 for every man, woman, and child. Almost 90% of that money is spent by government programs or government-controlled "private" insurance (via the government-instigated third-party-payer system). Where does that money come from? All of us. The "barrier to care" is government interference, which drives up the cost of healthcare.

If we had a free market in healthcare, all of that money would be left in the hands of the people who earned it, to spend as they judge best--including on a directly-owned health insurance policy that fits his needs. Quality, affordable healthcare would be within reach of almost everyone (with ample private charity or family help an option for the few who couldn't afford it).

The current system is grounded in the morality of egalitarian altruism, which holds that no one can have anything unless all people can have it. The only way that doctrine can be made a reality is to chain everyone to state control. This is how we got to the point that doctors are looking for an escape from the chains. We must recognize that every individual has a moral right to pursue his own healthcare with his own money, and every doctor has the right to practice medicine as he judges best, and both have the right to trade voluntarily with each other  to mutual advantage. A free market, not the ObamaCare path to totalitarian socialized medicine, is the only practical and moral alternative to the status quo.

Kudos to these doctors for pointing the way toward the solution.

If the opt-out trend continues to grow, it will clash with the statists' drive for increasing government control of medicine. What will happen next year, when the ObamaCare insurance mandate kicks in. What will happen when growing numbers of insured people can't find doctors who will accept insurance? Will the government mandate doctors to take a certain percentage of insured patients as a condition of licensure? Will the government ban the cash-only practice outright? Sooner or later, an advancing dictatorship will have to face a choice; either relinquish its drive fir power, and begin to roll it back, or do whatever it takes to protect that power. Any guess as to which way the statists will go?

Related Reading:

American Healthcare's Great and Powerful Oz

Giving Sebelius a Small Piece of my Mind

Moral Health Care vs. "Universal Health Care"

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