Wednesday, February 5, 2020

Free Market Health Care

There exists a Free Market Medical Association


Some quotes from the website:
.... innovation in healthcare can only happen when a buyer and a seller are able to business transparently and fairly.
The free market movement in healthcare is gaining steam. ...
Matching a willing buyer with a willing seller of valuable healthcare services is the goal of everyone involved in this movement. We help identify patients willing to pay cash, doctors willing to list their prices, businesses attempting to provide affordable quality insurance, and providers/services/and patient advocates that are helping make everything work.
The Free Market works when there is freedom of choice:
Willing buyer
Willing seller
Market clearing price
The association seems to be mostly a marketing platform plus a bit of information and advocacy.

In the words of the inimitable Ron Swanson of Parks and Recreation,
“Whatever happened to “Hey, I have some apples, would you like to buy them?” “Yes, thank you!” That’s as complicated as it should be to open a business in this country.”
I feel like a SETI researcher who finally hears an episode of Gilligan's Island beaming down from Alpha Centauri. I thought I was alone (except Mike Cannon at Cato, John Goodman of the Goodman institute and a few other assorted oddballs like myself -- oh, and the ghost of Milton Friedman of course) to think that a basically free market, including the guaranteed renewable and transferable insurance that a free market would provide, is a practical goal for US health care. Even normally sensible free market economists usually say silly things like "well, the free market is fine for everything else but health is too important to be left to the free market."

There is hope. Common sense people are starting to see the common sense that health care and health insurance need not be the same thing, and that the same cash market by which we pay contractors, tax preparers, lawyers, architects, financial managers, car repairers, plastic surgeons, vets, and other providers of complex services can lie at the basis of health care.  

7 comments:

  1. Your "discovery" of this service is late to the party. It's been evolving for years but few people inside or outside of the system are aware.As usual you're way behind the curve. There are organizations such as AAPS (Association of American Physicians and Surgeons) and D4PC (Docs for Patient Care) that have been advocating this for years, as well as internet enterprises that try to aggregate lists of doctors who treat for cash.

    In 2013 I started a cash pay program and have mentioned it on this blog several times. The demand for this service has gradually grown as health insurance coverage has dwindled. I can perform your procedure in my office for about 1/3 of the cost of a hospital outpatient department. 2020 has seen a significant increase in demand for this service.

    I've been listening to you bitch about this for years but as far as I can tell you sit in your ivory tower and never engage the people on the front lines. Why don't you talk to people like Ori Hampel, Hal Scherz or Lee Gross of D4PC? Why not contact AAPS? IMHO AAPS is a bit on the libertarian lunatic fringe but they still have valid points and a willingness to take on David vs Goliath legal cases and win.

    There are online services that compare local pharmacy prices and offer significant discount with their coupons (e.g. goodrx.com). While your insurance company might have negotiated a price of an MRI for $1100 (too bad if you have a $5,000 deductible) I can steer you to a cash price of as little as $225.

    So there is a growing underground movement toward competitive pricing but as usual the talking heads who are not involved in the real decision-making at the margin are clueless. The worst is probably John Goodman, who refused to believe in insurance contract gag clauses until I sent him a copy of one of my contracts.

    I publish my cash prices on the internet. To calculate any of my cash fees just look up the 2013 Medicare rate and add 5%. Yes, I haven't changed my cash price since 2013.

    I charge $214 for an initial evaluation, $224 for a lumbar epidural steroid injection, and $36 for optional IV sedation. A few blocks down the street Houston Physician's Hospital advertises a price of $1100 for similar services. The ever-popular media darling of price transparency, The Surgery Center of Oklahoma, advertises $700.

    Health care economics is far more complicated than you know. There are wheels within wheels within wheels.

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    1. Hi Dr. Gorback,

      I am curious: would you feel you would have an incentive to bill for more if the government subsidized the cost through insurance? I had a Doctor client once who was an anesthesiologist by training, ran a pain clinic: and while he wrestled with insurance reimbursement rates, somehow he was able to negotiate getting higher reimbursement rates than through cash prices, even though he did offer cash pricing for people without insurance. He really tried to be compassionate, but he also ran a business at the end of the day.

      I think part of the problem is how much disposable income people have at the end of the day to afford procedures like this out of pocket. When I was with Kaiser, if I needed an MRI? 20 bucks. Yearly insurance costs with drugs and doctor visits? About $6K a year including deductibles and premiums. There's also the issue, as you mention - it is complicated, partly because people tend to only look at their own Marginal Personal Cost versus the entire Marginal Social Cost (MSC). And, why should they look or care about MSC?

      Curious on your thoughts on pricing. How many use credit cards or finance in other creative ways?

      I enjoyed reading your perspective on the matter. Good stuff.

      Best,
      M

      Delete
    2. Dr. Gorback, why the aggressive tone against an ally like John? He writes this blog as a public service, and he covers topics like healthcare with greater integrity and clarity than almost anyone else out there, despite it not being his professional beat.

      Insight like yours is why I read the comments section, and it sounds like John could learn some things on the subject from you too, though that's probably less likely if your comments come packaged with personal attacks.

      As a cash-payer for medical services myself, I'm hungry to find more resources like the ones you mentioned. I hope you'll keep commenting on this blog and adding useful information, as the comments are a big part of what makes blogs like this special!

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  2. If you go to wolfstreet.com and search for my name you'll find several pieces I've written about healthcare pricing.

    In general health care is getting less affordable. As Dr Cochrane points out there's a difference between insurance and care. I could insure everyone in the country by charging $1/yr with a $1 million deductible but care would be hard to get.

    Some facilities offer payment plans. I used to do that but guess who gets paid last when the bills come in?

    Some people are in such sorry shape I treat them for free. I'm able to do that because at 66 I have enough to retire. If I were 35 with kids at home I couldn't do that. Also a lot of well-off docs are just greedy and "free" is a four letter word.

    At Xmas we usually have a debt jubilee where we identify patients with huge balances and no hope of ever paying them off, so we just zero out the balance.

    There is a company that helps finance health care. The name escapes me at the moment and we ran out of brochures.

    I really don't see how we will ever be able to have transparent pricing because you would have to disclose prices for every procedure. Even if the doctor doesn't the hospital, Laboratory, Radiology service, emergency room, Pharmacy, etc would also have to have transparent pricing.

    To make matters even worse if we are planning on a procedure that costs $10,000 and you have a $5,000 deductible your out-of-pocket is going to be individually tailored based on how much of the deductible you've already used up.

    There are several large barriers to price discovery. One of the worst offenders is the federal government which fixes Medicare rates. There is no negotiating. If I have a 4 month waiting list I can't charge any more than the guy who can barely keep the lights on in his office.

    Insurance companies have huge patient populations under their control and When you are offered a contract as far as they're concerned you can take it or leave it.

    I don't know about other markets, but in my local market south of Houston one hospital system has terminated its contract with UnitedHealthcare because they could not agree on pricing and a separate system is fighting with Cigna over the same issues. These two Hospital systems have a huge footprint all over the Houston metropolitan area. If they can't negotiate decent prices, then there's no way that a solo practitioner like myself ever could.

    Did you know that when they formulated the legislation for Medicare Part D, which is drug coverage, they inserted language forbidding Medicare from negotiating drug prices? So the largest third-party payer in the country can't negotiate drug prices.

    This is all just the tip of the iceberg. If you're not living and working in the system, you really don't see all of the difficulties that we face reforming the system.

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    Replies
    1. Thanks for all your comments, Dr Gorback, you are a breath of fresh air in the debate.

      The ridiculous penalties that can be imposed on doctors if they forgive deductibles is one place to start reform!

      Delete
  3. Two comments, both personal. In April of 2019, I had a total hip replacement. Procedure is state of the art, home the same day and walking up stairs. The bill to the insurance company was $47,500. They settled at $24,000. I asked the surgeon what he would charge if I were self-insured or uninsured. He said between $5000 and $10,000 given the various prices of the implant. He would also work out a payment plan. In our small North Georgia town, there are no less than 15 veterinary clinics within a ten mile radius. They take little or no insurance. Prices for services are posted and many offer a discount to military veterans. It seems a 48 billion dollar industry has figured this out. A possible model for human health care?

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  4. A hip replacement and going home the same day? Impressive! But my point is this: there is a long, long list of procedures for which the hospital time has been drastically reduced. The money we spend on hospitals should be drastically reduced.

    And yet we spend more than ever. The hospital that used to get $1000 a day for 10 days now bills $20,000 for one day of intensive care! This is an economic miracle of sorts, but a malignant one.

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Thanks to a few abusers I am now moderating comments. I welcome thoughtful disagreement. I will block comments with insulting or abusive language. I'm also blocking totally inane comments. Try to make some sense. I am much more likely to allow critical comments if you have the honesty and courage to use your real name.