More Sick People Board meeting by Ed Newmann
If housing were free, what kind of house would we live in? A mansion? Maybe a cardboard box? If a third party bought our food, even a close neighbor, would we eat well? Despite the obvious flaws in this logic, politicians have been enticing voters with empty promises of “free” healthcare while simultaneously making it both unaffordable and often unavailable.
Despite its market rhetoric, the U.S. healthcare system functions as a de facto command economy, where patients control less than 1 percent of total spending and have minimal influence over the means of production. Hospitals, insurers, and pharmaceutical firms dictate what services are available, how they're priced, and who can access them – often through opaque reimbursement structures and rigid licensing regimes. Regulatory overlays such as CPT and ICD codes, prior authorizations, and utilization reviews act as bureaucratic rationing tools, suppressing clinical autonomy and fragmenting care. RVUs (Relative Value Units) are communist replacements to assign value in the absence of the free market mechanism of matching supply and demand. Patients may pay premiums and co-pays, but they cannot direct resources, nor shape supply. Consumer choice is like casting the dollar vote upon a single party ballot. If you don’t like the healthcare you receive, call your congressman.
Health Maintenance Organizations (HMOs) and Accountable Care Organizations (ACOs) consolidated centralized planning and control by tying reimbursement to population-level metrics and cost containment, not individual patient needs and outcomes. HMOs restrict provider networks and require gatekeeping referrals, limiting patient access in the name of efficiency. HMOs allow financial inducements to align physician behavior to meet institutional profit objectives rather than patient wellbeing. Patients saw through this, establishing a natural disdain for HMOs. To remedy this, the Affordable Care Act (aka Obamacare) changed the paradigm. Rather than forcing patients into HMOs, the legislation, signed into law in 2010, forces doctors into ACOs which are functionally equivalent to HMOs. ACOs make it difficult for patients to switch doctors; ACO’s force the institutional allegiance of physicians contrary to patient need – eliminating the physician-patient relationship. ACOs encourage a sick form of government transparency by making the government's control invisible to the patient. From the physician point of view, they were required to join ACOs in order to be allowed to work at the hospitals. Hospitals, too, were required to form or join ACOs.
“Free” Medicine Is Bankrupting U.S. Citizens
It is natural that Hippocratic medicine, with its emphasis on the health of the individual, is also opposed by the communist view which views the human population like a herd needing to be culled. A few years ago, I diagnosed a woman with a ruptured aortic aneurysm – an almost universally fatal condition correctable with surgery. In the past, this person would be whisked off to lifesaving surgery. However, this woman was not even offered the lifesaving surgery. I later found out that surgeons are now subject to “quality measures” that are linked to reimbursement. They will not be reimbursed if they perform surgery that has a greater than 20 percent mortality. This means that our government is willing to let eight people die who could otherwise be saved to prevent two people from undergoing an unsuccessful procedure. In this case, surgeons is compensated for not saving lives, much like paying farmers not to farm, or pouring milk on the ground.
Historically, when patients were in control of their spending, U.S. healthcare spending was less than 6 percent of GDP. However, the communist policies alleging “equality” in healthcare, have greater than tripled costs to greater than 20 percent of GDP. Governments' share is approximately 50 percent and accounts for 27 percent of federal spending. The policy of “free” medicine is bankrupting America while sending our citizens to the grave.
Cost and Risk, Not Affordability
Affordability has become the political buzzword, void of meaning – what is “affordable” and to whom? Instead, we should be talking about managing health care Cost and Risk – two separate concepts. Government manages cost and risk through rationing and market manipulation with no ability to consider the needs of individuals. Nobody manages cost better than patients themselves. However, there is the possibility that health care costs exceed a patient’s resources – risk. Historically, health insurance spreads risk among policy holders. However, HMOs and ACOs no longer bear risk because they limit their risk by the denial of claims or manipulating the delivery of care to their advantage – dumping the risk back on patients.
Traditionally, deductibles and co-payments served as a partial measure of utility. Today, government manipulation and provider kickbacks are merely a mechanism for artificially increasing the percent that patients pay. Unknown to patients, HMOs often require payments, billing reductions, and payment withholds which raise the bills presented to patients. This is a commonly accepted form of insurance fraud. Providers are not allowed to make clandestine payments to patients to artificially inflate bills to insurance companies. Who’s protecting patients?
HSAs Help Patients Regain Some Control
Health Savings Accounts allow patients to save money to afford higher deductibles in a non-taxable account much like an educational savings account. Patients can theoretically afford higher deductibles policies that lower the cost of premiums.
Consumer direct healthcare plans are employer plans usually linked to health savings accounts so that employees can pay health care costs not covered by health insurance plans. This gives patients some skin in the game and decreases medical utilization. In general, insurance premiums go down as patients pay more of the cost themselves. Deductibles are costs under the control of the patient; premiums are average medical costs born by the insuring institution. As our government pushes for $0 coverage, the patient has no control over the cost of healthcare at all and the cost of healthcare must be limited only by institutional control alone. As deductibles increase, the patient controls more of the cost and risk. The costs under institutional control approach $0. By requiring that a policy's deductible must exceed the policy premium we can place half of the cost and risk under the patient control again and cut premiums much more than the additional out of pocket costs.
Good Intention, Bad Results
Despite these innovations, American healthcare lacks transparency and maintains a draconian regulatory environment which publicly expresses a good intention of limiting the cost of health insurance and making it “affordable.” The bad result is that it limits consumer choice and consolidates power into a socialized medical system. For instance, Minimum Loss Ratios (MLRs) are required under Obamacare were an attempt to limit the “profit” that insurance company could make on a policy by requiring that they must pay out at least 80 or 85 percent of premiums in medical costs or that their profit was limited to what they pay out. This policy did not consider the actuarial cost of these policies nor recognize that bearing risk has a price which may exceed the 15-20 percent the government determines as “profit.” Worse yet, this policy created a perverse incentive to allow healthcare costs to skyrocket, as increasing the medical expenses allows the insurance to increase their contribution margin.
Another example: Stark laws which prevent providers from referring patients to facilities that the provider has a financial interest in are only enforced against doctors and not hospitals. This has given hospitals a perverse incentive to buy out physician practices and employ doctors to refer to their hospital – something with is otherwise impermissible. A uniform regulatory environment is essential to restore a free market in health care and allow patients to flex economic muscle.
Governmental pursuit of “affordability” has made healthcare quite unaffordable. Free healthcare is not free. When patients abrogate all financial responsibility, they become merely a vehicle for the transmission of funds from third party payers to providers who deliver care which can only be said is better than nothing.
Crowd Health to the Rescue
Fortunately, the creativity and innovations the open market place nourishes has resulted in new potentially disruptive model for people to take control of their own healthcare and manage their own risk and costs. Andy Schoonover is the founder and owner of the membership-based medical sharing platform and service Crowd Health. Crowd Health provides members who pay a monthly subscription a dynamic mobile application that allows one to find doctors and services that Crowd Health's team will negotiate a cash price for and then fund those bills through a peer to peer funding platform. Over four years, Crowd Health has saved more than 20,000 members over $50MM with a 99.9-percent funding rate and 6.93 average days to secure said funds. Andy explains that unlike insurance companies, Crowd Health cannot guarantee payment. And to be an insurance company there has to be a transfer of risk, and Crowd Health does not do that either. He explained that while Crowd Health can't guarantee payment for your medical bills, the insurance companies that do guarantee payment still deny approximately 20 percent of claims and the customer has no recourse. Monthly subscriptions range from as low as $60/month to $340/month depending on if you are younger than 55 and if you choose your “commitment level” or the amount of the negotiated cash bill you will contribute to, so you have some skin in the game. And that level is either $500 or $15,000. Andy stated that cash pay prices are significantly less than what the big carriers are being charged and that their members are paying approximately 30-50 percent of what customers pay the major carriers and receive the same service. Crowd Health maintains a database available to members of more than 28,000 data points for cash pay prices for medical services, and adds about 2,000 data points per month. Andy predicts that within five years, all the best doctors will eventually not take health insurance and will only accept cash. (Learn more at JoinCrowdHealth.com)
Clearly, we can no longer afford “affordable” healthcare, where patients merely delegate their most intimate health decisions to political whim.
Dr. David Hartsuch is an Emergency Medicine physician with more than 20 years of practice. He can be reached for comment at (563) 508-9266.
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