August 19, 2003
By Tiffany Dovey
With prescription drug benefits being debated in Congress, increasing concern in the state legislature over double-digit percentage increases in health care spending and health insurance premiums, and the alarming number of uninsured Americans, one wonders if increasing legislation is really the solution to our health care problems.
Why wait for the government to step in when an affordable solution is already available? Its called SimpleCare (SC).
SC is pay-as-you-go health care. SC physicians charge patients a fair fee for routine health services if patients pay in full at the time of care. Shifting the burden of payment to patients eliminates costs associated with billing, insurance claim forms, coding diagnoses and procedures, referrals, authorizations, etc. Administrative costs are what make health care so expensive, 30-50% more expensive.
Since doctors dont have to spend so much time filling out a million forms, they can spend more time with their patients. Whats more, SC patients get assurance that their doctor works for them. All without Washington.
According to a 2001 cost survey commissioned by the Medical Group Management Association, 5 support staff are needed for every care-giving physician to handle the administrative burdens associated with third-party payers. By eliminating third-party payers, SC physicians are able to reduce their fees for routine health services.
For major medical catastrophes like cancer, SC patients purchase a high deductible health insurance policy. SC is like car maintenance. We insure our cars for major things, not for oil changes. Theres no reason that we shouldnt do the same with health care.
Economist Milton Friedman makes two key observations about high spending on health care: First, the majority of health care payments are made by a third-party. And second, nobody spends someone elses money as sensibly as he spends his own. So, bring down the cost of health care by eliminating third-party payers and empower patients through direct control of their health care dollars.
The RAND health insurance experiment showed that when consumers had to dip into their own pockets to purchase health care, spending decreased by 30% without detectable differences in health status.
Consumer-control of health dollars has already driven down the cost of health services not traditionally covered by health plans. The average cost of laser eye surgery has fallen dramatically from $2,000 to $500/eye.
SC not only lowers costs, but also assists a return to the pre-HMO world of medicine. A time when physicians worked for patients, not third parties.
Gag clauses once banned physicians from telling their patients about medical options that were not covered by their health plans. The Institute for Ethics at the American Medical Association has found that a third of physicians recently surveyed have withheld information from patients about useful medical services not covered by the patients insurance. Those doctors whose salaries were closely tied to controlling costs were more likely to withhold information. Who does your doctor work for?
SC doctors not only work for you, the patient, they also work for you longer.
According to Dr. Cherewatenko, co-founder of SimpleCare and CEO of the American Association of Patients and Providers, doctors spend about 1 minute with patients for every 7 minutes they spend tending to paperwork. SC has reversed this ratio. This was accomplished in part by eliminating a an overly complicated and extremely time consuming coding system used for billing purposes.
So, patients and physicians get more for less. Whats not to like?
Opponents claim that third-party payers, namely insurance companies, provide an additional quality control measure that SC providers are not subject to: physician report cards. A recent study published in the Journal of the American Medical Association debunks this claim. It goes even further to suggest that these cards may encourage doctors to evade penalties by avoiding more complicated cases.
With SC, you dont have to wait for government reforms to make health care more affordable. SC offers a practical solution to overcoming the financial barrier to health care. Patients receive affordable treatment. Physicians get fair compensation. Thats the essence of free-market thinking: both parties benefit from the exchange, as opposed to just the third.
Physicians across the country, eager to focus their attention and expertise on healing the sick, rather than on the ills of bureaucracy, have signed on to SC. Patients are following suit and discovering that health care can be affordable after all, without government intervention.
The Independence Institute
INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.
JON CALDARA is President of the Institute.
TIFFANY DOVEY is an intern at the Independence Institute.
NOTHING WRITTEN here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
PERMISSION TO REPRINT this paper in whole or in part is hereby granted provided full credit is given to the Independence Institute.