The Affordable Care Act was supposed to prevent this, but it cannot. Rather than reform health care, the law merely expanded health insurance, a costly system that leaves patients behind and is largely responsible for spiraling costs.
What Geometry Can Teach Us
Insurance Plan Reimbursement Patient--Provider Payments
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Think back to your eighth-grade geometry class. You probably learned that the shortest path between two points is a straight line. You can apply this same logic to spending, where the cheapest option involves only two parties. In health care, the two parties that matter are you and your health care provider (your doctor, the pharmacy, etc.). You spend the least money when you pay them directly. onsider how health insurance works. Your money exchanges hands multiple times before it reaches the provider. It first goes to a third party (either the insurance company or the government, such as in Medicare and Medicaid). From there, those entities negotiate compensation schedules with providers and facilities. Both of these steps add bureaucratic and administrative costs to health care’s price tag. And although insurers attempt to lock in reasonable prices on your behalf, they often come up short.Why? Because they’re not spending their money: They’re spending yours. They thus have less of a financial incentive to get the best deal. Businesses and bureaucrats are no different from you and me; if you give them someone else’s money, they’re more likely to spend it foolishly.
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Now consider how health insurance works. Your money exchanges hands multiple times before it reaches the provider. It first goes to a third party (either the insurance company or the government, such as in Medicare and Medicaid). From there, those entities negotiate compensation schedules with providers and facilities. Both of these steps add bureaucratic and administrative costs to health care’s price tag. And although insurers attempt to lock in reasonable prices on your behalf, they often come up short.
Why? Because they’re not spending their money: They’re spending yours. They thus have less of a financial incentive to get the best deal. Businesses and bureaucrats are no different from you and me; if you give them someone else’s money, they’re more likely to spend it foolishly.
The same problem affects you once you have health insurance. After you pay your premiums, insurance gives you the illusion that you’re spending someone else’s money. The health insurance trap thus comes full circle, both insurers and consumers make it more expensive.
This raises the question: If not “Obamacare,” what else? Reformers should start by giving consumers the freedom to make their own health care choices. We need to return health insurance to the role of taking care of unpredictable, catastrophic health care expenses, and leave the great majority of everyday health care decisions in the hands of consumers.
We know this works. In the fields of cosmetic surgery, lasik eye surgery , alternative medicine, and dentistry, the absence, or minimal presence, of government regulation or health insurance has driven prices down, and quality and service up. This has occured due to these procedures being elective, and requirement for out of pocket payment by the patient.
Doctors can also refuse to take health insurance. More doctors and hospitals are choosing this path. One of my patients did this and saved $17,000 on a single procedure.
Lawmakers should encourage this kind of patient-focused innovation. Instead, they gave us “Obamacare,” which wraps health care in red tape and forces everyone to purchase health insurance. Real reform shouldn’t leave us with a higher bill.
Dr. Jeffrey Singer practices general surgery in Phoenix and is an adjunct scholar at the Cato Institute.
