By Aaron Monson
Inevitably this time of year, many are taken up with thoughts about healthcare. Open enrollment, when the news of health insurance rate hikes hits the fan, is a time when all must wonder how long can this go on before only the wealthy can afford healthcare?
This seemingly difficult issue demands that we look outside the box for solutions, a new perspective in which to frame the problem. With that in mind, we pose the question, is health INSURANCE the same thing as healthCARE? Our well-meaning politicians would have us believe that they are the same. If health insurance and healthcare are in fact the same thing, then one could argue that things are better if viewed solely on the basis of how many people are now “covered” by some form of insurance.
But saying so doesn’t make it so. Good care is still available, but the promise of receiving it because you have insurance coverage is increasingly becoming less of a sure thing. For most Americans, the passage of the Affordable Care Act (ACA) has led to higher premiums, higher deductibles, fewer items covered, shrinking networks, etc. Not to mention greater challenges to care providers to render the care itself, in the form of tighter requirements to participate with the insurers. We have more health insurance, but not more healthcare — let alone better or more “affordable” healthcare.
The value proposition of insurance is that unexpected and large expenses will be covered in the event of an unforeseen or catastrophic event. We accept this for other aspects of our existence, such as in the case of car insurance, homeowners and life insurance. We are happy to pay a relatively small amount for someone else to bear the risk for us. The insurance companies profit from it and most of us do not mind that fact.
But does it make sense where basic and general healthcare is concerned? Health insurance companies also exist to make a profit, and paying for the care of their members reduces that profit. Simply put, the economic incentives of the health insurance companies do not align with the priorities of the doctors and their patients.
As it now stands, insurance company involvement in the care transaction goes way beyond the coverage of unforeseen or catastrophic events. Adding insurance into the basic healthcare picture not only complicates the process, but it increases costs in the form of overhead brought to the transaction — and, of course, the insurance company profit margin. When viewed through this lens, it makes little sense to put this third party between the two participants (doctor and patient) to a care transaction that is NOT unforeseen or catastrophic.
With the proliferation of higher-deductible health plans, health insurance is becoming useful only in catastrophic situations anyway. Ironically, it is, by default, returning to where it should have stayed to begin with. So why not embrace this fact and remove health insurance altogether from basic, routine healthcare? Let the two participants (doctor and patient) in a simple care transaction determine what is fair market value, trade money for services directly between each other, and let the free market settle the issue without government-forced insurance?
There is a growing voice for this concept, something called direct primary care (DPC). While insurance still makes sense in catastrophic and unforeseen circumstances, basic primary care can easily leave it out. A car insurance plan doesn’t cover wiper blades, oil changes, or flat tires — those things are covered directly by the car’s owner, not an insurance company. Primary care is like that, mostly routine and predictable — and as such could easily be covered directly by the consumer.
Returning basic primary care to a direct transaction (without health insurance in the middle) realigns the two parties’ (doctor and patient) motivations, without the interference of a third party (insurance) with differing motivations. In the end, the care transaction is not only more cost-effective, but it is better for BOTH parties.
Consider also that under the present system, doctors only get paid when their patients are in the doctor’s office receiving care. This negatively aligned incentive means that the doctor gets paid only when you are sick. Sick people are good for a doctor’s business. Well people are not good for business. Unfortunately, a narrow, bureaucratic view of this issue has added to the problem.
Washington bureaucrats have issued edict after edict requiring healthcare providers to participate in increasingly onerous reporting and compliance burdens that are supposed to make healthcare better.
Government created “value-based” healthcare programs, largely enforced through a care provider’s participation in government insurance programs, are supposed to fix the issue. While the idea that “anything that can be measured can be improved” is sound in many industries, it doesn’t work well in healthcare.
The reasons are easy to understand when reduced to the basic components in a care transaction. In simple economic terms, the care transaction is an exchange of money for a doctor’s time, focus and expertise. Any requirement imposed on a doctor that takes away time and focus from the patient, means the patient is getting less care in the long run. The road to healthcare hell is indeed paved with the many good intentions of the multiple bureaucrats, government officials and insurance companies that wish to enforce their ideas of “value” on the care transaction. These good intentions are so costly and time-consuming that they hurt, rather than help, the consumers they pretend to help.
So how can doctors be incentivized to keep their patients healthy, rather than practicing reactionary care and profiting when they are sick — without government involvement? Forcing compliance with a third party’s ideas about value gets in the way of the two-party free-market exchange that should be allowed to happen in healthcare. Fortunately, this is a problem with a solution, one that is already in practice and growing exponentially across the United States.
In the direct primary care model, patients pay a monthly membership to their primary care doctor for any care that might be needed in the future. Doctors are paid whether the patient is sick or not, with the promise to render basic care as needed in exchange for a small monthly fee. Consider the economic realities in this arrangement: If a doctor has already been paid, the incentive is to keep the patient healthy, happy, and willing to continue to pay that monthly amount. In other words, the doctor is incentivized to practice pro-active and better (more valuable) care. Better for the doctor, and better for the patient, with market forces (and not the government) ultimately determining value.
This arrangement is being quietly adopted and promoted by numerous independent Utah physicians. Based on an in-depth review of Internet-only sources as of September, there are 77 healthcare providers in 33 clinic locations across 15 primary care groups in Utah that are either already practicing this way or moving in this direction. Because the field is relatively new, with a still largely undeveloped voice and marketing strategy, many of these entities are barely noticeable, even if you are looking for them.
Freedom-loving, entrepreneurial healthcare providers are not waiting for Washington to decide how to fix healthcare. They are creating their own healthcare landscape, and it is changing primary care as we know it. Consumers, business managers, business owners, HR directors and indeed anyone who might be involved in healthcare in any way would do well to sit up and take notice.
Aaron Monson is the COO for Riverton & Zenith Family Health Centers, a Utah primary care medical group, and manager for Zenith Direct Care, a growing network of direct primary care clinics.