Why insurance is the wrong model for health care | DIRECT primary CARE JOURNAL

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1. Dr. Laband correctly lays out the reasoning why Health Plans, masquerading as “insurance”, are inefficient and cause prices to soar. What I would challenge is the notion that, and I quote “If the almighty free-market system could have solved this problem, it would have done so by now.”

   The reality is, we haven’t given the Free market half a chance in health care since advent of HMO’s. Given the way third-party Health Plans work, the Free Market is virtually non-existent in health care today, because there is essentially no consumer pressure on prices. The demand-Price curve is all jacked up; therefore the inflationary spiral we have witnessed in health care for the past 40 years. Dr. Laband is correct about the distorted nature of “health insurance” and why is doesn’t work as a finance tool. This is because Health Plans largely use someone else’s (employer’s) money to “reimburse” something that should be paid directly. This is highly inefficient and excessively expensive. It flies in the face of how “insurance” is supposed to work, as pointed out eloquently by Dr. Laband.

   Contrary to, and with all due respect to Dr. Laband’s view, I do think this is a liberty issue. One can’t separate personal liberty from economic liberty; the two are inseparably linked. And I am not talking about hijacking the notion of “liberty” which is easy to do on the left as well as the right side of the political isle. l I am talking about REAL liberty, which comes with true choices about how and when to spend our health care dollars and what risks we want to insure and those we don’t insure.
   While I totally agree that the third-party “insurance as a commodity” is not working, it is NOT because of a failure of the Free market. There is really NO FREE MARKET IN HEALTH CARE Sector because of many of the reasons Dr. Laband points out. Ironically, it is precisely because of the way Health Plans are structured and financed that distorts the Free Market, causing the third-party payment system to be the disaster that it is. This is largely due to the consumer-patient NOT having control of most of the first-dollar expenditures. These are tied up in premiums and networks, linked to employment and restricted to contracts that patients have no control over.

   There have been many solutions proposed outside of the third-party system that most Physician live and work under now. Here is a synopsis of the key points of market-based reforms:
   1) Move to a defined contribution model for the medical social safety net, not a defined benefit (medicaid, medicare). Singapore has shown us how this can be done effectively. This is the only way to achieve fiscal budgetary sanity.
   2) Physicians (providers of care) should NOT be part of networks; they should be free professional agents
   3) Health Plans (insurance) should NOT be zoned by networks or linked to employment: it should be personal, portable, and privately held.
   4) Prices need to be transparent: a by-product of Direct-Pay medical care
   5) Insurance should indemnify against finacial risk, rather than be a pre-paid medical plan.
   6) Assuming we stick with our crappy tax system, Feds should provide a refundable tax credit to offset the cost of purchasing health insurance and all restrictions on HSA contributions should be lifted and anyone who wants an HSA should be able to have one. ALL medical expenses should qualify as an income deductions.

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