Posted in Access to healthcare, Consumer-Driven Health Care, Defined Contribution Benefit Plans, Direct-Pay Medicine, Direct-Pay Practice Models, Economic Issues, Employer-Sponsored Health Plans, Health Insurance, Healthcare financing, Independent Physicians, Medical Costs, Medical Practice Models, Policy Issues, Tax Policy, third-party payments, Uncategorized

Who Pays for Your Healthcare Matters

By Robert Nelson

Zero co-pays. No co-insurance. No surprise medical bills! Considering the inflated prices we pay for healthcare, who could pass up that deal, right?

Are the new generation of value-based employer-sponsored Direct Contracting Health Plans, which often include Direct Primary Care, a great deal and more efficient use of our healthcare dollars? Absolutely yes!

real-health-care-expenditures-and-third-party-largerBut we can’t lose sight of the economic reality that individuals always pay the cost of benefits, either directly or indirectly.  And linking benefits to employment has been a colossal policy mistake and the genesis of job-lock and our 3rd-party payer system, which has been the source of runaway costs for 50 years. As the graph illustrates, insurance (3rd party payer) is now a near surrogate for total healthcare costs!

Don’t be fooled. Within the modern paradigm of healthcare financing, employers don’t pay for our healthcare. Our healthcare expense, no matter how it is structured, IS part of our compensation and a huge portion of of it.

images-223535545945618981307.jpgFACT: Every dollar of tax-favored benefits paid by our employer reduces our take-home pay.

The beauty of Direct Primary Care is the portability (no job lock) and affordability which can exist independent of the size or benefit package of the employer. But the foundation which aligns the incentives is based on the identity of the customer. This is why we have to be careful to match the buyer with the recipient of care whenever possible. To insert another 3rd party, even the employer, undermines the sovereignty of the patient and the independence of the physician.

The supply side of healthcare has served the wrong customers for far too long. DPC should not make that same fatal error by exchanging its essence for a pipeline of patients.

This linkage highlights the importance of policy decisions regarding use of HSA funds; the importance of allowing HSA dollars to pay premiums AND DPC fees can’t be overstated.

For DPC, and Direct Contracting at-large, to dig us out from under the boot of the 3rd party apparatus it must remain accessible to the sole proprietor, independent contractor and very small businesses that don’t have “health plans.” And moving to defined contribution plans and away from defined benefit plans will help get us there.

third-party-2Getting first dollar decisions in hands of consumers will also be deflationary and spur competition; and essential to the goal of eventual portability & ownership of benefits. To do otherwise, with too much focus on a new & improved generation of employer-sponsored healthcare plans, will lead us right back to where we started.

Posted in American Presidents, Economic Issues, Free Society, Liberty, Philosophy, Policy Issues, Representative Republic vs. Democracy, Rule of Law, third-party payments

17 Facts on the Reunification of Germany – Foundation for Economic Education

“For decades, German families had been separated from one another between East Germany and West Germany. Post-World War II, the East German government—the German Democratic Republic (GDR)—constructed this physical barrier to define their territory separately from the government of West Germany, the Federal Republic of Germany (FRG). The main distinguishing characteristic between the two governments? A generalized sense of freedom and liberty versus socialism and oppression.

The Berlin Wall served the GDR’s main purpose: “to permanently close off access to the West.” Between 1949 and 1961, West Germany provided East Germans with a pathway toward democracy and capitalism.”

https://fee.org/articles/17-facts-on-the-reunification-of-germany/

Posted in Access to healthcare, Affordable Care Act (ObamaCare), CPT billing, Economic Issues, Essential Benefits under the ACA, Government Regulations, Health Insurance, Healthcare financing, Medical Costs, medical inflation, Medicare, out-of-pocket costs, Policy Issues, Price Tansparency, third-party payments, Uncategorized

Medicare Turns Health-Care Prices Into a Guessing Game – WSJ

https://www.wsj.com/articles/medicare-turns-health-care-prices-into-a-guessing-game-11558282907

Posted in Access to healthcare, Accountable Care Organizations, Affordable Care Act (ObamaCare), Economic Issues, Government Regulations, Healthcare financing, Independent Physicians, Medical Costs, Medical Practice Models, Medicare, News From Washington, DC & Related Shenanigans, Organizational structure, Patient Choice, Patient-centered Care, Policy Issues, Price Tansparency, Reforming Medicare, third-party payments, Uncategorized

How The Trump Administration Is Reforming Medicare | Health Affairs

“This 124-page document challenges a premise behind 50 years of thinking in health policy circles: that our most serious problems in health care arise because of flaws in the private sector. Most problems arise because of government failure, not market failure, the document declares, and it goes into great detail on how to correct the policy errors.

Trump policy toward health care appears to be based on the idea of promoting choice, competition, and the role of market prices. In Medicare, so far that means liberating telemedicine and accountable care organizations (ACOs), ending payment incentives that are driving doctors to become hospital employees, promoting hospital price transparency, reducing regulatory paperwork, and creating more transparency in the market for prescription drugs.”

https://www.healthaffairs.org/do/10.1377/hblog20190501.529581/full/

Posted in Access to healthcare, advance-pricing, Direct-Pay Practice Models, Economic Issues, Education, Employee Benefits, Free-Market, Health Insurance, Healthcare financing, Independent Physicians, Influence peddling, Liberty, Medical Costs, medical inflation, Medical Practice Models, Patient Choice, Policy Issues, Price Tansparency, The Quadruple Aim, The Triple Aim, third-party payments, Uncategorized

Annual Conference | Free Market Medical Association

Forum for Healthcare Freedom is proud to be a Mobile App & WiFi Sponsor for the 2019 Free Market Medical Association annual conference, to be held at the Hyatt Regency in downtown Dallas, TX.

Since 2014, the mission of the FMMA has transformed from Education to Insurrection.  Our mission is to rouse and provoke those suffering because of the broken system and motivate them to fight back.

The 2019 Conference speakers will motivate, energize, influence, and empower attendees to eliminate the option of retreat, reject the status quo, and emancipate themselves from the deteriorating ship.

We have an incredible lineup of general session speakers, including our Keynote Luncheon speaker, the Honorable Ron Paul, M.D.  All attendees will find something of value in one of our eight breakout sessions covering topics such as Incorporating the Free Market into your Benefit Plan, HMOs & the Free Market, Pricing of Specialty Care, Lies Employer’s Believe, Creating Bundled Pricing, and more! The conference will close with our Founder Panel where Dr. Keith Smith and Jay Kempton will present Burning the Ships: Going All In!

Space is limited, so register today!

Source: Annual Conference | Free Market Medical Association

Posted in Access to healthcare, advance-pricing, Affordable Care Act (ObamaCare), British National Health Service, Deductibles, Direct-Pay Medicine, Direct-Pay Practice Models, Employee Benefits, Employer-Sponsored Health Plans, Free-Market, Government Regulations, Health Insurance, Healthcare financing, Individual Market, Individual ObamaCare Market, Insurance subsidies, Large group insurance market, Medical Costs, medical inflation, Medical Practice Models, Medicare, Patient Choice, Policy Issues, Price Tansparency, Quality, Subsidies, Third-Party Free Practices, third-party payments, Uncategorized

Lies That Won’t Die: Health Insurance Costs and Healthcare – Post Hoc Ergo Propter Hoc

In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause—it is seen. The others unfold in succession—they are not seen: it is well for us, if they are foreseen. Between a good and a bad economist this constitutes the whole difference—the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favorable, the ultimate consequences are fatal, and the converse.  ~Frederic Bastiat

The results of the immediate/ intended effects (the seen) and the subsequent/ unintended effects (the unseen) of U.S. healthcare policy are clearly instantiated by examining the way we use, and misuse, health insurance.  

Despite the ostensibly good intentions to improve access by expanding coverage for various medical services, the “ultimate consequences are fatal, and the converse.”

Our insurance-based third-party payer protocols have pernicious and nefarious economic consequences on our healthcare system.  This manifests as rampant healthcare inflation catalyzed by the macro-economic market distortions of the 3rd party payer effect and perpetuated by the micro-economic price-obscuring distortions of the billing cycle.

As evidence for the negative consequence of misusing insurance as a pass-through system for virtually every healthcare expense, we can examine the employer-sponsored group market premiums. From 2007 – 2017 the average premium for family coverage increased by 55% and employee contribution rate as a share of premium cost increased by 74% over the same 10-year period; while median household income went up by only 3%.

To add financial injury to insult, the percentage of employees with an out-of-pocket maximum of greater than $3,000 doubled, going from 30% to 60% of employees.

“Eighty-one percent of covered workers have a general annual deductible for single coverage that must be met before most
services are paid for by the plan. Among covered workers with a general annual deductible, the average deductible amount for single coverage is $1,505
.  ~KFF.org

In the ACA individual market insurance exchanges, single coverage premiums (unsubsidized) increased by 62% and family coverage premiums increased by 75% just since the implementation of ObamaCare!

And between 2002 and 2016, medical costs for a family of four in an employer-sponsored PPO plan increased 180%! 

Given that household income has barely budged in real dollars since 2002, these increases are clearly not sustainable. By contrast, the auto insurance market (a real indemnity product) increased by only 17% from 2007 – 2016, while deductible offering ranges remained stable, averaging $500.

The refusal of some to recognize the valid comparatives between the health insurance market & the auto insurance market (ostensibly because healthcare is SO different) is not an argument suitable to justify the dysfunction and high costs of Healthcare; nor does it explain why health insurance premiums have become an unwelcome surrogate for total healthcare costs! The irony being that a competitive cash market for all things related to driving and keeping a car in working order, which are not paid for at all by insurance, is exactly why the auto insurance market is affordable and sustainable! Based on data from 2014, auto insurance accounts for about 15% of the cost of ownership of a nicer car for an average safe driver. Stated differently, the cost of insurance adds about 18% to the cost of ownership compared to not having insurance.

Health insurance, on the other hand, adds about 50% to the cost of healthcare compared to no having insurance. Now consider that cost ratio in light of the NIHCM 2012 study on the concentration of healthcare spending.

“… mean annual spending for the bottom half of distribution was just $236 per person, totaling only $36 billion for the entire group of more than 150 million people… 15% of the population had no spending whatsoever in the year.”

So in any given year, 150 million of us spend less than $300 per person on actual medical care. Even more striking is the statistical likelihood that roughly 15% of the population (nearly 50 million) will have no personal health expenditures in a given year (we have no reason to believe the year in question was an aberration)!

The flip side to this story – and one that is often used to justify the way we use health insurance – is that about 81% of the spending comes from 20% of the population, which holds largely true in almost any given year. But this is the rule for almost any market and is not unique to healthcare. Most of the cars or new homes or new roofs or refrigerators or new tires or new windshields are purchased by a small percentage of the population each year; but it is not by the same people every year.

This is precisely why insurance is necessary and valuable; but also precisely why insuring too many things that are more affordable in a cash market is a horrible financial strategy! Yet we continue to commit to paying for all the small stuff, plus the unpredictable catastrophes, with this expensive proposition we call health “insurance”!

So maybe should re-frame how we look at healthcare and ask…”What have we done TO healthcare to make it behave the way it does?”

Instead of blaming “market failure” – or any of the usual suspect villains – for the high costs & low quality of healthcare, maybe we need to re-frame how we view the provision of healthcare. And when it comes to blaming the “free-market”, how do you blame something that is wholly absent? Because almost NONE of the factors which define a normally functioning free market system (discoverable, actionable prices and outcomes data with competition based on price & quality) are operational in healthcare today.

Rather than market failure, a more productive and accurate way to view healthcare would be as a massive, systemic, well orchestrated pricing failure…brought to us almost exclusively by the central planners in Washington DC, And the perverse incentives that are baked into the system.

Dr. John Goodman, economist and healthcare policy expert, has
this to say
about the consequences of this [“pricing failure”].

“In every  profession outside medicine – law, accounting,
engineering, architecture, etc. – providers are able to repackage and reprice what they offer to the market…Doctors by contrast are slaves to a third-party payer system that has been shaped and molded by government.

Many of the problems begin with Medicare, which pays doctors today the
same way it paid in the last century – long before there were emails or
iPhones. Most private insurers and most employers pay the same way. State governments pile on. Sometimes they make consultations with patients by phone or by email or by Skype illegal. In most places, doctors can’t freely practice across state lines.” –
Dr. John C. Goodman

Collectively, these interventions add excessive costs of our healthcare system. It is important to remember that many of these cost over-runs are manifestations of the applied distortions, not intrinsic to healthcare itself.

One of most pernicious of these pricing failures can be traced to the bizarre way in which we utilize health insurance; which brings me to our featured “lie that won’t die”, and it goes like this…

“Health insurance is expensive because Healthcare is expensive.”

NOT!

But like all effective fallacies, it contains just enough truth on the surface and enough logical coherency to be believable. Let’s explore why this commonly held doctrine in healthcare circles is not only wrong, but counterproductive to useful healthcare reform.

Insurance should be the financial fireman that protects us from the consequences of catastrophic events.  But for insurance to work, these catastrophic events must be infrequent & unpredictable, thus spreading the risk of these infrequent events across a large population; so at any given time, only a few are affected.

When insurance becomes a funding source for the routine – the predictable – the affordable events, then we actually concentrate risk rather than spreading it! This model changes “insurance” into a perpetual payout fund, violating every tenet of insurance! And to compound the effect, the contractual obligations on both the demand side and supply side promote the incentive for everyone to utilize their health plan as often as possible.

It doesn’t take a Ph.D. in economics to predict that the costs of sustaining such a model are never satisfied, always being squeezed by patients who are chasing the benefits and providers who chase the billing codes for reimbursement.

So health insurance is definitely the Fireman or “lifeguard” when we have a costly health crisis; but when it becomes an expensive medical maintenance plan, insurance also becomes the arsonist.

We have taken a tool designed to pay out rare higher-priced claims on unpredictable events, and turned it into an inflation-prone product whose design promotes an incentive for everyone to use it as often as possible. That makes about as much sense as trying to buy insurance for a car that is regularly used in a demolition derby.

Our third-party payer system has created a dependency paradox; the same funding method (health insurance) that contributes to runaway costs also causes us to be more dependent on it for access.

The result is a healthcare system that costs way more than the sum of its parts. This is why playing the blame game does not solve the problem. American doctors could take a 50% pay cut and we could eliminate the spend equal to all care during last 12 months of life and we would still spend more per capita than any other country. You can go down the list of culprits and repeat the calculations, which I’ve done, but the math doesn’t add up; it doesn’t reconcile.  

The introduction of DPC has deflated these cost escalations considerably.  In the individual market, data from several sources bears this out.  CovenantMD, a Direct Primary Care practice in Lancaster, PA illustrates the potential savings based on a typical family’s utilization.

They compared the total costs incurred using a Bronze ACA plan with $6K individual/$12K family deductibles without and with a DPC membership at CovenantMD.  Pairing a Bronze Plan with a DPC membership resulted in an out-of-pocket savings of $7,267, even after the cost of the membership was counted.  That is a 65% reduction in out-of-pocket costs!

Zenith Direct Care did a similar analysis for a typical family of five with an 80/20 plan with $3,000 deductible.  They compared annual costs for this scenario with a Zenith Direct Care membership plus a Health Cost-share Plan (health-sharing member).  Estimated out-of-pocket costs with the traditional insurance alone was $18,343 compared to $6,160 with the Zenith/HCS combination.  A savings of 66%!

Core Family Practice, a DPC practice in Kennett Square, PA, compared a 90-day supply of four common primary care medications purchased through Aetna’s Mail-order supplier with the prices their members pay for same quantity.  The annual cost for the Aetna mail-order came to $2,248.68 compared to only $850.80 for the same medications from Core’s generic supplier, which were dispensed in the office. That $1,397.88 savings equates to a 61% reduction in out-of-pocket costs for the married couple!  They also looked at the costs of obtaining three sets of commonly ordered lab tests for the same couple.  Out-of-pocket costs using their high-deductible plan (QHDHP) was $480 in lab test responsibility. The same tests drawn and paid at time of services to Core FP totaled $63.17 yielding an incredible 87% reduction.

All components of healthcare spending add to cost of care. But the overwhelming cost drivers for the U.S. healthcare system are embedded so deeply within the way we access and pay for medical services that we often overlook them, choosing instead to blame the symptoms for the disease rather than the disease for the symptoms.

So the next time you hear someone say or pen the words, “health insurance is expensive because healthcare is expensive”, please gently remind them of the facts. It is the unwise use of a pre-paid, highly regulated & gated access model, masquerading as insurance, that causes medical care to be more expensive than it needs to be; and the same payment model suppresses the market for more cost-effective alternative pathways to access healthcare.

Posted in Access to healthcare, Economic Issues, Healthcare financing, Medical Costs, out-of-pocket costs, Patient Choice, Policy Issues, Price Tansparency, Reforming Medicare, third-party payments, Uncategorized

Why a patient paid a $285 copay for a $40 drug | PBS NewsHour

Insurance copays are higher than the cost of the drug about 25 percent of the time, according to a study published in March by the University of Southern California’s Schaeffer Center for Health Policy and Economics.

https://www.pbs.org/newshour/health/why-a-patient-paid-a-285-copay-for-a-40-drug

Posted in Access to healthcare, Crony Capitalism, Economic Issues, Government Regulations, Health Insurance, Healthcare financing, Influence peddling, Medical Costs, medical inflation, Medicare, Network Discounts, Organizational structure, outcomes, Patient Choice, Patient Safety, Policy Issues, Price Tansparency, Quality, third-party payments, Uncategorized

Improving Hospital Competition: A Key to Affordable Health Care

Avek Roy

In 2011, James Robinson of the University of California reviewedhospital prices charged to commercial insurers for six common procedures: angioplasty, pacemaker insertion, knee replacement, hip replacement, lumbar fusion, and cervical fusion. He found that, on average, procedures cost 44 percent more in hospital markets with an above-average degree of consolidation.

It is problematic enough that regional hospital monopolies have the power to demand high prices. But on top of this, many hospitals engage in additional anticompetitive practices. Anna Wilde Mathews of the Wall Street Journal obtained secret contracts between insurers and hospitals revealing that these contracts often barred insurers from sending patients to “less-expensive or higher-quality health care providers.” Other hospitals precluded insurers from excluding some of the system’s hospitals from the insurer’s networks. Some contract provisions, including those from New York-Presbyterian Hospital and BJC HealthCare of St. Louis, prevented insurers from disclosing a hospital’s prices to patients.

https://freopp.org/improving-hospital-competition-a-key-to-affordable-medicine-343e9b5c70f