The Blog post was written by a BRI Student Leader who wishes to remain anonymous.
… And now for some basic questions about a cash based healthcare system, since we’ve put the philanthropic and economic questions to rest…
I’ve heard some conservatives advocating for more cash-based medical care. The insurance plan I have now is expensive, but it covers most of my healthcare needs.
To understand the state of healthcare in America today, it is useful to understand the historical background in which our system developed. Our tradition of employer-sponsored health insurance arose during the 1940s in response to a government-imposed freeze on salaries. In order to supplement employees’ income, companies began offering health insurance benefits. When the wage freezes were repealed, employer-sponsored insurance did not go away with them. Americans became accustomed to employer-sponsored insurance, and being covered by a comprehensive health insurance plan became the norm. Unfortunately, this has led us into a state of over-insurance: Americans are paying excessive amounts of money for healthcare benefits that they previously purchased directly through cash payments.
Insurance is a tool to hedge against unexpected misfortunes, like your house burning down or a natural disaster. It is not meant to be used for routine expenses like paying your electric bill or buying groceries. However, Americans now buy health insurance that includes a spectrum of both routine and catastrophic medical care. When proponents of free enterprise talk about cash-based systems, they are advocating that we shift back to a system in which consumers pay for routine medical costs out of their own pocket. The point of this is to align consumers’ incentives so they are naturally drawn to make the most efficient economic decisions. If you are responsible for paying for your routine healthcare, you will be inclined to search for the services that fit your preferences, and you will be hesitant to consume services that are unnecessary. It is easy to spend someone else’s money, but people spend much more deliberately when it is their money in question. The only “single-payer” for routine care should be individual patients themselves.
What are the benefits of moving to a cash based healthcare system?
If we shift back to a cash-based system for routine medical expenses, health insurance still has an essential role to play. Health insurance will still be essential to insure against unexpected, catastrophic medical events. The price of this insurance should be reasonable because it would only cover medical events over a certain dollar amount; all of the routine care that is inflating health plan pricing today would be excluded from catastrophic insurance.
A system based on mixed cash payments and catastrophic insurance would be extremely beneficial for patients and their doctors. Cash payments for routine care would vastly simplify the insurance payments fiasco that doctors experience today, reduce administrative costs, and allow physicians to spend less time filling out paperwork and more time with their patients. Physicians and patients around the country are beginning to embrace this system, and early results show that the cost of care is decreasing, health outcomes are stronger, and physician satisfaction with their work is much higher. A few examples of successful cash based practices include the Surgical Center of Oklahoma, Atlas MD, and Gold Direct Care.
Although this concludes our series on free market medicine point/counterpoint, I hope it is just the beginning of the dialogue on how we can work together to transform American healthcare. Do not hesitate to share your beliefs with your peers, despite what they might believe currently. Dynamic social change occurs because small groups of people are willing to speak for what they believe, even if it is unpopular.
This is our time.