A January Time article provided a glimpse into what a cash-based health care system would look like: an actual free market health care system that conservatives have longed for. What are the benefits and drawbacks of such a system? Could it be the wave of the future given the looming dumpster fire that is Trumpcare?
Here are seven things you need to know about paying cash for medical care.
1. It allows consumers to be more cost-conscious. One of the main problems with the current health care system is that a third party, whether it’s an insurance company or the government, covers most of the costs; therefore incentivizing consumers to overconsume when it comes to medical care. In a cash-based system, consumers can see how much each particular treatment costs and can decide from a variety options what the best service is for them.
2. Doctors won’t have to deal with nearly as much bureaucracy. Bypassing the third party means doctors don’t have to dedicate as many resources toward filling out unnecessary paperwork and learning the various rules and regulations that come with dealing with a third party. As a result, it can be cheaper for a patient in a cash-based system to obtain various tests or procedures: (H/T: Wall Street Journal)
ClearHealthCosts has compiled self-pay prices for dozens of tests and procedures in eight cities and found a vast range. In Houston, an MRI for the lower back can cost as little as $750 at an imaging clinic and as much as $1,961 at an academic medical center. A colonoscopy in San Francisco is $600 at one surgical center and $5,500 at another.
Finding the negotiated rates for those same services is tougher, since many insurance contracts bar payers and providers from disclosing them. But individual plan members can see that information on their Explanation of Benefit statements, so ClearHealthCosts has joined with public radio stations in New York, California and Pennsylvania, asking listeners to anonymously post what their health provider charged, what their insurance paid and what they paid out of pocket. Thousands have responded, showing that in many cases, while insurers had negotiated a big discount off the provider’s original charge, the negotiated rates were still higher than the service would have cost in cash at the same place or nearby.
“My favorite was the $5,400 MRI at an academic medical center in California,” Ms. Pinder says. “Insurance paid about $2,900 and the patient paid about $2,500. It looked like he got a great deal—but he could have paid $725 cash down the street.” When people see this data, she says, “they don’t behave the same way in the marketplace again.”
CNN Money also highlighted an example in which someone could “get a cholesterol test done for $3, versus the $90 the lab company he works with once billed to insurance carriers. An MRI can be had for $400, compared to a typical billed rate of $2,000 or more.”
3. Doctors that take only cash typically charge monthly or annual fees for “unlimited access.” The Christian Broadcasting Network (CBN) reported that one facility in Dallas, TX called Diamond Physicians, charges “$95 to $295 each month, based on age” for “acute procedures and medications.” This is a model that a lot of cash only doctors follow.
4. The cash-only model allows doctors to spend more time with their patients. According to CBN, on average patients spend “as little as eight minutes per visit” to actually be able to talk to their doctor in person because Obamacare has overwhelmed doctors with an average of 3,000 patients. Doctors that only take cash deal with an average of 500 patients, therefore providing patients more doctor face-time.
5. Hospitals are offering discounted rates to those who pay with cash up front. The Wall Street Journal explains that this is largely due to the fact that they can bypass a lot of “administrative work and collection hassles,” although regulations that prevent hospitals from price-gouging also play a role.
6. The number of cash-only doctors is small, but it’s growing. Per KPCC:
The American Academy of Private Physicians estimates there are about 6,000 doctors in the country who contract directly with their patients. That’s less than 1 percent of the more than 900,000 licensed doctors in the U.S., according to a study of 2014 national data.
However, the article points out that the number of cash-only doctors has increased “by 25 percent a year over the past four years.”
7. The most common criticism of cash-only medical care is that it adversely harms the poor. The Time article quoted Twila Brase, the Citizens’ Council for Health Freedom president, as saying that the answer to that is charity. Additionally, CBN quoted Dr. James Pinckney, a cash-only doctor, as saying those in favor of a cash-only system were hoping to end the perception that cash-only medical care is only for the rich.
“We’re trying to obliterate that stigma and make sure people in this country understand that concierge medicine, or what we’re calling ‘direct medicine,’ is affordable, and something that everybody should strive for,” Pinckney said.
Cash-only doctors do still recommend that people buy catastrophic health insurance with high deductibles. Vouchers with work requirements for the poor would also be a way to allay fears that the poor would be unable to afford cash-only medical care.