For anyone who wonders "why the heck is US health care so expensive", may I recommend Jim Epstein's terrific piece in Reason on US physicians breaking from the insurance model and going for a direct payment model:
A drained abscess runs $30, a pap smear, $40, a 30-minute house call, $100. Strep cultures, glucose tolerance tests, and pregnancy tests are on the house. Neuhofel doesn't accept insurance. He even barters on occasion with cash-strapped locals.Epstein points out that many of the costs of regular doctors come from having to employ an army of staff to manage the forms, phone calls and risks of the US "HMO" (health maintenance organisation, an insurer gone wild) model. Doctors like Neuhofel have had enough of the crap and costs which come with that model, and are reverting to caring for the patient rather than being an abused effective employee of HMOs. With direct care, their interests and their patients' interests are much better aligned.
I'm going to bill Epstein for the cost of replacement of a coffee-drenched keyboard, as a result of reading:
Insurance used to pay $128 for a bag of IV fluid. Now Davidson doesn't bother passing on the cost of IV bags because they run $1.50 each.$128? IV fluid is SALT WATER! Sure, it's sterile, and sometimes they mix in sugar (D5W) but still, $128 for a couple litres of salt water? No wonder health care costs are out of control.
I think that the direct care model is great, but the big problem I can see is what happens when you really are sick and need to go to hospital. I can't see hospital bureaucracies moving to the direct care model; they're still going to need to deal with insurance because you really, really do need at least catastrophic care insurance (covering critical illness with a high deductible). Once you have the staff to deal with the insurance companies, the benefits of adopting direct care are much reduced. The secondary problem is the increased risk of lawyer attack for a direct care physician who only carries out treatments which seem necessary. The first patient of a direct care physician who misses a massively unlikely but important symptom through omitting an expensive test will be lawyered-up and litigating against the physician before you can blink an eye.
For those believing that Obama's healthcare reforms are going to help, remember that it is only going to increase the bureaucracy required to obtain healthcare, and look at what the current bureaucracy is costing subscribers:
Wong says he launched his business partly on the belief that Obamacare will drive up health care costs, causing more and more companies and individuals to drop out and start paying their own health care bills. Neuhofel agrees that Obamacare could be good for business. "I expect some real unintended consequences after Obamacare is implemented. There could be more uninsured people."After all, any occasion where governments believe they can design a better system than the private sector (even one as bloated and demented as the US health insurance system) has to make one wonder at their optimism.
[ Hat tip: Advice Goddess Amy Alkon who has been banging this drum for years. ]