Cash, Please

If you’re a doctor who’s fed up with the paperwork and hassles of dealing with insurance companies, what do you do next–push for a government program? Don’t be silly. How about going cash-only?

A blog of The Heritage Foundation talks about one Minnesota doctor who has turned his practice into a cash-only business.  Doing so gives Dr. James Eelkema the chance to spend more time doing what he wants to do, which means he spends more time with patients and less time overseeing an office staff that’s dedicated to filling out paperwork for insurance companies.  He cut his fees by one-third to one-half and started making rather than losing money.

The Minneapolis Star-Tribune, on whose work the Heritage blog post draws, calls Eelkema “a potent symbol of the times.” It offers a perspective from Dr. Patricia Fontaine, president of the Minnesota Academy of Family Physicians, who says that Eelkema is making a statement: “I’m opting out of all the over-regulation and lack of support for primary care.”

The Star-Tribune accidentally discloses another benefit of cash-only practices: Eelkema makes house calls. And if his patients are going to pay cold hard cash, why wouldn’t he?

It wasn’t just the financial drain of shuffling paperwork that bothered Eelkema, it was the nagging from insurance companies: “Over the years, insurers — alarmed at the growth in medical spending — began tracking what doctors do in the exam room as well as patient outcomes. Has a patient stopped smoking? Was her blood sugar under control? At every patient visit, doctors had to record everything they did.” (If politicians take a bigger role in health care, expect the number of those questions to increase.) Don’t forget the hassle of documenting procedures for insurers and government programs: “‘If you undercode, you lose money,’ Eelkema said. ‘Overcode, and you get fined. Now it’s an audit tool.’”

One significant factor that keeps this approach to health care from being more widespread is that federal and state tax law discriminate against it. Run your spending through an insurance plan and you get a tax break. Pay cash and you lose the tax break.

Cost Containment That Relies on Less Government Power, Not More

On January 20, New York Times quoted President Obama, trying to rescue his health bill, stressing the need for “some kind of cost containment because if we don’t, then our budgets are going to blow up…” Ironically, if the President had read an adjourning article in the same newspaper he would have found the answer to his quest under the heading: “Should surgeons meet patients Online?”

The article describes Board-certified surgeons populating a website, onto which prospective patients upload photos of body parts which they believe would benefit from surgery. Surgeons nationwide reply with explanations of procedures and price estimates. If patients then decide to proceed, they travel to the surgeon’s office for a consultation and, in many cases, undergo the procedure.

These surgeons, of course, are cosmetic surgeons, who work directly for their cash-paying patients — not insurance companies or the government. The result of direct payment is that, even though the variety of cosmetic procedures has exploded over the years, prices for cosmetic surgery rose at about half the rate of consumer prices, from 1992 through 2005. Prices for medical services — most of which are paid for by insurers or government — rose almost twice as fast as consumer prices.

The New York Times equivocates about the benefits of this innovation, because the price might go up a little after the surgeon sees a patient in person, and because providing an internet consultation across state borders often violates state licensing laws. But these state licensing laws are also an unnecessary interference in the freedom of patients and physicians to have consultations via “telemedicine.” Seeing a doctor in person is becoming increasingly difficult, and face-to-face consultations are often curtailed.  (That’s why regulations on telemedicine that restrict doctors’ and patients’ ability to engage across state lines are a measurement in the U.S. Index of Health Ownership).

I recently attended a presentation by David Goldhill, a businessman who wrote a compelling indictment of the U.S. health care system. Mr. Goldhill described U.S. health care as on an island, separated from the mainland by a body of water which nobody can cross. “In what other sector of American life,” he asked rhetorically, “do we fear technological innovation, accusing it of driving up costs, reducing quality, and limiting access?”

Only on the health care “island” do policy-makers hold such an absurd belief, passing laws and regulations preventing people from using devices like telephones and high-speed Internet in the pursuit of medical services. Cosmetic surgery is a narrow bridge from the health care island to the real-world mainland. If President Obama really wants to contain costs and increase access, he should take a walk across that bridge.

Is Health Insurance Preferable?

Dr. Jane Orient asks the provocative question, “Is it Always Better to Have Health Insurance?”

In particular, she describes a patient who lost her insurance and paid $900 out-of-pocket for treatment to save her eyesight. She didn’t have $900 immediately, but was able to work out a time payment plan with the treating physician.

In contrast, she describes what would have happened if the patient had “coverage” from the government:

…Now, what would have happened if the Medicaid program hadn’t cut her off — because she earns $100/month too much? In that case, she wouldn’t have had to worry about the bill.

But — the receptionist would have had to say: “You’ll need to fax over a referral.”

A Medicaid patient can’t be billed, except for a nominal copayment. Without a referral, Medicaid can’t be billed. So if the specialist, or in this case subspecialist, sees the patient, he cannot be paid. Moreover, he is probably violating a rule and conceivably might be prosecuted for soliciting business (that’s called “fraud”). Discounts and freebies are marketing strategies, after all, and the poor and vulnerable have to be protected.

Not just any doctor can give the patient a referral. This doctor couldn’t. It has to be the patient’s primary care provider, who is contracted with the patient’s plan. And the specialist has to be in the plan too.

Say that a seizure patient needs to see a neurologist promptly to have his medications adjusted. Sorry, the emergency room doctor can’t write the referral. Neither can the hospitalist who is discharging the patient from the hospital. It has to be the “primary.” If the primary happens to know the patient, he might just send the referral. But most of the time, the patient will have to come in. The primary won’t want to risk getting an unnecessary referral or an incident of “inadequate documentation” on his report card.

For a retinal problem, there are probably three hurdles: the primary gatekeeper (who might not even think of the diagnosis), then the general ophthalmologist (who will make the diagnosis but can’t treat it), and finally the subspecialist. All probably have waiting times for appointments, especially for Medicaid patients. Most doctors can’t afford to see very many of those.

Not just Medicaid, but all managed-care plans have a structure like that. It’s part of the cost-containment strategy. I know of three insured patients who had retinal detachments. They all had premonitory symptoms, and they all — eventually — had elaborate and costly operations, as many as six procedures. They were “covered,” and they didn’t get a bill for $900, but they had a poor visual outcome that might have been prevented by prompt treatment.

(Read the full text of “Is it Always Better to Have Health Insurance?“)

Dr. Orient’s analysis vividly illustrates the point that “coverage” does not equal care.

Furthermore, government policies that attempt to guarantee “coverage” will create bureaucratic regulations and cost-control guidelines that will restrict the ability of physicians to offer actual care to their patients.

Or as Dr. Orient puts it:

Insurance is supposed to help you pay bills in the rare event of a catastrophe. If it morphs into a scheme for emptying your wallet in advance, and then prevents bills by preventing treatment, we just might be better off without it.

Lasik Surgery for Health Care

We should change the way we pay for health care. Should we fold it into government? Or, as this video argues, make prices more obvious to the patient? The history of lasik surgery shows that health care can get both better AND cheaper.

Can I Offload Maternity Coverage On You?

The Colorado Independent, a left-leaning news site, sent one  of its writers on a mission: Find an individual policy in the state that offered maternity coverage. The writer had a difficult time, and the best advice she received was “work out a cash discount with your provider.”

I suppose we’re supposed to be horrified (or outraged) upon reading the story. But consider several facts. First, the individual market in Colorado (like any state) is modest, at less than 7% of all state residents. Perhaps maternity coverage would be more widely available if the market was larger. But it’s not, since tax laws favor the group market.

Second and most importantly, maternity coverage is a perfect example of a moral hazard. Yes, there are plenty of “whoops” babies around, but with modern contraceptive techniques, pregnancy is something that you can plan for.

And if it’s something you can plan for, it would make a lot of sense to hold off on buying coverage until you plan on needing it. Wait until the year before the anticipated delivery date, for example, or until you’re ready go stop using contraceptives.

And with that we have something akin to trying to buy homeowners insurance after the house is burning down. What sensible human being would sell insurance at a reasonable price in those conditions?

If we strip out some of the expensive regulations governing the health profession (certificate of need laws, for example), we could make health care in general more affordable, and insurance less necessary. And when insurance is reserved for truly unpredictable events, it becomes cheaper.

A final note on working out a discount with the provider. That’s most likely possible if you’re dealing with a midwife or a doctor who isn’t a hospital or health-system employee. But if you plan to give birth in a hospital, then you’re sent into the strange world of opaque prices that our current approach to buying health care encourages.

Insurance Mandate Violates Religious Freedom

Health “reform” coming out of Congress has many problems, but one of the more obscure is also one of the most important: It might violate religious freedom.

Across the country, thousands of people, operating out of religious conviction, don’t have health insurance. Instead, they participate in health sharing ministries. Members get newsletters that describe the financial and medical needs of others in the ministry. A central office coordinates things but otherwise, money goes directly from healthy members to sick ones.

The Roanoke Times offers up a description of these efforts, which are known as health sharing ministries. One woman, for example, had her expenses for treatment of kidney stones covered by Samaritan Ministries International. They also paid for her fertility treatments. Those were successful, which means that soon they’ll help pay her childbirth expenses. In addition to receiving financial benefits, ministry participants report spiritual and emotional benefits of connecting with others.

But they’re worried about legislation that would hit them with a financial penalty for not having insurance. After all, if there’s going to be a law requiring someone to have insurance, Congress must define it. People who belong to such ministries may face a choice: Pay the steep penalty for not having insurance, or give up on the ministry, and buy a government-approved insurance product.

The article, perhaps in an attempt to be balanced, includes some criticisms of health sharing ministries. I find those hilarious.

First off, someone from the office of the National Association of Insurance Commissioners warns that the ministries aren’t licensed or regulated.

Not licensed or regulated by whom? By state insurance commissioners. Can you say “job security?”

Aside from that self-interested motivation, people who live in the world of insurance regulation have, understandably, a different mindset from people who participate in health sharing ministries. (After all, they ministries are faith-based organizations.)

The second warning in the article came from a representative of America’s Health Insurance Plans (AHIP), the trade group that tried to cut a deal with the Obama Administration and Congressional Democrats to … require everyone to purchase their products. Think AHIP can take an objective look at health sharing ministries?

Health sharing ministries aren’t for everyone, and at best, they’ll serve a small portion of the American public. But the fact that people may be forced to choose between their religious convictions and a government diktat shows how oppressive health “reform” can be.

(There may be some exceptions, in the end. But even those are cold comfort, as they would inevitably entangle government in the question of what was a “sincere” religiously based sharing organization.)

Individual Health Insurance GOOD; Health Care Sharing BETTER

America’s Health Insurance Plans just released its latest survey showing how affordable individual health insurance is.  Even so, health care sharing is even more affordable.  Health care sharing involves a community of Christians who share their medical bills without insurance.

Nationwide, annual premiums for individual health insurance averaged $2,985 for single coverage and $6,328 for family plans in mid-2009.  Annual sharing amounts for health care sharing, however, averaged $1,564 for singles and $4,788 for families.

The AHIP survey highlights the differences in premiums based on age as well as the state in which a policy holder lives.   The amounts that members of health care sharing ministries share are not based on age or state of residency.  In fact, they are based exclusively on family size: singles, single parents, couples, and families.

Monthly sharing amounts for singles range from $120 to $150.  For families, the range is $285 to $488, regardless of the family size.

The average insurance plan deductible for singles ranges from $1,179 for those using a HMO or EPO to $3,263 for those using an HSA.  For singles using health care sharing, they could be responsible for the first $300 to $500 per year of medical events.

The average insurance plan deductible for families ranges from $2,969 for those using a HMO or EPO to $5,897 for those using an HSA.  For families using health care sharing, they could be responsible for the first $900 to $1,500 per year of medical events.  (This personal responsibility could be easily reduced to zero in at least one ministry under certain conditions.)

As policy makers are looking for affordable medical payment arrangements, health care sharing is certainly a viable option, one that already more than 100,000 Americans in all 50 states enjoy.

Lessons from the Mailbox

Advertising can be annoying, but it’s also instructive. The other day I received a direct-mail piece (”junk mail”) from a group of eye surgeons who perform Lasik surgery, and it presented some simple but powerful information.

One side of the flier asked the question “Are Contact Lenses Really Less Expensive than Lasik?” It then had a photo of three people of different generations (Gen Y, Gen X, and a boomer), with an accompanying graphic of how much contact lenses would cost, cumulatively, over the life of that person’s life, compared with Lasik surgery.

The flip side of the flier had contact information for the clinic along with a few pitches for what Lasik surgery can do.

Though the Internet itself would collapse without advertising, it’s rare for medical professionals to advertise. Is that because it’s undignified? You could argue that, though I don’t see anything undignified or hucksterish about the advertisement I’m talking about.

Now, the reason is that the price of most medical services is obscured behind third-party payments such as Medicare, Medicaid, or private insurance. When you as a patient don’t directly pay for the service (though surely you do pay indirectly through insurance premiums), you have much less incentive to ask “how much does this cost?” In turn, medical professionals have much less incentive to become more productive in ways that will reduce prices.

So while the fact that most medical services aren’t subject to advertising may have a superficial appeal–who wants to hear an ad for the great new colonoscopy while sitting down after the evening meal–it’s also a clue as to some things that are wrong with our approach to health care. For as you’ve doubtless read, Lasik, a service that is regularly advertised, is one of the few medical services that have seen both an increase in quality and decrease in price in recent years.

New York’s Assault on Affordable Health Care

A doctor in New York City wanted to make his services affordable to people without insurance, so he developed a fixed-price model: Charge patients $79 per month and $10 per visits. By forgoing insurance, Dr. John Muney is able to offer lower prices. Who could be against that?

The New York insurance department, which says that Muney is operating an unregulated insurance company. TakeBackMedicine.com tells the story.

Health Care Sharing Ministries Provide Valuable, Unique Service

From ABC News Website:

Faith Based Health Care for Evangelical Christians

When Scott and Rachel Kramer, gospel music makers from outside Peoria, Ill., discovered that their son, Weston, had autism, they spent $30,000 on early-intervention therapy.All of it was paid for by strangers — fellow Christians who sent checks, cards and prayers.

“Sometimes it was just a simple note saying even though we don’t know you, we want you to know that we are thinking of you and we are certainly going to pray for your son,” said Rachel Kramer.

Samaritan Ministries and their members, the Kramers, were featured in a piece last night on ABC World News. We expect some reaction, both positive and negative, from the story. Certainly the segment was much too short to really capture what we do as faith based, non-insurance alternatives. The news segment certainly does not paint us in the best light, right up to and including the truncating of my last statement about our methods for protecting our members and ensuring they understand the difference between health care sharing and health insurance.

I’ve been considering for some time posting here to statehousecall.org, and have just not gotten around to submitting posts. The news for health care sharing ministries on ABC has pushed me over the organizational hump and I want to offer a more rounded picture of health care sharing than you are able to see in the ABC news piece:

The story talked about a ministry that years ago had been accused of embezzlement. All of the health care sharing ministries operating now have controls in place to prevent such a thing from happening. The ministry in the report, Samaritan Ministries, has an elected board who oversee the budget and set salaries for officers. All of the ministries in the Alliance have an external audit performed annually.

It is true that there are no guarantees of payment. That is part of the faith based nature of what we do, and why only people of faith are interested in them. One doesn’t have to watch much of the news lately, though, to find story after story of where the “guaranteed” insurers are guilty of doing what their policy holder thought they shouldn’t, or guilty of not covering something the policy holder thought was covered. Because we’re not concerned with policies and contracts, our members share in burdens. We are less concerned about what medical care you choose than how we can help you. Samaritan Ministries has no consumer complaints filed in any state that they’re aware of, and has file drawers full of letters thanking them for the ministry they’re providing. No one takes the time to send a thank-you note to an insurance company. Again–we don’t believe this is for everyone, but it is one option that we’d like to see protected.

When the reporter was out we spent a great deal of time talking about how the health reform bills could affect health care sharing. I was surprised that none of that footage made it in to the segment. We remain concerned about how those who are paying their bills without insurance will be affected by the proposed legislation, and are working to protect our members as the bills are completed.

People on the Internet are already abuzz about how this might work for some cases but not big ones. All of the ministries have shared needs into the hundreds of thousands of dollars for a single need, and are sharing millions of dollars in needs each month.

Lastly, remember that these ministries are already succeeding in providing charitable, health care help. Samaritan Ministries (the largest health care sharing ministry in the U.S.) does not turn away anyone based on health history. They provide a sponsorship program to help families who cannot afford the very small monthly share of $285 per month (less for couples and singles). The membership in a health care sharing ministry is not tied to employment and so it is portable from job to job and from state to state.

Health care sharing isn’t for everyone. But our members are excited about what we do, and they love us. We’re providing a viable, unique service and helping people with tens of millions of dollars of health care expenses every year.