As the debate over repealing and replacing Obamacare continues, it’s important to address one of the root causes of skyrocketing health care costs: the middle men standing between patients and doctors, driving up the price of care.
Prior to Obamacare, the government’s preferential tax treatment of employment-sponsored health insurance shifted the market away from doctors and patients and toward the insurance industry. Health insurance companies effectively became the “de facto” customer in the health care market place.
When insurance companies, acting as middle men, took on the role of patients, costs were driven up. This fact is illuminated by “cash only” clinics, like in Oklahoma City. While one Oklahoma hospital offered knee replacement surgery for upwards of $40,000, a nearby cash only clinic, that didn’t run through insurance, offered the same procedure for $19,000. That price even included a plane ticket to fly the patient out for the procedure and put him up in a nice hotel room, where he was visited by his doctors throughout the recovery process instead of a hospital room. The cash only clinic also offered a warranty in case the patient experienced complications resulting from the surgery.
This perfectly illustrates the added cost of having a middle man stand between doctors and patients, looking for a cut of the money. This process is not dissimilar to ordering a pizza from Dominos – you can pick it up in store for lower prices than if you pay a person to deliver it to you.
The other middle man that has supplanted patients is the federal government itself. Obamacare shifted the burden of insuring Americans away from employers and towards the bloated federal government. This resulted in over 7 million people being issued insurance cancelation notices while working families saw their premiums rise by an average of 25%. By placing itself between doctors and patients with higher taxes and new regulations, mandates, and subsidies, the federal government drove up the cost of care.
Some on the left, like socialist Senator Bernie Sanders, acknowledging the failures of Obamacare, have begun to call for “Medicaid for all” as a solution. But just look at what that would entail. Since Medicaid reimburses doctors for sometimes as little as 50% of what their services actually cost, fewer and fewer doctors are accepting Medicaid patients, causing Medicaid beneficiaries to flood emergency rooms instead. This drives up the costs of health care even further, as E.R. visits average roughly $580 more than seeing a primary care physician. Clearly, putting government in between patients and doctors produces a failed system, regardless of whether government props up insurers or tries to insure people directly.
As we look to replace Obamacare, it is important to remember that further propping up the health care middle men will only ensure that costs continue to rise.
To truly reform medicine, the role of ‘health care customer” must shift back to ordinary Americans, rather than multi-billion-dollar insurance companies or the bloated federal government. When the patient-doctored relationship is given greater priority, the cost of care will naturally go down.