Time to Rethink How We Pay for Medical Care and Healthcare

Today we mostly have prepaid medical care insurance with some co-pays and deductibles – both with commercial insurance and with Medicare. In other words, our insurance covers essentially everything from basic and routine care to the catastrophic. And the insurance pays out based on units of care – a visit, a test, a procedure, a hospitalization, a prescription. This creates a system in which providers (physicians, hospitals, drug and device companies, others) get paid for a unit of activity – self interest dictates that all providers will offer more and more units of care, especially when providers feel that are underpaid for the individual units. And since insurance pays for care of illness but not at all or not much for disease prevention and health promotion, we can call this a disease industry rather than a healthcare industry. (I accept that, with rare exceptions, each provider attempts to offer the best care possible for each patient but I also am certain that the patient often does not need all of the units of care offered and often does not get the most appropriate units in a well coordinated manner.)

If the basic payment system changes to one that:

-Expects us (patients) to pay for routine, basic and preventive care, including medications, up to a maximum of, say, $1000/year, (offset by tax-advantages HSA accounts for all, including those on Medicare, and tax credits for the less well off)

-This creates a “professional services contract” between the patient and the provider (rather than today’s contract between the provider and the insurer)

-Insurance pays for everything beyond that.

Then three things would happen:

-We would pay attention to what drugs, tests and procedures are offered or suggested and query our provider in much more detail than we do now – because it is our money that is being spent in a direct manner with the provider.

-Providers would be mindful of the “contract” and be careful to recommend drugs, tests and procedures only if truly needed, appropriate and useful; they would think about our pocketbook.

-Insurance would cost much less.

Possibly a fourth thing would happen:

Because we are paying our provider, especially our primary care physician (PCP) directly, as we do our lawyer, accountant or other professional – and paying a price jointly agreed to be acceptable – our PCP would earn enough to:

-Reduce the total number of patients in his/her practice

All of which would result in:

-More time available per patient

-Time available for true preventive care

-Time available to give good coordination of care to those with complex chronic illnesses.

This would not be a panacea and there are other changes also needed to the payment system, but the effect of these few initiatives would be — less expensive yet better quality care.

And if this does not come to pass, expect primary care physicians to take matters into their own hands by moving to retainer based practices, charging an annual administrative fee, or just not accepting insurance, especially Medicare, anymore.