Why Not Try Free Market Health Care?
John C. Goodman October 17, 2019
I’m often asked if the free market can work in health care. My quick answer is: that’s the only thing that does work.
Show me a health care sector where there is no Medicare, no Blue Cross and no employer and I bet that’s a market that works very well.
Lasik surgery is one example. Patients get a package price and they know what they are going to pay in advance. There are no “surprise medical bills.” As my colleague Devon Herrick has shown, there is price and quality competition here – unlike other health care markets.
Competition works. Over the past decade, the real price of Lasik surgery fell 25%, despite a huge increase in the number of procedures and all manner of technological change – the type of change we are told leads to cost increases everywhere else in medicine.
A similar story can be told about cosmetic surgery – another sector where the third-party payers have no role to play.
What about conventional procedures – like knee and hip replacements? Can the market work there? Where patients pay with their own money, it already is working. Canadian patients routinely come to the United States for these procedures (in order to avoid lengthy waits for surgery in their own country). They get package prices and they pay about the same amount that Medicare pays. That’s about one-half to one fourth of what employer plans typically pay.
By the way, there is nothing the Canadians are doing that you can’t do. There are three requirements: (1) you must be willing to travel, (2) you must pay in advance and (3) you can’t have an insurance company step in after the fact and argue about whether the entire procedure was really necessary.
MediBid is a company that puts patients and doctors together for all manner of procedures. It has created an online competitive market. Patients submit data and their need for a procedure. Providers bid on price. Patients can also check out quality information about the providers.
Then there is the international market for medical tourism. You can shave one-third off the cost of surgical procedures and maybe more by traveling to Health City Cayman Islands. The center posts quality information online (infection rates, readmission rates and mortality rates) and I suspect that their numbers easily beat comparable figures at the hospital nearest you.
It’s also worth noting that most of the cost-saving innovations in health care have emerged outside the third-party payer system – initially catering to people paying with their own money, even if the third-party payers eventually came around.
- Rx.Com came into existence to compete on price and quality with local pharmacies for patients who bought drugs with out-of-pocket funds.
- Walk-in clinics emerged for patients who bought primary care with their own health care dollars.
- Firms like Teladoc began providing phone and email doctor consultations – completely outside the third-party payer system.
If the idea of letting employees participate in a free medical marketplace seems too radical for some employers, I have a more modest suggestion. Liberate primary care.
That is, put two or three thousand dollars in an account for the employee every year and let the employee be completely responsible for all primary care, all diagnostics tests and maybe even all generic drugs.
Who is ready to serve these employees? Walmart, for one. Beginning this month, Sam’s Club is offering customers packages of healthcare services, including discounted dental care, free prescription drugs, and telephone health consultations in Michigan, Pennsylvania and North Carolina.
Also, Walmart has opened its first Health Center in Dallas Georgia, following its business model of “everyday low prices.” A dental cleaning costs $25, a doctor’s visit $40. A test for a urinary-tract infection is $10; a pap smear $50; a vitamin B-12 injection $18; and a flu shot $39.84.
Then there is concierge care. At one time only available to the very rich, a model of what is now called “direct primary care” has been developed by Atlas MD in Wichita and is rapidly spreading across the country.
The cost is $50 a month for an adult and $10 for a child. For that the family gets 24/7 access to a physician (including by phone and email), who provides all the services people traditionally expect from a family doctor. The family also gets access to generic drugs for prices lower than what Medicaid pays.
Ameriflex is a Dallas-based company that helps employers set up a platform for employees to connect with direct primary care doctors – bypassing insurance companies altogether.
A market for primary care is fast developing. Employers are foolish if they don’t take advantage of it.
John C. Goodman: I am one of the nation’s leading thinkers on health policy. I am the President of the Goodman Institute for Public Policy Research, a Senior Fellow at the Independent Institute.