Americans spend more on medical care as a percentage of GDP than any other nation. For the decade ending in 2020, insurance premiums rose 47 percent and deductibles jumped nearly 69 percent. Even with employer-based health insurance benefits, employees now pay an average of nearly $6,000 versus their employers’ average of $22,221 for family coverage.
Furthermore, obtaining medical care has not only become more expensive, but increasingly complicated and difficult to navigate.
Consider this: Americans of all ages, incomes and education levels buy millions of new and used cars each year without the slightest knowledge of all the intricacies of engines, transmissions and all the software that makes motor vehicles run. Yet, even without this knowledge, the American people seamlessly purchase hundreds of billions of dollars worth of motor vehicles each year because the public can do the research online to obtain expert opinions from Consumer Reports, Edmunds and Kelly Blue Book to make informed choices.
But when it comes to medical care, the medical/health care experts tell us there are “asymmetries” in the medical sector and therefore the public cannot make an informed decision. In other words, the public does not have the same information as doctors and hospitals. This lack of transparency in purchasing medical care, and employees’ reliance on employer-based insurance to pay the bills, keeps them further removed from the true costs.
The way we pay for our medical services violates a fundamental economic principle – namely, in a market transaction between a willing buyer (in this case a patient) and the provider (a doctor or hospital), transparency makes the ability of the buyer possible to assess the value of the service rendered or the goods purchased.
The good news for both employers and employees is that America is moving toward the “consumerization” of medical care. With costs through the roof, employers voted with their dollars by opting out of the traditional medical insurance marketplace.
Fortunately, promising alternatives to traditional medical insurance have emerged. Here are some examples:
- Restoring the doctor-patient relationship.
Doctors are increasingly frustrated by the role insurance companies play in approving procedures and medications they prescribe for their patients. After all, the physician has had the one-to-one contact with the patient and has the expertise to judge what is needed; the insurance company representative does not have one. Efforts are underway, such as Direct Primary Care and Concierge Medicine, in which patients pay a set monthly fee to have same-day or next-day access to a doctor, taking the insurance guy out of the equation. Specialized treatments are referred to other doctors, and operations are performed in an outpatient center or hospital.
- Transparent pricing.
The Free Market Medical Association (FMMA) is one of the vanguards of the medical care revolution. Founded by Jay Kempton, owner of The Kempton Group Administrators, and Dr. Keith Smith, medical director of Surgery Center of Oklahoma (SCO), said the association reduced the cost of medical care, while exposing the gross overcharging by hospitals and traditional medical practices. . Tired of butting heads with hospital administrators, Dr. Smith and Steve Lantier created a cash-only clinic and brought into the group other surgeons who wanted to practice medicine without the distraction of insurance companies or bureaucrats. One uninsured patient who needed a breast mass removed was quoted $19,000 by a hospital—ten times higher than the price charged at SCO. The group proves that a more market-based environment delivers efficient, value-based medical care.
With medical care inflation and the resulting rising cost of medical insurance premiums, more and more employers have cut out the insurance companies by insuring themselves. At America’s Largest Companies, 82 percent of employeesare covered in whole or in part by self-insured plans. A self-insured group plan allows employers to customize employee insurance coverage. Depending on a company’s demographics and culture, a self-funded plan may include benefits that your employees would like to see covered, such as dental, vision, prescription drugs, and chiropractic or acupuncture treatments.
By exploring the options now made available by medical entrepreneurs, employers can reduce medical insurance costs and put money in their employees’ pockets – an attractive benefit in today’s tight job market – without having to skimp on medical care.
Written by Murray Sabrin.
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