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Liberate the Doctors – Commentary

The one group that has been noticeably absent from these discussions is the doctors who actually deliver care.

For almost half a century, this country has been seriously engaged in efforts to reform our health care system to reduce costs, improve quality, and expand access to care.

Participants in the effort have included politicians representing all points of view in Congress and in state legislatures, bureaucrats of all stripes and varieties, business executives, labor leaders, insurance company reps, hospital execs, academic health economists, and a slew of nonprofit foundations.

The one group that has been noticeably absent from these discussions is the doctors who actually deliver care.

Virtually every solution that has been tried involves people who don’t practice medicine telling the doctors who do practice medicine how to manage their affairs. None of these solutions appears to work. Costs keep rising. Quality of care is not improving measurably. Access to care (as measured, say, by per-capita doctor visits or the length of time needed to see a doctor) seems to be getting worse.

Repackage, Reprice Services

Doctors are the only professionals in our society who do not have the freedom to repackage and reprice the services they offer in the marketplace. All other professionals—lawyers, accountants, architects, engineers, etc.–are free to change the services they offer and the fees they charge whenever technology changes, whenever science changes, or whenever there is a change in customer preferences.

Currently, there are 10,000 tasks that Medicare pays doctors to do. If there is a service that a patient needs that is not on the list, the doctor doesn’t get paid anything. If the service is on the list, the doctor only gets paid Medicare’s fixed price. There is no negotiation of these prices. The doctor must take it or leave it.

Large private insurance companies tend to pay the same way Medicare pays, using the same list. Their rates tend to be a percentage of what Medicare pays (e.g., 150 percent), and again there is no negotiation. It’s take it or leave it.

No other professional is paid this way, and for good reason. Imagine you were charged with a crime and an outside entity set the fees your lawyer got for different tasks. Suppose, for example, the lawyer gets $50 an hour for jury selection and $500 an hour for preparing a final summation of your case. You might get a really excellent summation at the end of your trial, one that would ordinarily get you off scot-free, but (unfortunately for you) it’s delivered to the wrong jury!

Even worse than mispricing is the presumption that anyone could think of everything a professional might do to help a customer and then put it on a written list. Until the pandemic, for example, consultations by phone, email, Zoom Skype, etc., were not even on the list of services Medicare paid for except in rare circumstances.

Encourage Supply-Side Innovation

How do we know practicing doctors could improve on the current system? Because that is what happens whenever they provide services outside the third-party payer system. For cosmetic and Lasik surgery, for example, we see transparent package prices that have declined in real terms over the last two decades even as the cost of every other type of surgery kept on rising.

This happened despite a huge increase in demand and all manner of technological changes, which we are told raise costs everywhere else in medicine.

Direct primary care (DPC) is another example. DPC doctors provide all primary care for reasonable monthly fees (say, $50 a month for a mother and $10 for her child), and patients are usually able to reach their doctor by phone at night and on weekends, as an alternative to visiting the emergency room.

There are endless possibilities here. Giving doctors freedom to offer different services for different prices promises less-expensive, higher-quality care. It should be the goal of any responsible reform.

Unleash Specialized Plans

In an ideal world, doctors would be able to approach Medicare and make a deal. In return for being paid in a different way, they would guarantee lower costs and a higher quality of patient care. We shouldn’t give up on that idea, but the odds will be much better if the payer is a private entity.

For example, DPC doctors initially refused to deal with any third-party payers. That has changed. One of the fastest-growing trends in private insurance is employer payment for direct primary care.

To my knowledge, no public sector insurance plan has taken advantage of this opportunity. Yet, there is an exception to this generalization. That is the Medicare Advantage (MA) program, where roughly half the beneficiaries are enrolled in private insurance plans. MA plans are allowed to specialize and become centers of excellence for specific types of care.

For example, there are special insurance plans for diabetes, for congestive heart failure, for lung disease, etc. These plans are becoming innovators in chronic disease management. Some doctor-run MA plans, for example, make insulin free, as well as consultations with an endocrinologist.

By investing in these upfront costs, the plans avert the greater costs of emergency room visits and hospitalization.

One way to think of these special-needs plans is to see them as an extension of the DPC model, applying it to specialty care. There is no reason in principle why doctor-run centers could not provide specialist services under all private-sector insurance plans.

Deregulate the Medical Marketplace

There are many ways to overcome regulatory obstacles to solve health policy problems. Other solutions include expansion of telemedicine, health savings account access to pay for DPC, and offering doctor-run specialty plans on the Obamacare exchanges.

We should ask the practicing doctors to suggest many more.

John C. Goodman, Ph.D. (johngoodman@goodmaninstitute.org) is co-publisher of Health Care News and president and founder of the Goodman Institute for Public Policy Research. A version of this article appeared in Forbes on June 13, 2023. Reprinted with permission.


John C. Goodman
John C. Goodman
John C. Goodman is president of the Goodman Institute for Public Policy Research.


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