The Empowerment of Payment Improves Health
by Ari Armstrong, August 16, 2007
We economize when buying groceries, clothes, electronics, cars, and the other goods and services we need. That is, we seek the greatest value for the money. Depending on circumstances, that can mean buying things on sale, shopping around for the best price, looking for the best quality, or spending a little more to save time.
Yet, when it comes to medicine, many of us act as though no choices are available. Why is that? It's because the market in medicine has been largely stifled by government controls. Government has taken over around half of all health-care spending. Moreover, tax distortions have driven non-portable, high-cost, employer-payed health coverage. Instead of purchasing our own health care directly from providers for routine care, most of us "pay" through an intermediary, whether a bureaucrat or an insurance agent.
Some argue that medicine is so important that even routine care must be funded by a "third party." But what could be more important to our lives than food? We buy food out of pocket. And I routinely spend more at the grocery store than my last doctor's visit cost.
Imagine what would happen if we bought groceries the same way most of us "buy" medical services. We'd either be on government-funded "Nutricare" or "Nutricaid," or we'd purchase pre-paid grocery "insurance" through our employers. When we walked into the grocery store, we'd have little incentive to look at prices or find the best values. Many customers would buy groceries thoughtlessly and wastefully. And grocers would offer service based not on helping you meet your needs, but on how to get payments from the government or insurance companies. Employers would face the nightmare of costs spiraling out of control.
If some Colorado reformers get their way, politicians will force people to fund more pre-paid medical care and directly pay even less on routine services. The results are predictable: prices will continue to skyrocket, resulting in more rationing.
Perhaps you've heard the claim that, without third-party payment, some people won't seek preventative care. That claim is nonsense. My wife and I were never so concerned about our health as when we were uninsured. We took every precautionary step we could think of to keep ourselves healthy.
Now my wife and I have real insurance with a high deductible, in association with a Health Savings Account, made possible by 2003 federal reforms. We continue to pay for all routine expenses out of pocket and to be proactive in keeping ourselves healthy and seeking preventative care. We have insurance to protect us from serious, unexpected, high-cost expenses, such as cancer or a heart attack. But our goal is to never need to make a claim.
There is nothing more liberating than paying for my own routine health care. Now my doctors answer to me directly. I wasn't satisfied with my previous doctor, so I looked around and found one who better serves my needs. I got my heart scanned for calcium deposits, a preventative measure, and I called around first to find the best price. Recently I sprained my ankle. I paid for expert advice from my doctors office, but I opted to forego an X-ray, because the injury was very likely just a sprain, and treatment options would have been similar regardless. My wife sees a different doctor and also diligently watches her health.
Now that I've discovered the empowerment of paying for my own routine medical care, I will never go back to a system of third-party payment. That is, unless some politician forces me.