As Congress and the new Trump administration work toward dismantling the Affordable Care Act, it's vital to millions of Americans that a replacement be put forward as soon as possible. Remember, the health care system was already sick when the ACA was put into place in 2009. The ACA was one prescription - just not the right one.
So what principles should the replacement emphasize? That's easy - free market principles. And a new experiment shows just how fundamentally sound those principles are.
Time magazine reports on "What happens when doctors only take case," an experiment in Oklahoma.
"When Art Villa found out, after one too many boating accidents, that he needed a total knee replacement, he began asking around to see how much it would cost," Time reports. "The hospital near his home in Helena, Mont., would charge $40,000 for the procedure, he says. But that didn't include the anesthesiologist's fee, physical therapy or a stay at a rehabilitation center afterward. A 2015 Blue Cross Blue Shield study found that one hospital in Dallas billed $16,772 for a knee replacement while another in the same area charged $61,585."
But then Villa learned of another option - a medical group that would take cash.
"There, the all-inclusive price for every operation is listed on the website," the magazine explains. "A rotator-cuff repair for the shoulder costs $8,260. A surgical procedure for carpal tunnel syndrome is $2,750. Setting and casting a basic broken leg: $1,925."
Why the big difference in prices? It's simple, Times says: "There are no negotiated rates, no third-party reimbursements and almost no paperwork."
This kind of service - once called concierge medical service - is now becoming more mainstream.
"Nowadays many of the people seeking cash-based care are middle-class Americans with high-deductible insurance plans," Time says. "For a patient with an $11,000 family deductible, for example, it might make more sense to seek out a cash-based center like the Premier Medical Imaging facility in Minneapolis, which offers a basic MRI for $499, than to cough up the several thousand dollars that the same procedure generally costs at a traditional hospital."
The point here isn't to use cash-only medical care as a model (though surely it has a role to play). The point is to demonstrate how market-warping forces in government have increased costs for all Americans.
"What happens when doctors only take cash?" asks Reason magazine's Nick Gillespie. "The lucrative field of medicine gets demystified, prices go down, services go up, and everybody except insurance companies come out ahead. Paying cash on the barrel head isn't the full limit of how to increase the quality of medical care while driving prices down, but it's an essential part of any serious reform that doesn't simply involve rationing the quantity of care."
That's why health savings accounts should be part of the eventual ACA replacement package - people decide how to spend those dollars, and they make better decisions with them.
Free markets - which represent voluntary exchanges - are always better for consumers. That's what Congress must keep in mind as it replaces the ACA.
