A True Free Market Healthcare System

Medical Economics published an editorial response by Craig M. Wax DO to the people that hammered his original article.   I thought it was so good that I had to show you it here:

We have not had a true free market for healthcare services or insurance in more than 60 years. Previously, patients paid physicians and other healthcare entities and were reimbursed for major medical issues by their insurance. Physicians individually set prices as necessary at a competitive rate of a few dollars for a visit or patients could barter with their own goods or services.

Healthcare list prices are inflated and unrealistic. Most payer entities have deals that cut the price significantly. Only the self-pay patient gets the full list-price bill sent to collections for payment. Such patients should get the best price because direct payment eliminates the middlemen and preempts costly coding, billing, and appeals.

I agree with Dr. Kleinman that the current solution is not working for the 15.1% of the population below the poverty line. I would, however, go further to say that the current system is not working well for any party, except the insurance industry; their stock prices and chief executive officer salaries keep rising. Government and insurance companies increasingly are intimately involved in the patient-physician relationship, artificially modifying care decisions with administrative verifications, pre-certifications of tests, prior authorization of medications, retroactive denials of care payment, etc. We all agree that the current healthcare environment does not work to improve patient involvement in his or her own health self-maintenance or healthcare option decisions.

A true free market healthcare, patient health-freedom, and major-medical insurance reimbursement environment would succeed with no government oversight or startup and maintenance expenses.

People will make better choices when directly responsible for the risks and benefits—and associated costs—they experience. They must be free to make lifestyle choices and choose healthcare options, insurance plans, etc., based on their value systems, because their health is their responsibility.

People should be able to purchase low-cost, high-deductible major medical health insurance plans across state lines with tax-free health savings accounts, as individuals or groups. These insurance plans must reimburse patients based on their health and healthcare choices, not provider networks or artificial administrative processes that are designed to deny care options and ultimately drive up care costs.

Unlike the current employer/employee sponsored system, an individual or group system would remain in effect through job changes and other work-related issues. Insurance companies should compete across state lines to offer people direct health insurance plans that meet their needs, value systems, and cost structures.

All aspects of healthcare—from physicians, labs, hospitals, pharmacies, and pharmaceutical companies to insurance companies—must compete in the free market to provide an efficient and economical environment for patients to exercise their health freedom free will.

For the population that lives below the poverty level, they too must be invested in their own care and self-maintenance. Perhaps the taxpayer system should provide minimal coverage for their major expenses while they shop in the competitive marketplace for their healthcare needs and self-maintenance wants.

Another option, the Zarephath clinic model, as detailed by Alieta Eck, MD, could replace the expensive and unsustainable New Jersey Medicaid system. The plan proposes that doctors of all specialties care for the poor in or through nongovernment free clinics. In lieu of pay, the state would protect the physicians from malpractice claims.

Competition among surgery centers and hospitals bring prices down and quality up. The inflated retail price for procedures and services would be a thing of the past. Please read about the experience of Keith Smith, MD, of the Surgery Center of Oklahoma.

Independent, direct-pay physician practices would also predominate to serve patient needs and wants. Prepaid or pay-per-office visits are options. Patients could prioritize which choice best suits their needs. They would be free to experience and learn from the risks and benefits of good health lifestyle habits versus risky behaviors. Josh Umbehr, MD, a family physician at AtlasMD in Wichita, Kansas, has a working model that produces both outstanding results and cost efficiencies that are not currently seen in our insurance- and government-driven model.

Tort reform, in the form of damage caps and health courts, work in states where instituted to decrease malpractice insurance costs and the costs of defensive medicine. Consider the example by Peter Leone, a malpractice insurance expert for more than two decades.

The main points of true free market health freedom:

  • The patient-physician relationship must be sacrosanct and subordinate to no one—not insurance companies or government entities.
  • Free markets work and create efficiency and cost effectiveness through competition for all parties—patients, physicians, hospitals, labs, insurance companies, etc.
  • Patients get engaged when they must prioritize, choose options, and manage costs within their value systems.
  • Health insurance must be scaled back and competitively priced to be major medical coverage that reimburses patients for major losses. It must be individual or group sponsored, but not employer sponsored.
  • Individual choice and freedom must be vigilantly maintained for all parties.
  • Tort, malpractice, and liability reform must be achieved to reduce costs for all parties via caps on non-economic damages and health courts.
  • Physicians must be free to innovate and compete without government or insurance interference. Competition will create efficiencies to provide the best service and lowest price.
  • Primary care physicians can coordinate care using analog or digital methods as they see fit, not by government mandates or insurance schemes.
  • The Affordable Care Act must be repealed to allow real free market competition to bring efficiency and cost effectiveness to healthcare delivery, insurance administration, and patients’ lifestyle choices.



Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  5 comments for “A True Free Market Healthcare System

  1. big picture doc
    September 23, 2012 at 2:43 pm

    Well, you can write out all the great ideas that you want, but they will just collect dust on the shelf unless you have enough money to pay the lobbyists who give carte blanche to the private [yes private] insurance companies. Private industry has bought our representatives and they have paid for a supreme court who declared that corporations are people. It’s going to take a lot of people with a lot of money to beat the private insurance corporations.

  2. September 19, 2012 at 11:17 am

    This is some of the finest thinking of the 1920s. Worked great then, didn’t it?

  3. William Bodenheimer, MD
    September 19, 2012 at 9:54 am

    This is exactly what I have been telling my pt’s for years. It is spot on. Bring the free market back to medicine.

  4. J. R. Johnson
    September 19, 2012 at 9:37 am

    I agree with many of Dr. Wax’s assertions, however one cannot have a “true free market healthcare system” and a third party payer system. The two are mutually exclusive. A true free market healthcare system where the consumer pays the bills directly would leave a lot of patients unable to afford needed care- are we as a country okay with this?

  5. Pat
    September 14, 2012 at 9:20 am

    That was a good dustup article/response – worth reading.

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