Free Market Surgery

I thought I was going to read another story about evil insurance companies and why we need socialized medicine. Instead, this clinical vignette makes a great case for the free market as a way to provide good care at a reduced cost.

James Schlieper drove five hours from Central Texas to a surgery center across state lines for his hernia surgery — a procedure his catastrophic insurance doesn’t pay for. Hospitals back home quoted him cash prices of over $30,000.

Then he went online and found the Surgery Center of Oklahoma’s cash price: just over $3,000.

“It’s great. What do you want? That’s how much it costs.”

Anesthesiologist Keith Smith runs the center but they only perform certain outpatient procedures — like knee or gall bladder surgeries — and they don’t take insurance.

“Patients are quoted anywhere from six to 10 times what we have listed online,” Smith said of other facilities.

But New York University health economist Sherry Glied says not everyone can pay cash and this won’t solve the system’s larger problems.

The Affordable Care Act demands insurers cover a host of health benefits such as prescriptions; maternity and newborn care; mental health and substance abuse; and breastfeeding counselling and supplies. These services – as well as no co-pay for flu shots, annual physicals, and birth control- are wonderful things, but they drive up the cost of premiums. 

A patient told me the sage advice his mother gave him 50 years ago when he left home, “Make sure you have hospitalization.” The point is still true today. Make sure you have catastrophic coverage for the big bills. That is what insurance is for. The smaller bills you can work out yourself, perhaps with a Health Savings Account.  Mr. Schlieper took that advice. He controlled his healthcare costs with a catastrophic policy. He shopped around. He realized that paying $1000 a month for an ACA compliant healthcare package was a waste of his money. He didn’t want to pay for services he will never need. Instead, he chooses how to spend his own money. What a revolutionary concept. 

The main problem he faced is that hospital systems fix their prices and collaborate with insurance companies so there is no true free market. If we had more surgery centers like Dr. Smith’s, we could provide better access to care and lower costs.

And, what is the response of the Harvard trained expert Health economist? She objects because Mr. Schlieper and Dr. Smith didn’t solve the ‘larger problems.’ Well, they solved one man’s problem. Maybe economists should admit a good solution when they see one. Health economists haven’t done well solving the larger problems themselves.

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