Sunday, August 16, 2009

Paying for Health Care the old-fashioned Libertarian Way: With Cold, Hard Cash $$$

by Eric Dondero

Forget Government involvement. Forget even the Insurance Companies.

Why not return to the traditional purely free market way of seeking and providing health care through direct payment to the Doctor for services rendered.

Seems simple right? Why has this time-honored practice been completely missing from all the discussions by the politicians in Washington? Why hasn't Obama, or even the Republicans, mentioned this truely single payer system?

Out in the Heartland, at least, the people are catching on.

In Lakewood, Colorado, Rich Olver has no health insurance, and he wants to keep it that way. Olver pays for all his health care needs with cash. From his editorial in the Denver Post, July 31, "Paying Cash for Health Care":

As one of the millions of uninsured, I’ve developed the habit of shopping for my medical care. The good news is that there are deep discounts to be had if you can pay at the time you receive care. Nor does cost have much to do with quality of care. Some top doctors give deep discounts for not having to deal with the “medical insurance companies”.

While some quacks haven’t figured out that getting paid up front is easier, faster, and in the long run cheaper than waiting 3 to 6 months or never getting reimbursed by said “insurance” companies. (Certainly you’ve noticed that job One at the insurance companies is to NOT pay claims, and they’re just making up reasons to not pay these days)
So, where do you find cheaper rates? Olver makes a simple suggestion: Shop on the internet:

we uninsured don’t have to pay their exorbitant fees. There is always competition.

These days most of it resides on the internet. Recently my doctor suggested a test. A call to LabCorp, and it priced out to $125 (sorry sir, no discounts for paying cash). But it only took 5 minutes on the internet to find the same test for $49.
And now there's even a twist on the growing cash for health care movement: Barter on Craigslit:

From the SF Examiner, Aug. 14:

The Web site Craigslist says overall bartering posts have more than doubled over the past year as the recession took hold.

People who barter for health care say the practice allows them to stretch their resources or receive care they couldn't afford. But bartering can be tricky, and not every health care provider will consider it.

Some doctors are open to bartering directly with patients. Others do their trading through an exchange like ITEX.

Health care bartering has risen dramatically since the recession began, as people lose their health insurance and consumer spending drops, said Allen Zimmelman, a spokesman for the Bellevue, Washington-based trade exchange ITEX Corp.
The article goes on to cite a couple examples: A woman in rural western Virginia who trades fresh produce from her organic farm to a local doctor to keep her premiums down, and a man in New Jersey that traded his web design services with a dentist, for cosmetic repair of a chipped tooth. Continuing:

Josefs, the Web site designer, found quick acceptance for his services. A dentist about an hour from his New Jersey home responded a few days after he posted a notice last year on Craigslist... Josefs had bartered successfully once before — by doing some Web design work for a sushi restaurant he and his wife frequent — and decided to try again. After calling an insurer to make sure his barter partner was an actual dentist, Josefs got about $900 in work in return for designing a Web site for the dental practice.

He and the dentist hashed out a price after Josefs showed some sample Web sites and explained their cost.
And bartering may be bigger than you think.

From the San Diego Union-Trib. March 9, 2009:

Although bartering is an age-old way of obtaining goods and services
that was largely replaced by currency, U.S. businesses have never
stopped using it. Bartering among U.S. companies accounts for about $4.3
billion in transactions, according to the National Association of Trade
And like so many other proposals, it's the libertarians who are out on the forefront of the cash for health services movement.

Columnist Arnold Kling writes at the Library of Economics & Liberty website:

The basic problem that the Democrats have with health care reform is that when it comes to taking our system away from free markets, there is just not that much farther we can go. We already regulate the practice of medicine and allied health services with licensing cartels. We already regulate individual health insurance practically out of existence.

In contrast, there is a lot of room to move health care in the other direction--toward free markets. The only real health care reformers are those of us on the libertarian fringe.
Libertarian candidates are even emphasizing the cash for health services issue in their campaigns.

Dr. Tim Nerenz is a Libertarian Party candidate for Congress in Wisconsin. From his campaign website:

The way to fix an economic efficiency problem is to increase choice and competition; add in the component of direct payment for services, and you have a Libertarian health care alternative to government run health care – Medical Choice.

We already pay for many types of health care services directly – optometry, dentistry, chiropractic, many pharmacy products and services, routine office visits, for example. The simple act of paying the entire amount of a service, rather than a tiny co-pay portion, make consumers and providers focus on benefits and costs of health care services, just as they do any other purchase decision.
Hopefully, Libertarian Party candidates such as Dr. Nerenz can push the issue more into the mainstream of American politics. And hopefully, Republicans will be quick enough to adopt this libertarian ideal.

The completely free market alternative of cash and barter could provide a powerful counter balance to the Progressives looking for a complete government takeover.


Dan Sheill said...

Great article. You've really stepped it up the last couple days. Bartering will also increase as the currency goes to shit, which happened in Russia in the 1990s. Those with the means to do so will find a way to get the care they need even when the government will be rationing it.

Ran said...

Thanks Eric, do you read Chris Muir's Day By Day?

Genifer said...

I tend to agree with what you are saying; however, I wonder what your solution is for things that can't be bartered, i.e. medications, hospital procedures? Do you think that if insurance had less involvement in pricing, that prices of these things would go down?
Do you have another solution for situations where people just can't afford part of their care, even if they could pay cash for another part?

ajnock1976 said...

Barter is an inefficient alternative to money. That's why we use money. But governmental management [yikes!] of the national checkbook gives us, well, bad things.

That said, though, there is an additional point made here in passing.

Medical insurance companies aren't free marketeers. They tend to be the kind of businesses that spring up only due to governmental intrusion & subsidies. They are less inefficient than the government running things, but that's about it.

Compare grandma's bridge insurance & her insurance that deals w/medicare vs. grandpa's dealings at the VA.

It's always appalled me the way veterans get the shabby treatment they get at VA hospitals. If the VA hospital system was abolished, oh, say, tomorrow morning and each eligible veteran had a VA medical card on par w/grandma's medicare card [yes I know a lot of grandma's were veterans] it would a) improve service to veterans and b) lower VA medical costs.

The problem is there is a bureacracy that would be-forced-to-look-for-work-outside-of-civil-service. A fate too ghastly for them to embrace.

Returning to the main point: Dr. Ron Paul has done this himself. Lot's of MD's have.

I believe Obama-care [Hilary care under an Obama mask] will be blunted enough to either a) be far less worse than proposed and b) might be stymied enough as to kill it.

your most faithful and obedient servant

Alan Turin


Now if you could get your MD or any other provider to take Euro's...


Tajitj said...

About time some people start to realize this. I bought stock in a company who sells monthly memberships that give large discounts to people who pay at time of service for healthcare. It is a growing market either by peoples choice or because of harsh times. People without insurance are realizing there is something very cheap they can do so save money in case something happens.

Eric Dondero said...

You're welcome Dan & Ran.

Hey, that ryhmes.

Eric Dondero said...

You all, please try to mention cash & barter as alternatives to government takeover, as much as you can in emails and to friends, and associates at work, and family, as much as you can.

We have to expand the debate in our libertarian direction. The more we do that, the more outlandish the progressives (read Fascist!) will seem.

The Right Guy said...

I think paying cash would work for regular doctor's visits. The problem is that if you need costly treatment or diagnostics, it could bankrupt people. I am not sure that a totally free market would bring the costs of such things down enough for most people to afford. I could be wrong, and I'd like to be. I guess if demand went down enough, they'd have to lower their prices until demand picked up. I like the idea though... I also think that the malpractice premiums need to come down too.

Kn@ppster said...

Nice piece!

Alan Turin writes:

"Barter is an inefficient alternative to money."

Not necessarily.

For one thing, that claim depends on how "efficient" the particular money in question is.

Between open taxation, inflation and the costs of regulatory compliance, the real tax rate on US currency earned "legitimately" is probably in the neighborhood of 50%. So that guy who got "$900 worth" of dental work in return for web design would have had to earn about $1800 punching a clock for it to be as "efficient" as the trade was.

Secondly, the information age has reduced the inefficiency of barter by making it much easier for exchangers to locate and communicate with each other.

Wesley said...

Great article, Eric. At one of my previous jobs, I was one of those newly defined as "under-insured". I had a health-insurance plan with a $2000 deductible. It was the greatest healthcare that I have ever had. I felt the security that if anything bad happened, I would be taken care of, and I got all of the benefits of paying cash. I'd tell the doctor or hospital that I was paying cash up-front, and they'd immediately give me a discount, sometimes as much as 75%. I got stitches at a hospital for less than my co-pay was for a similar incident when I had a PPO.

Usually they'd even do the paperwork for me to get credit toward my deductible with my insurance, but even if they didn't, I could get credit by just sending a copy of the receipt.

Paying cash for healthcare is best for all parties.

eda said...