Another Blow to Free Market Health Care

dpcby James A. Bacon

Citing fiscal reasons, General Assembly Republicans have blocked Medicaid expansion that would have extended medical coverage to 400,000 uninsured Virginians. But they have tried to enact other measures to make medical care more accessible and affordable. Among other ideas, they have fought for expanding medical clinics, rolling back Certificate of Need restrictions on competition, and pooling insurance company data to create databases that allow analysts to spot inefficiency and poor outcomes in the health care system.

This year, a bill sponsored by Del. R. Stephen Landes, R-Verona, would have eliminated legal ambiguities discouraging physicians from contracting directly with their patients to provide primary care services for a fixed monthly fee. The bill declared that the contracting arrangement, commonly known as Direct Primary Care (DPC), did not constitute insurance and, thus, was exempt from insurance regulation. DPC proponents say it provides a cheaper alternative to accessing primary care through health insurance, which adds layers of bureaucracy and cost.

But Governor Terry McAuliffe vetoed the bill last week, saying, “While I applaud the patron’s desire to increase access to care, I feel this concept needs further scrutiny and study. … Not only would a product like this deter an individual from purchasing health insurance, it would still not cover any catastrophic care or chronic conditions requiring a specialist.”

Landes’ bill passed the House 97 to 0 with broad backing from patients, family practice doctors, small business lobbies and chambers of commerce. But it ran into trouble in the Senate when the insurance industry began lobbying heavily against it. As reported by the Associated Press:

Insurance companies don’t oppose the idea of direct primary care in principle, but don’t want imperfect legislation rushed through, said Doug Gray, executive director of the Virginia Association of Health Plans. This legislation, he said, is unnecessary and provides no consumer protections.

McLaughlin has joined a tiny but growing movement of doctors nationally — there are only a handful in Virginia — who have begun to provide subscription-like service to patients, a model known as direct primary care.

Similar to concierge medicine for the rich, direct primary care can appeal to middle and low-income patients who struggle with high deductibles or can’t afford insurance at all. McLaughlin charges $60 a month for people over 31, $30 for 30 and under and $15 for kids whose parents are enrolled.

The change from typical primary care has been “wonderful,” McLaughlin said: She can focus on fewer patients, spend more time with each one, and worry less about dealing with insurance companies. Other doctors are taking notice, she says, including young ones, who might otherwise avoid going into primary care because of its relatively low profit margins and high-volume demands.

“This can change the trajectory of our whole system,” McLaughlin said.

That may be the real problem with Direct Patient Care — it would change the trajectory of the system. Many players in the health care industry are vested in the status quo and don’t want to see the system change, except on their own terms. And many politicians are so ideologically committed to an expanded role for government in health care that they want to grind out market-based alternatives before they can prove their efficacy. Meanwhile, legal uncertainties may discourage other physicians from following McLaughlin’s example, and Virginia consumers will be denied a choice that might benefit them.

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11 responses to “Another Blow to Free Market Health Care

  1. You nailed it! But of course, folks like Larry and Peter will come up with any number of straw man arguments against such an idea, mainly because they, like the politicians you cite, want single payer health care, leaving no choice for anyone. They won’t be able to say why someone shouldn’t be able to make that Direct Care choice, other than to say that they and their ilk know better than the people making the choice. The poor blighters! They need to be protected from themselves. They might make a mistake. Just like school choice, which Larry now sorta kinda maybe allows might be worth looking at, choice in medical care and how one pays for it is about freedom as much as it’s about how the medical care system works. But Larry and Peter aren’t for freedom; they’re for government control. I suspect, much as I’m not a particular fan of Trump, that Trump might blow that “government control” notion out of the water, and that may be why he’s doing so well.

  2. Of course – when someone becomes ill beyond what he direct primary care covers – what happens?

    Do taxpayers then pick up those costs?

    or in Crazy/Bacon world – these folks just go off and die cuz they can’t pay?

    while we’re on the subject – I wish Bacon would do a blog post on the latest from the GOP -The Sessions-Cassidy plan, i.e. the HELP Act, short for “Health Empowerment Liberty Plan”

    It’s truly revolutionary – because it repeals the tax breaks for employer-provided health insurance and replaces it with a $2500 tax credit for each person regardless of whether their employer offers insurance or not.

    that plan actually COULD work with Direct Primary care because the $2500 could only buy HSA/Catastrophic and everything else is an out-of-pocket cost which would include direct primary care.

    Notably this GOP Plan still bans insurance companies from denying insurance to those with pre-existing conditions which is a real buzz killer to truly free market health care…

    I note also that in past Blogs – Jim Bacon himself has advocated getting rid of employer-provided health insurance so maybe our views are CONVERGING! eh?

    Crazy – for gods sake stay out of the right wing catnip!

    • I hadn’t heard of the Sessions-Cassidy plan — I’m all for it.

      It’s not really a topic for Bacon’s Rebellion, though, because it’s a Congressional measure…. Unless insurance plans get state income tax breaks, too, in which case, Virginia could enact a mirror measure.

      For the record — I don’t advocate getting rid of employer-provided insurance, just special tax breaks for employer-provided insurance that others, who don’t get insurance through their providers, don’t get.

  3. “Insurance companies ….. don’t want imperfect legislation rushed through.”

    It sounds like they are describing Obamacare. That certainly was rushed through (the Senate voted on Christmas Eve 2009) , and, to say the least, has been very imperfect.

  4. geeze – saying Congressional action on health care is not a Virginia issue at the same time you go on and on about things like Dodd Frank , the national debt, Boomergeddon, etc al?

    come on guy!

    the tax break for employer-provided DOES include state tax also BTW.

    then we have this: Senator Bill Cassidy(R-LA) introduces The Primary Care Enhancement Act of 2015

    and of course MedicAid… HIPPA, the VA, Medicare –

    so Jim Bacon opposes the tax breaks for employer-provided but favors the govt prohibiting insurance companies from denying coverage for pre-existing conditions and also supports community-rated premiums where everyone in a class pays the same premium regardless of their individual age and health status?

    I would say the number one biggest impediment to free market health insurance are the rules that do not let the insurance companies drop people who get sick and become costly and if they could drop those people they could keep costs down for the the others.

    that’s the real free market. any kind of govt control over that is sorta like saying you’re only a “little” pregnant.

    I bet even Crazy agrees with that!

  5. I have found so many blockades for health care progress because of legislators that care nothing for people, only for the corporations and their re election dollars.

  6. Of course the ultimate free market – is that each individual saves money to pay for their health care and does not rely on others to come rescue them when they get sick.

    the truth is that a lot of people want “protection” from someone else. They say they just want to buy it from a company and not have the government involved but they never seem to grasp the reality that without the govt -no company has to sell you insurance to start with – and they can increase the price or dump you anytime that company starts to lose money on you.

    so folks play this pretend game that it’s bad companies and bad govt that is the root of the problem.

    Let me say once more. No company has to sell you insurance and any company, without the govt being involved – would dump you in a heartbeat once you filed a big claim.

    At some point those folks who say they don’t want the govt involved – ought to be more honest about it.

    • “The ultimate free market – is that each individual saves money to pay for their health care and does not rely on others to come rescue them when they get sick.”

      Totally wrong — again. Insurance was one of the free market’s greatest inventions. It arose as a tool to manage risk by spreading the risk over many people. What’s NOT free market is when government forces people to share risk whether they want to or not.

      • free market is when insurance charges you for risk for you and can decide to not cover you.

        that’s the truth.

        insurance is voluntary on the part of the companies in a true free market.

        If we had a true free market in insurance, many, many people either would not be covered or their premiums would be so high they could not afford it.

        speak the truth here guy.

        ” What’s NOT free market is when government forces insurance companies to share risk whether they want to or not.”

        come on Jim – is it so hard to admit the truth here?

        I would expect that of any truly principled conservative.

  7. A true free market in health insurance – is one where the insurer, not the govt – would decide who to offer insurance to and how much to charge for it – and under those conditions we WOULD have a TRUE free market in health insurance. But that’s simply not the case with employer-provided insurance and few people either know it or will admit it.

    And because of that – we never really get to the actual facts in these discussions and instead keep talking about ideology.

    Our problem with this issue has been claims that it’s govt rules that mess up free market forces in health care and health insurance and there is unquestionable truth to that statement but the bigger truth that the free market advocates like Mr. Bacon and others continually refuse to admit is that it’s the govt that forces Employer-provided insurance companies to not only offer insurance to people they would not normally do so – without those rules – but also that the same govt rules (HIPPA) require the insurance companies to offer insurance at the SAME price to all people regardless of their individual health status or age whereas in a true free market – each person would be charged a different price according to their individual age and health status.

    Anyone here who has employer-provided insurance ought to be able to verify this for their own insurance:

    1. most every employee can buy the insurance the employer offers and

    2. it’s the same price for each employee on an individual or family basis – no matter the age or health status.

    People apparently believe it’s the employer that makes these rules and it just so happens -every single employee has the same rules!

    The reality is there is a Govt Law and Regulation called HIPPA that REQUIRES coverage for all and at one price:

    * Limits the ability of a new employer plan to exclude coverage for preexisting conditions;

    * Provides additional opportunities to enroll in a group health plan if you lose other coverage or experience certain life events;

    * Prohibits discrimination against employees and their dependent family members based on any health factors they may have, including prior medical conditions, previous claims experience, and genetic information;

    *Guarantees that certain individuals will have access to, and can renew, individual health insurance policies.

    https://www.dol.gov/ebsa/publications/yhphipaa.html

    This OUGHT TO BE a key central point in any discussion about so-called “free market health care – and insurance” since HIPPA applies to the 70% of employed who are offered employer-provided insurance.

    An employer does not have to offer health insurance – but if they do – it has to conform to HIPPA regulations.

    I’m quite sure some folks – who almost unknowingly take for granted the HIPPA rules with employer-provided health insurance might think it would be the same for direct primary care. (DPC) but would that be true?

    Could a doctor charge different patients different fees – based on the prospective customers age or health ? Could different doctors charge different prices? Could different doctors bundle different services as covered and exclude others on a per patient basis? Could they simply refuse to offer DPC to some people because they think they will be a higher financial burden to serve?

    How would prospective customers know what different doctors were offering and to be able to shop and compare prices – i.e. would doctors actually be required to post their prices or not change them or notify when they do change?

    I would assert that ALL of these things – in a true free market – would be things that Doctors could decide – not fettered by govt rules.

    I would further assert that many people, including those who say that DPC is a ‘free market’ benefit – would want the govt to regulate it such that doctors could not arbitrarily vary the prices and and services according to the “market”.

    And I say this because – right now – people tend to think that employer-provided insurance is “free market” insurance where it is the employer that offers it and it is just some sort of coincidence that pre-existing conditions are covered and everyone in the same company pays the same price for insurance. They do not realize that it is the Govt that is enforcing the pre-existing and everyone-pays-the-same rules -not the employer.

    So those folks just assume that’s the “way” health insurance “works” and they buy into the pro-free-market folks claims that it’s the govt that is harming the free market in insurance – without every really thinking that their OWN employer-provided insurance has those same govt rules that require pre-existing coverage no matter health status or age and same subscriber pricing no matter age or health status.

    So we have this Alice-in-wonderland debate going on about “free market” principles in health care -where major fundamental facts about employer-provided is not even acknowledged – and just taken for granted, when, in fact, it’s the 600lb gorilla in the “free market” healthcare world.

    So we have folks who already have the benefit of fully-protected employer-provided health insurance – opining about how those who don’t have benefit of it – should be getting their health care through the “free market” and if they did – it would be more accessible and affordable.

    And the simple truth is – if it were a true free market – insurance companies – and doctors – and other providers would not even offer coverage to high-risk individuals or if they did it would be at rates 5, 10 times higher than low risk individuals.

    Imagine that approach – used for employer-provided insurance where the insurance company just simply would not offer insurance to some people and to others – it would be at far higher rates than others in the same company – even co-workers doing the same work for the same salary -the cost of the health insurance would be far different on an individual employee basis.

    So – that’s why I say – the ongoing discussion about implementing “free market principles” in health care and insurance is basically a bogus and dishonest discussion if we refuse to to admit that employer-provided is the biggest offender of govt rules against free-market health care and insurance.

    Until we honestly admit that this is the case -then these continuing discussions about how to implement free-market principles in healthcare is disingenuous.

    If we truly and honestly want free market principles – the first place to start is employer-provided where we would let the insurance companies decide who to cover or not and what to charge each person – because that’s what the free market would actually do -without govt rules.

    And all I really have tried to do here in these many discussions in BR is to get the free-market advocates to simply admit this -so discussions of the free market in healthcare are honest and deal with facts and realities and not ideology.

    DPC are, in fact, things that would expected in a true free market and I would further ask folks – do they think that if/when DPC is allowed-that the govt will ALSO impose “rules and regulations” about how pricing

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