Friday, October 19, 2012

Adalja on 3rd Party Payor System

Dr. Amesh Adalja (clinical faculty at University of Pittsburgh) has a new Forbes OpEd, "Let's End The Enslavement Of Healthcare Providers".

He discusses the problems of our current 3rd-party payor system, noting the following key points:

1) The 3rd-party payor system "sets up is a conflict between those who pay for healthcare (i.e., insurance companies and taxpayers) and those who consume healthcare. If healthcare is a cost or a liability to a third party, the tendency is to seek to reduce costs. Hence, the policymaker’s view that healthcare consumption is a drain on the economy."

2) The current system is an artifact of WWII-era government regulations, not the free market.

3) Instead of doubling down on the current system (as ObamaCare does), we need to transition to free-market solutions, such as Health Savings Accounts (HSAs).  Dr Adalja notes:
"[H]ealth insurance would be utilized solely for catastrophic health events for the majority of individuals (e.g., major surgeries, chemotherapy, long hospitalizations, etc.), and routine healthcare transactions would be between provider and patient. This devolution of power back to the two transacting parties would result in increased physician autonomy, patient empowerment, and a drop in the prices charged for healthcare services as the absence of a third party would eliminate much overhead while allowing more flexibility in price structure."
4) I especially like his identification of the fundamental problem:
"The pervasiveness of the viewpoint of healthcare as a right—it is even included in the U.N.’s Universal Declaration of Human Rights -- is the root cause of all our healthcare woes. It has created an ever expansive footprint for government, disintegrated the provider-patient relationship, and suspended the operation of the free enterprise system in healthcare."
(Read the full text of "Let's End The Enslavement Of Healthcare Providers".)