What is insurance, after all?  You see, big insurance companies walk a tight rope.  They don’t just want to not pay claims.  They actually set physician reimbursement at a level below the market clearing price.  Remember that price controls cause shortages. This approach by the insurance companies guarantees access to a physician’s office is limited.  No access to the physician means no access to the really expensive goodies like surgery and MRI’s.  Oh yeah.  All the while the insurance companies are collecting  premiums!  See how it  works?  Now they have to be careful that this doesn’t get out of control or they will lose business to competitors. So, many of us pay insurance premiums, an action which guarantees difficulty with physician access!  Isn’t insurance- for-everyone a great idea!!

In anticipation of getting more serious about the care denial business, the insurance industry lobbied hard for and received the Medical Loss Ratio provision in the Unaffordable Care Act, a provision that will drive their smaller competitors out of business.  Now, with the rationing abuses unchecked by competitive pressures,  there’s nowhere for us to run.  The insurance tightrope becomes a boardwalk.  See how it works?  Thank you Obamacare.  

Remember “coverage doesn’t mean care?”  This is the purpose of the “Independent Payment Advisory Board.”  Not to keep the cost down by keeping bills low.  To lower physician payment to levels that no one wants to see patients!  If you don’t get through the doctor’s door, the rest of the wonderful care available is unavailable.  The beauty of this is that the physicians will be made out to be the bad guys.  

I’ve decided that the model adopted by many smart companies, self insurance, is the way to go.  For individuals.  We should all become our own third party administrators.  Rather than pay premiums, the payment of which virtually guarantees denial to care, we should use this money to buy care.  When a month goes by that no medical purchases are needed, stow the money away for a rainy day.  

This is exactly what self-funded companies do.  They have access to “re-insurance,” so that very expensive claims can be paid, but they pay for virtually everything else “out of pocket.”  These plans also have a history of seeking out the best physicians, as this decision alone, can determine the plan’s solvency.  Self-funded plans then are the opposite of third party plans like the giant insurance companies, seeking and finding the higher quality providers, cost-conscious all the while.  

Scary to be self-insured, isn’t it?  What if you need heart surgery or a total hip replacement?  In Oklahoma City, you can receive open heart surgery for under $25,000 and hip replacement for about the same amount of money.  This isn’t cheap, but it is as cheap as it gets.  Keep in mind this is two year’s premiums if you are paying $1000/month.  

Cancer?  Cancer-only coverage is available if you want to protect against this risk.  Very soon in Oklahoma City, affordable cancer treatment will be available, removing the worry of bankruptcy associated with this diagnosis.  If you guessed that getting this treatment out of the hospitals was the key to reducing the cost, you go to the head of the class.  They typically mark up the price of chemotherapy drugs by 10 times.  10 times!  It’s amazing the lengths to which these folks will go to avoid making a profit.

Could you be self-insured?  What do you think would happen to the price of care if vast numbers of people rejected insurance altogether and paid their own medical bills?  This lowering of prices, the result of all those more well-off and risk tolerant becoming self-insured, would bring the purchase of health services within the reach of those not as well-off.  This deflationary snowball would continue and more and more people would actually be able to afford to pay for their care, rather than purchase insurance out of fear of bankruptcy only to be denied care.  Very few people would have health needs they found unaffordable, fewer than we have today for sure.

I don’t know about you, but I’d prefer to buy medical care than to buy a worthless piece of paper guaranteeing me only a place in line.  

G. Keith Smith, M.D.