Empowering patients means reducing the role of third-party payers

People love Medicare . They love it when their employer provides health insurance benefits. They also love it when insurance companies are required to cover preventive care (including birth control!) with no copay. They love subsidies, low deductibles, and so-called Cadillac plans .

All this love — for the wrong things — is why patients also have trouble finding doctors willing to take them, face high costs, and feel like they have few choices, if any, when they need help. The public needs to reevaluate how we pay for healthcare and look for policy solutions that return control of healthcare dollars to individual patients.

Practically, this looks like reducing the role of third-party payers such as the government, insurers, and employers. Politically, this looks nearly impossible because the public have come to expect that someone else will pick up our healthcare bills.

The group lunch analogy is a tired but effective picture of how the lack of direct payment ultimately drives up costs. It goes like this: When you and several friends go out to eat, you are more likely to spend more money if the check will be divided equally. Conversely, you will be more judicious with how you spend money if the bill for your order comes directly to you.

What is often lost in this analogy is that when the group lunch is sponsored by the government, our employers, or our insurers, these sponsors can take certain dishes off the menu. In healthcare, the dishes are hospitals, providers, and treatments. The person who pays has control.

But the public have been sold a lie: We believe that in healthcare, third-party payment is necessary, or better. In reality, healthcare is expensive in large part because we’ve expanded the role of third parties , and in so doing, we’ve separated patients from decisions about their care and the associated costs .

Consider that the few healthcare services that are typically paid for out-of-pocket by patients (like LASIK eye surgery ) have some of the most transparent and competitive prices and some of the best customer service. Similarly, when drugs move from prescription-only status (where they are often financed through insurance) to over-the-counter status (where patients buy them directly), their prices often drop dramatically . This is the power of direct payment and downward pressure on price.

Of course, there is a role for insurance. Traditionally, insurance served as a backstop against unexpected or catastrophic costs. This is the way we use other types of insurance. But health insurance in the United States has drifted far from this. The public has found that we like sending someone else the bill, even for a routine doctor’s appointment.

And because our premiums don’t reflect our risk of filing a claim, and because for most people, someone else (the government or our employers) pays the premiums, it is better for us to have more services covered by insurance. It shifts the cost of our healthcare away from us altogether — or at least it feels that way if we don’t consider our tax bill or how our employer-sponsored health insurance lowers our salary.

People can’t be blamed for wanting to keep this system in place, even if it’s exactly this system that makes healthcare so unaffordable, regressive, and uninterested in providing good customer service in the first place.

But there’s one sign of hope from outside the political arena: the organic proliferation of direct primary care. In the DPC model, doctors take third parties out of the mix and bill patients directly for primary care services, usually as a monthly subscription. DPC beats traditional primary care on several factors: longer patient visits , lower patient panels (meaning fewer patients for each doctor to manage), and higher satisfaction for patients and doctors .

We should encourage more options for DPC and avoid limiting it. The government could allow people to pay for it with their health savings accounts and remove barriers for Medicaid patients to access DPC. States could act (and many have) to remove DPC from the purview of the state insurance regulators.

But more than that, we should work toward a healthcare system with less third-party payment in general. When patients as voters oppose efforts to foster more direct payment in healthcare, we are our own worst enemy. While it’s often not presented in politically palatable terms, true empowerment for patients will only come when we control healthcare dollars ourselves.