photo illustration of Ben Franklin wearing a health care mask and bonnet on a one hundred dollar bill

Simpler And More Direct Pay: How to Salvage American Health Care

America’s health care system is in a state of disarray. Hospitals are closing, patients have no way of knowing what services are going to cost, and – on top of that – the primary method of paying for health care in America, insurance, is becoming less and less affordable. In order to see positive change, America needs to pass serious reforms to the system. In his latest research brief, JLF’s Jordan Roberts explains that health care reform should move forward in two major forms: simpler insurance and more direct pay. Roberts writes:

[R]eform in our health care system needs to take place on two fronts. The first focuses on making insurance more affordable and easier to use. The second emphasizes patients paying directly for much of their health care, without an insurer. I believe with proper reform in these two areas, a health system will exist that provides meaningful alternatives to Americans.

Roberts writes that health insurance is complicated and difficult to use. A large portion of that comes from government mandates that make insurance more expensive. He explains:

It’s hard to access the health care system without insurance, but insurance is so expensive, many can’t afford it. This is a direct result of regulating the parity and robustness of health insurance plans through such things as Obamacare and state-level insurance mandates. Insurance regulations add layers of costs and interfere with free negotiations between insurers and providers. This is a significant reason insurance is so expensive and so difficult to understand and use for many Americans.

Roberts encourages more direct transactions between patients and health care providers. Roberts explains direct primary care providers and up-front cost surgery centers have saved patients money and stress by eliminating surprise bills. Roberts writes:

Paying for health care without insurance may seem like a foreign concept in present times. But there was a time direct-pay models were the norm in health care and insurance was used for unpredictable, catastrophic events. The lesson here is that despite the contemporary reliance on insurance, an affordable direct-pay model was once very common. It’s now making a comeback, and it’s scalable to the entire industry.

Ultimately, America’s third-party payment system exacerbates the problem with the nation’s health care system. As Roberts eloquently states:

We lean on health insurance so much that we miss the bigger picture — health insurance may be why health care costs so much. The more we rely on health insurance to pay for health care, the less sensitive we are to prices that drive up demand, and the more it ends up costing all of us. Patients have ceded all consumer power to the insurance companies. No one, including those involved in the process of purchasing health care, knows the true price. Consumers pay a monthly premium to access health care via insurance and are therefore shielded from any idea of costs. This creates a strange world where the consumers aren’t the ones directly purchasing the product, and the firms in the market aren’t directly responsive to consumer demands — the perfect recipe for a nonfunctional market. Health care in this country will become more functional when patients start buying their health care themselves.

Read the full brief here. Read more from Jordan on health care here.

Brenee Goforth / Marketing and Communications Associate

Reader Comments