This is another post inspired by a reader question. Awhile back I wrote an article about how I proposed to implement medicare for all based on state medicaid systems. And someone posed the question, what if we had an all cash healthcare system? In this scenario, we would get rid of the insurance companies and healthcare providers would have to compete in the open market. To some degree, in things not often covered by insurance (chiropractic, vision, dental) this is already the case. It serves as an example of what that might look like. So let’s travel down this road and think about what an all-cash system might look like.
You get care, you pay
The first, and most obvious idea here is that people would pay for the care that they can afford. As I said already, this is often the case in vision and dental care. Many people don’t have vision and dental coverage and so providers of those services keep prices reasonable and often offer payment plans for larger procedures. There is a whole credit system (you’ve heard of care credit?) to manage this kind of thing.
I have eye issues and it is $115 for my eye exam and my contacts are around $200. That’s at least money I can put together. However, this would be a major change for general clinicians. One of the reasons the cost of healthcare has gotten so high is that insurance companies only pay part of the bill that they are sent: around 65%. As long as they get a discount, they are happy. Doctors are forced to basically over-charge in order to get the money they actually need to cover the cost of care. This would go away in an all-cash system. The pharmaceutical companies would be in the same boat. The cost of their drugs would have to come down to accommodate what people can actually afford.
Rather than keep low prices and lose out on insurance patients, the medical field has increased prices so that when they bill insurance, they get some of the money to actually cover care. In a cash system, doctors and hospitals would have to lower prices because the patient is the one doing the paying. This would likely lead to a medical arrangement already popular among the wealthy in Britain and that is growing in popularity here in the U.S.