I blog about free markets in medical care and transparent pricing.
I noted in a previous blog that now that Medicare no longer pays for B 12 shots, their availability will become greater and their price will drop. ”What about the poor,” you say. Actually, the poor are the true beneficiaries as the price will drop to a range affordable for them. In short, the price will become what the price should become, as sellers and buyers dance until equilibrium occurs, leaving neither surpluses or shortages, what economists call the “market clearing price.”
I was asked earlier today in an interview about payment for dialysis and how that fit in to my “free market” medical ideas. Dialysis is expensive. I would argue, though, that its high price is primarily due to the presence of the mother of all third party distorters, Uncle Sam. If dialysis were no longer covered by Medicare, what do you think would happen to its price? Its availability? Why should it be any different from B 12 shots? Without government administered dialysis, the price would fall. Charities would form to pick up the slack and would render more dialysis for far less money. Bastiat’s dollars not wasted from the previously overpriced dialysis care could be used to purchase more dialysis, for someone who could otherwise not get it.
Now let’s change gears. Why wouldn’t physician services follow the same economic pattern? They would and they do. What would happen to physician fees in the absence of third parties? If you said they would fall and become more available and abundant, you go to the head of the class. Just as Medicare patients should celebrate the decision by Medicare to no longer pay for B 12 shots (prices will fall and the shots will be more available), these same patients should celebrate physician services no longer being paid for by Medicare. Physicians who “opt out” of Medicare are a great example. This is the only way these physicians will see patients “covered” by Medicare. Their professional services would otherwise be unavailable to these patients. Their fees are transparent and low after opting out. This physician defection removes the scarcity-producing price controls and therefore improves access for the elderly. This financial arrangement, limited to the patient and their doctor, also removes rationing influences like “best practices,” and results in care that is customized for each patient, not care that caters to a faceless Medicare bureaucrat.
Look at the prices on our website. These prices have made surgery an affordable option for many who would never have been able to have access to this care, thanks to our friends at the “not for profit” hospitals. These prices are contingent on the absence of a third party. Lower prices, better access.
The Unaffordable Care Act (UCA) institutionalizes the distortion of the government and third parties on health care costs, a situation that will drive prices through the roof and simultaneously create long waiting lines. Higher prices, less access. Once again, remember that this is intentional, as the crisis created by the UCA will lead to many begging for even more government “help” in the form of a bankrupting single payer system
Smart patients should be begging their doctors to get “off the grid,” to “opt out.” Smart Medicare patients should be encouraging their doctors to do this, as this will mollify the physician’s fears of this bold move. Smart patients should be asking their doctor to be thinking about how much they would charge if the patient paid cash.
Many physicians have “opted out” of Medicare, thanks to the writings and advice of the Association of American Physicians and Surgeons. As smart a move as this is for the doctors, their patients are the primary beneficiaries. Lower price, improved access. More and more doctors will make this move. I think that many more would do it with the encouragement of patients who understand the basic economics of the distortions of third parties, which are nothing more than government charlatans masquerading as “protectors” of the people.
G. Keith Smith, M.D.