Alternative Medicine

The media love a horse race—a competition between stark alternatives. Although the present discourse presents the future of medicine as between maintaining the status quo and “Medicare For All” there are other alternatives. In an op-ed in the Wall Street Journal John Carlson explains one of them:

If Todd Gibbons from Poulsbo, Wash., has an aching shoulder or needs a physical, he can call and schedule an appointment on a day’s notice, maybe the same day. His physician is also available for phone consultations and even makes house calls. It all costs Mr. Gibbons $150 a month to cover his family of five.

Costs are so low and coverage so good because the Gibbons family goes to Vintage Direct Primary Care—a medical practice that treats patients for routine care and procedures for a monthly membership fee. Virtually every routine service—from electrocardiograms and pap smears to stitches and physicals—is included. There are no office-visit fees or copayments. All physician services and procedures offered at Vintage are covered, and all without the use of health insurance.

Without third parties taking money and adding overhead, Vintage can offer medications and lab tests not covered by the monthly fee at wholesale prices. A cholesterol blood test is $3.20 for a Vintage member, but $22 at other in-network providers, according to Fair Health Consumer. Drugs are cheaper. Vintage buys directly from three national wholesalers, which compete to provide medications at the best possible price for any given patient, and Vintage resells them at cost. A 30-day supply of the generic equivalent of 40 mg Lipitor for cholesterol is $3.30 at Vintage. At Walmart it’s $9. Sildenafil, the generic for Viagra, is 37 cents a pill. The next cheapest option in Poulsbo is Safeway at $2.13. Over-the-counter drugs are also cheaper and available in-house at Vintage. Cetirizine allergy pills (the generic version of Zyrtec) are 6 cents a tablet at Vintage, about half the Walmart price.

Costs are low and transparent. The monthly fee, whether paid by employer or individual, is predictable and easy to budget. Patients still need high-deductible insurance or cost-sharing pools to cover nonroutine procedures and care. But complementing a direct primary care plan with one of those two options is still the cheapest coverage.

For example, Atlas MD in Wichita, Kan., works with more than 100 small companies that have formed partnerships with Allied National insurance to create plans based on clinics coupled with catastrophic-care policies. Josh Umbehr, owner and medical director at Atlas, says these companies save 30% to 60% by switching from traditional health insurance plans.

Tax incentives currently discourage employers from switching to direct primary care plans. One possible fix would allow patients to use health-savings accounts to pay for membership. The IRS could make this change by redefining a direct primary care membership as an eligible HSA expense.

Cutting the middlemen out of daily health care won’t solve all of the medical system’s problems. But altering the tax code to encourage employers to use direct primary care could help control or even shrink costs. Most important, it would improve the quality of care by letting doctors spend less time filling out paperwork for reimbursement and more time helping patients.

Think of direct primary care as extending the recurring revenue model adopted by Microsoft or Netflix to health care. It sounds a bit like what HMOs were supposed to be but instead became something completely different. As noted in the op-ed direct primary care doesn’t cover every conceivable health care expense but it does cover a lot of people’s everyday experience with health care. And it would allow insurance to be limited to covering insurable risks.

10 comments… add one
  • steve Link

    Remember the demographics of health care spending? Rounding off a bit to make the numbers easier, 20% of people account for about 80% of our spending. 80% of people account for 20% of our spending. I think DPC mostly affects that second group of 20% of our spending, ie the healthier people.

    That said, I would not totally discount the DPC people. They have certainly helped to show what happens if we can lighten the huge admin (including profits) costs of our current care. However it has never beed tried on a large scale and not for very long. It requires a physician who is more willing to be involved in running their practice at a time when most new grads just want to tome out and work.

    Steve

  • I wouldn’t propose replacing all other health care with direct primary care. For example, I think we should retain what I think is the nucleus of Medicare but abandon any notion that it provides all-inclusive health care or, worse, all-inclusive health are for everybody.

    The basic point is there are more ways of eliminating middlemen than abolishing private insurance in favor of nationalized insurance.

  • steve Link

    “The basic point is there are more ways of eliminating middlemen than abolishing private insurance in favor of nationalized insurance.”

    Agreed. I have been through this with the DPC people quite a few times. They are pretty fanatical (I think). However, note that even with DPC you need insurance for major procedures and they often dont cover major chronic diseases.

    Steve

  • TastyBits Link

    It is not lower overhead costs. Compared to a low deductible and low co-pay insurance policy, it is much cheaper, but you are paying for healthcare you do not need in exchange for lower costs for the healthcare you do need.

    When it only covers a few people, it can work, but I am skeptical that it could be scaled up. As more people are covered by negotiated drug prices, they will probably need to increase to cover the manufacturer’s costs.

    Also, what happens to catastrophic insurance prices as there are fewer people paying for full coverage?

    The entire healthcare system is f*cked-up from top-to-bottom. My wife has been on the pay-as-you-go, employer provided insurance, and Obamacare – platinum and gold. The employer provided was best, but it does not compare to my socialized plan (VA). For specialized care, I see more residents than my wife, but I do not have to worry about deductibles, co-pays, or out-of-pocket expenses.

    For all the free-market advocates, how’s that social media free-market working out for ya, and for all the de-regulation advocates, how did letting Boeing certify its plane work out? Yeah, that’s what I thought.

  • Jimbino Link

    I don’t believe in insurance any more than Jesus did. For cataract surgery, I went to Rio de Janeiro, where I paid half what I’d pay here. In Mexico, I would have paid 1/3 the USSA charges. Expat residents would pay much less there.

    I am hoping for good, old capitalist competition to lower prices in the USSA once Trump starts demanding posting of prices for all medical services, whether hospital, doctor, drug or labs, on the WWW.

  • However, note that even with DPC you need insurance for major procedures and they often dont cover major chronic diseases.

    IMO that’s the role for insurance. Not regular checkups, childhood vaccinations, or birth control.

    TastyBits:

    IMO the original sin of our present system was in trying to leave it completely in the hands of private providers but that was the price that was paid to get physicians to acquiesce to the Medicare and Medicaid systems.

    My model is and always has been more along the lines of public health. Public health measures have been viewed as the responsibility of government (mostly at the local level) for a century and a half. There might still be some people somewhere who insist that we’d all be better of if we were all responsible for our own sewers and water purification but there probably aren’t many of them.

    And, of course, I stand practically alone in believing that government at some level should be providing the equivalent of direct primary care for the poor directly through a system of clinics.

  • steve Link

    “IMO that’s the role for insurance. Not regular checkups, childhood vaccinations, or birth control.”

    Just a reminder that those kinds of care are what make up a very, very small percentage of our health care budget. Also, if you care about costs, then you want insurance to cover birth control since long lasting BC is much superior, but costs a lot more. Saves more money in the long term.

    Steve

  • TastyBits Link

    @Dave Schuler

    You know my position. If a little socialism is good, a lot is better, but a little is better than none.

    I think that the VA model is far better than the present mess, and it can be used in the private sector. The VA only serves veterans, and vets are different than non-vets. (Hurry up and wait. Stand in one line to get to stand in another. Equipment is not the most up-to-date.)

    The VA model is vertical integration. When the VA decides they are spending to much money on outsourced services, they bring them in-house. If drug prices get too high, I would not be surprised for the VA to begin manufacturing drugs.

    This ties in with your post The Decline of Local Government. It would expand on the above quoted article, and simply, the local hospital, urgent care, clinics, testing facilities would be centralized under one healthcare plan and location with satellite locations as necessary.

    I am sure that @steve will tell me that it will not save money. I do not care. I am tired of having to use a supercomputer to determine which plan will get me as close to all inclusive as possible. I have paid for a platinum plan and a gold plan from two different insurance companies, and they both suck. You cannot get a straight answer from any of them, and it is a crapshoot as to whether you will be covered or not.

    We are in this mess in a large part because of the people crying “socialism, socialism, socialism”, and if it costs to much, socialize the financial industry and keep going until it is paid for – auto industry, oil industry, electric industry, entertainment industry, and so on.

  • As you must know by now this is something of a sore spot with me. Back in the 1960s before Medicare and Medicaid the health care sector comprised about 4% of the economy. It now comprises more than 16% of the economy of which at least 60% is paid from tax dollars. Medicare and Medicaid addressed genuine problems but my preferred model for handling them was the VA. The main opponents of such an approach? Physicians.

  • steve Link

    “I am sure that @steve will tell me that it will not save money. ”

    I will tell you that it might or might not. It would depend upon the rules under which it would have to operate. That said, you do illustrate why people like Medicare. You arent fussing with someone on the phone in a call center somewhere about whether or not your care is covered. No surprise billing when you find out one of the docs was not in network. No hours spent on trying to sort out the bills. Etc.

    Steve

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