Jim Epstein: Doctors Going off the Insurance Grid

Lynne Kiesling

Reason’s been knocking it out of the park lately. Consider this article from Jim Epstein on doctors who have chosen to set up their practices to provide direct primary care. They don’t take insurance, they consult with patients in more flexible ways, and they charge lower fees as a result.

This model is growing in popularity. Leading practitioners of direct primary care include Seattle, Washington-based Qliance, which has raised venture capital funding from Jeff Bezos, Michael Dell, and comedian (and Reason Foundation Trustee) Drew Carey; MedLion, which is about to expand its business to five states; and AMG Medical Group, which operates several offices in New York City. Popular health care blogger Dr. Rob Lamberts has written at length about his decision to dump his traditional practice in favor of this model. …

Direct primary care is part of a larger trend of physician-entrepreneurs all across the country fighting to bring transparent prices and market forces back to health care. This is happening just as the federal government is poised to interfere with the health care market in many new and profoundly destructive ways.

As a consequence, these doctors may earn less in annual income, but they experience less stress and are happier in their jobs. Several of the doctors Jim interviews discuss how they dreaded work, they hated the paperwork, and the short appointments forced on them by the administrative process made them hate their jobs and wonder what happened to the patient care that was the reason they decided to become doctors in the first place.

And the cost inflation accompanying third-party payer health care … take this example:

When she was operating a traditional practice, Davidson witnessed firsthand how our “payment plans for routine expenses” drive up prices and block innovation. She recalls that one insurance company paid $118 for a routine PSA test. Now that her patients pay the bill directly the cost is $18. Insurance used to pay $128 for a bag of IV fluid. Now Davidson doesn’t bother passing on the cost of IV bags because they run $1.50 each.

In the second half of his article Jim digs into the consequences of the bilateral monopoly market structure between hospitals and insurance companies, and why the incentives in that administered bilateral monopoly structure lead to higher costs and quality degradation. He also analyzes high-deductible plans as a way to induce consumers to be more cost-conscious within the strictures and poor incentives of a government-run industry (and make no mistake: while the form of intervention here is regulation and not provision of health services by the government, it still functionally amounts to a government-run industry).

Jim’s article is an outstanding piece of journalism, well worth your time and consideration. And if you, like me, reach the end of it feeling more optimistic because some medical entrepreneurs do exist who can and will go off-grid, then that bodes well for our future. It certainly bodes better for our future than either what we have now or the government-run future.