By Bryan Fischer
Follow me on Twitter: @BryanJFischer, on Facebook at “Focal Point”
The New York Times today indicates that as much as one-third of all medical expense in the United States is due to unnecessary tests and treatments.
The reason for this is simple: we have a third party payment system. Either the employer or the government pays for the bulk of health care costs. This means the patient - who is not paying out of his own pocket - has no reason and no incentive to eliminate unnecessary expenditures, and the doctor has every incentive to order as many tests and procedures as he can get away with.
The latest information I have seen indicates that consumers are digging into their own wallets for only about 12% of their own health care expenditures today. The other 88% is being paid by a third party.
That means the money is being paid out by a bureaucrat in a cubicle somewhere who is not the patient, not the doctor, is not in the room when the exam or treatment is being performed, and therefore is in the worst possible position to make health care decisions that affect somebody else's life and health.
The solution is easy: catastrophic insurance policies with high deductibles and low premiums, with the savings from lower premiums plowed into a Health Savings Account controlled by the patient.
When I set up a non-profit organization in 2005, I arranged for just such a plan. We purchased a catastrophic insurance plan with a deductible of $7500. The premiums were low enough that we were able to invest hundreds of dollars a month into an HSA with our name on it.
It wasn't long before there was plenty in that HSA to satisfy the $7500 deductible if my wife or I ran into a major health care issue.
But because we were out of pocket for every dime we spent up to $7500, we were extremely careful about medical expenses.
For instance, I needed to replace a crown one time. When I went to the dentist, I told him I only wanted an x-ray of the affected tooth. I didn't want an x-ray of my whole head, I didn't want a general dental examination, and I didn't want my teeth cleaned.
I wanted my crown fixed, period. Why? Because I was out of pocket for every penny.
Most insurance today is use it or lose it. If you don't seek any medical help over the course of a year, you have nothing to show for it. In fact, you might even be harmed. If enough people on your same plan make extensive use of their health insurance, your premiums may go up even though you haven't spent a dime.
But because we got to keep every dollar of the HSA we didn't spend, and hold on to it for future health care needs, we had a lot of incentive to take good care of ourselves. We flossed, exercised, and ate right. Consequently, my visit to the dentist was just about the only trip to a medical professional we made in the 4 1/2 years we were on the program.
Our example indicates that if we put patients back in charge of their own health care, by letting them assume out-of-pocket responsibility for health care expenditures up to a high deductible, health care costs will rapidly come down.
So how do you get doctors to stop running unnecessary tests? Put patients back in charge of health care expenditures. I guarantee you they will have a series of questions about why this particular test is necessary, how much it will cost, is there a less expensive alternative, etc.
So the solution to spiraling health care costs is exactly the opposite of ObamaCare or RomneyCare. It is to reduce the role of government and insurance companies in routine health care decisions, to reserve insurance for major emergencies, and put medical decisions back in the hands of consumers and out of the hands of government or insurance bureaucrats.
You know, the way we did it from 1492 until the end of World War II. It worked for 450 years, and it'll work again.
(Unless otherwise noted, the opinions expressed are the author’s and do not necessarily reflect the views of the American Family Association or American Family Radio.)