The advantage of paying for medical care directly

According to a PBS health report about a retiree on a Medicare Advantage plan, Z. Ming Ma was issued a prescription from her physician that cost $285 for a 90-day supply. “A month later,” the article says, “Ma and his wife were about to leave on another trip, and Ma needed to stock up on her medication.”

But her 90 days weren’t up, so Anthem wouldn’t cover it. “Ma asked the pharmacist how much it would cost if she got the prescription there and paid out of pocket,” the article says.

The total cash price was about $40.

This is not uncommon. In fact, a study from USC demonstrated that nearly 25 percent of all prescriptions filled at the pharmacy cost the insurer less than what the patient paid in a copay. Yes, that means paying cash is more affordable than using your insurance card.

Over the past several decades in the United States, the health care industry has become increasingly dominated by third-party payers. An individual’s health coverage, whether it is private, Medicare, or Medicaid, can significantly influence health care decision-making — through deciding what it will, and will not, cover.

A health plan can determine which medical professional is seen, which prescription drugs are filled, and even whether a procedure can be done.

Because it increased the power of third-party payers, the Affordable Care Act was essentially a benefit to special interest groups such as insurance companies and other middlemen. The United States health care system hasn’t always been dominated by third-parties but has become distorted from many years of government regulations.

The policy makers forgot about the patients and the medical professionals who provide the care.

The response from both groups has been entirely predictable — and rational. Because of the increased mismanagement of the health care industry, many physicians chose to opt out of insurance products (both private and government) and instead provide personalized care at more affordable cash rates. This emphasis on the doctor-patient relationship has contributed to the growth of an innovation commonly referred to as Direct Primary Care (DPC).

For the patients, the benefits are clear. They now make their own health care decisions, with the advice of their providers and full knowledge of what the costs will be.

DPC practices are a commonly utilized direct care model. These primary care practices require small periodic fees (typically monthly), and in return patients are not charged out of pocket for each individual appointment. Patients are allowed to see their provider as often as they like for preventative, wellness, and chronic care, and certain medical tests are included in the membership fee depending on the membership agreement.

The business community has taken notice, as small employers who have felt the financial burden of health care costs are now trying innovative models with DPC at the forefront.

Legislators have also taken notice of the benefits that come from direct care as well. More than two-thirds of states have implemented legislation that codifies DPC and ensures that they are not regulated as a form of insurance as interpreted by the Treasury. In fact, states like Oklahoma and Texas are seeking to make use of this model to improve quality of care and access for Medicaid beneficiaries in their states.

Federal lawmakers have become engaged as well, seeking to qualify DPC as a qualified medical expense under the tax law. Sen. Ted Cruz (R-Texas) and Rep. Chip Roy (R-Texas) have introduced identical bills to create more equality in the tax treatment between employers and employees that allow individuals to use pre-tax dollars for a direct care practice.

Insurance coverage in health care was intended to transfer risk should something catastrophic occur.

The products we have today resemble pre-paid medical care, as opposed to true insurance, and these have contributed to ever-increasing cost of coverage — which is why it’s often the case that paying cash is more affordable than using the insurance card in your wallet.

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