By Mark J. Perry Friday, November 13, 2009
Filed under: Health & Medicine, Big Ideas, Economic Policy, Public Square
Government healthcare reform sure gets a lot of media attention. In just the last month alone there have been about 13,000 new stories containing the word “government” and the phrase “healthcare reform.” In contrast, there have been fewer than 300 news reports during the last month with both of the terms “market based” and “healthcare reform.” That’s a ratio of 43 stories on government healthcare for every one story about market-based healthcare—government-based “reform” has completely monopolized the debate.
Given the momentum in Congress for some kind of government healthcare overhaul, the media attention is understandable. But at the same time that Congress debates different versions of Obamacare and considers various public options, some market-based healthcare solutions have gone largely unnoticed, despite the fact that they have successfully lowered medical costs and improved both access and quality of service.
Here are seven such examples of market-based healthcare alternatives:
1. Retail clinics. There are now 1,200 retail health clinics across the country providing high-quality basic medical care at lower costs than emergency rooms or physician offices. They offer better, faster service, with longer and more convenient hours than a traditional medical office. Providers include Target Clinics (Minnesota and Maryland), Minute Clinics at select CVS pharmacies in 24 states, Wal-Mart Clinics in 11 states, Take Care Clinics as select Walgreens in 32 metro areas, the Little Clinics at select Publix and Kroger grocery stores in 11 states, and Roadside Medical Clinic Labs serving drivers at truck stops in three states. Typically staffed by nurse practitioners, retail clinics offer basic services such as sports physicals for as little as $29, and have been praised by insurance companies, employers, and consumers for their convenience and affordability, and as an effective way to serve the uninsured.
2. Retail clinic-hospital partnerships. To offer a full range of medical services, from flu shots to major surgery, some retail clinics like Minute Clinics have recently entered into partnerships with major hospitals like Allina Hospitals in Minnesota and the Cleveland Clinic in Ohio (see a recent news report here). These partnerships will allow patient referrals in both directions, as retail clinics refer some of their patients to hospitals for more serious medical conditions, and hospitals refer some of their patients to retail clinics for minor services like flu shots. Electronic medical record sharing will allow a seamless transition for patients in either direction.
3. On-site workplace healthcare clinics. According to a report by National Public Radio, “More than 1,000 large companies in the U.S. have on-site, primary care health clinics. They serve about 5 percent of the working population … but that number could grow to 15 percent by the year 2015.” Some studies show businesses can cut healthcare costs by up to 30 percent, the report says later.
For example, in addition to operating Take Care Clinics in its pharmacies around the country, Walgreens also now offers Take Care Health Employer Solutions, which provides workplace clinics for primary medical care, on-site pharmacies, dental and vision services, and exercise and fitness programs.
4. Affordable $4 generic drugs. In 2008, Wal-Mart started offering more than 1,000 over-the-counter prescription drugs for $4 or less, which then forced other retailers like Target, Walgreens, and Kroger to offer similar discounts. Wal-Mart claims that its customers have already saved more than $1 billion since the $4 drug program was introduced, and that doesn’t count the additional savings of millions of dollars for the thousands of customers who buy $4 drugs at Wal-Mart’s competitors.
In September, Wal-Mart introduced a new $10 prescription drug program that includes a 90-day supply and free mail delivery anywhere in the country, which will save American consumers even more money, and they don’t even have to live close to a Wal-Mart. Thanks to Wal-Mart and its rivals, prescription drug costs have come down dramatically in the last few years, and it’s unlikely that any government reform will match these kinds of market-based savings.
5. Prepaid medical plans. For about the same monthly cost as a cell phone (annual fee of $480 for singles, $580 for couples, and $680 for families) The No Insurance Club offers affordable, pre-paid healthcare plans that cover basic medical services (12 office visits) from a participating board-certified physician, with no deductibles, no additional premiums, and no co-payments. Customers and physicians enter directly into a patient-doctor relationship without going through a third party, and even pre-existing conditions are covered under the No-Insurance Club plan. Although currently not available in every market, coverage is gradually expanding around the country.
6. Concierge medicine. This provides primary medical care from family practice physicians for annual membership fees of $1,000 to $1,800, and the doctor reports directly to the patient, and not an insurance company or Medicare, as his main customer. Concierge practices generally include 24/7 access to a personal physician’s cell phone, same-day appointments with no waiting, personal coordination of care with specialists, personal follow up when admitted to a hospital, and even house calls. While a typical physician has more than 2,000 patients, a concierge physician generally limits his or her practice to between 600 patients. Examples of concierge medicine providers include MDVIP and Concierge Medicine Today.
7. High-deductible health insurance plans along with individually owned and managed health savings accounts (HSAs). This consumer-driven approach could be called “MackeyCare,” after Whole Foods CEO John Mackey, who outlined this plan in his August 11, 2009, Wall Street Journal editorial, “The Whole Foods Alternative to ObamaCare.” The details of MackeyCare work like this:
Whole Foods Market pays 100 percent of the premiums for all team members who work 30 hours or more per week (about 89 percent of all team members) for our high-deductible health-insurance plan. We also provide up to $1,800 per year in additional healthcare dollars through deposits into employees' Personal Wellness Accounts to spend as they choose on their own health and wellness.
Money not spent in one year rolls over to the next and grows over time. Our team members therefore spend their own healthcare dollars until the annual deductible is covered (about $2,500) and the insurance plan kicks in. This creates incentives to spend the first $2,500 more carefully. Our plan's costs are much lower than typical health insurance, while providing a very high degree of worker satisfaction.
The number of American workers covered by HSAs and high-deductible health plans is now about eight million, and would probably continue to grow unless some form of Obamacare passes with a public option. According to Investor’s Business Daily, government healthcare reform “would have no place for cheap, basic plans that—like true insurance—cover just the big costs and require policyholders to pay out-of-pocket for routine care and drugs,” but would instead favor “plans that cover just about everything with little or no co-payment.”
So while Congress now debates how to control rising healthcare costs and expand access to medical care through government intervention and a public option, the private marketplace has already started many healthcare reforms on its own—providing affordable access at more than 1,000 retail clinics in pharmacies, truck stops, and workplaces around the country; lowering drug costs with prescriptions for $4 or less anywhere in the country; introducing innovative prepaid medical and concierge plans that restore the direct patient-doctor relationship; and covering eight million employees with HSAs.
When it comes to lowering costs and improving quality and service, government enterprises have a miserable track record, and competitive markets have a proven, excellent record. If we want to make healthcare affordable and accessible, we should encourage greater competition and more market-based solutions like the examples above; and less government intervention, not more. Unfortunately, the politicians in Washington have it backwards.
Mark J. Perry is a professor of economics and finance in the school of management at the Flint campus of the University of Michigan.
Image by Darren Wamboldt/Bergman Group.
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