Patient as paying customer vs. health plan as paying customer

In response to Wal-mart’s plan to expand its medical care offerings, John Goodman summarizes what happens when your health plan buys your health care rather than emulating how car insurance and home-owners insurance does:

  • The provider becomes the agent of the third-party payer, rather than the agent of the patient — even shaping the practice of medicine to the third-party’s view of how it should be practiced.
  • The provider no longer competes for patients based on price.
  • Absent price competition, the provider no longer competes for patients based on quality.
  • Overall, the provider’s incentive is to maximize against reimbursement formulas rather than provide low-cost, high-quality care.

Goodman contrasts this with the growth of walk-in clinics, where patients pay directly for care:

Fortunately (at least for efficiency’s sake) a lot of people are paying for a lot of care out of their own pockets or out of medical savings accounts of one sort or another. As a result, there are about 1,300 walk-in clinics nationwide (see the graph below via Sarah Kliff at Ezra Klein’s blog). These include about 140 Wal-Mart clinics, CVS Caremark’s nearly 550 Minute Clinics and Walgreen’s 355 Take Care clinics. All of these clinics post prices; they keep records electronically; most can prescribe electronically; and, according to one study, they provide more reliable care than conventional primary care physician’s offices. [See our previous reports here, here and here.]

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Filed under insurance, tax code, HSAs

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