Anyone acquainted with the complexity of health care policy debates in Washington DC and the 50 states can appreciate the legend of the Gordian knot.
Legend holds (and History.com reminds us) that when Alexander the Great and his men entered the city of Gordium in modern-day Turkey in 333 B.C., the challenge of untying a famously complex knot obsessed the young general. The knot—really a series of knots inextricably woven—served as the hitch of an ancient wagon once owned by Gordius, father of King Midas, whose touch transformed objects and people into gold.
The person who figured out how to untie the knot would one day rule all of Asia, according to one oracle. After struggling with the knot, Alexander finally drew his sword and sliced it in half with one clean stroke. He went on to conquer Asia.
The United States’ highly regulated health-care system is a Gordian knot that only a renaissance of liberty can loose. We ought to know this, because we have tried everything else.
From Mutual Benefit to Tug of War
Our knotty health-care system is the locus of a great tug of war. If you expand health insurance coverage to the poor, you impoverish the masses by taxing them and raising their premiums. If you swing wide the gates for uninsurable people to buy health insurance, you shut the door on healthy people wanting inexpensive, catastrophe-only insurance.
These are policy knots. There are others. Even on the rare occasion a policy solution seems obvious, political knots remain. It profits House Speaker Paul Ryan (R-WI) nothing to whip 200 Republican votes without securing almost 20 additional conservative-libertarians or centrists. In the Republican-controlled Senate, Democrats may as well hold a majority of seats, so devastating to the GOP agenda is the tyranny of the filibuster, which Senate Majority Leader Mitch McConnell (R-KY) has naively left intact.
Lawmakers, health-care providers, and patients have countless opinions on how to untangle our health care system. These opinions fall roughly along two channels. One focuses on the problem, the other on the solution.
Wise as focusing on the problem may sound, this strategy is fatally flawed when applied to our health-care system, because it accepts our flawed system’s flawed rules of engagement. The most egregious such rule is the widespread conflation of health care and health insurance. The myth that having a robust health insurance policy is cost-effective or essential for low- and middle-income Americans to obtain quality care is a Trojan horse. Congress’ insistence on insurance as the basis of our health-care system is our Achilles’ heel.
Congressional Republicans have granted faulty premises most recently codified by the Affordable Care Act, and previously codified by a half-century of entitlement spending and tax breaks for employer-provided health insurance. Faulty premises include the ideas insurance should be central to obtaining routine care, insurers should have to insure people whose preexisting conditions make them uninsurable by definition, and present and future generations of federal taxpayers should have to pay for it.
Hang ’em High
Because congressional Republicans grant these premises, proposals such as that from senators Lindsey Graham and Bill Cassidy, the House-approved American Health Care Act (AHCA), and the Senate’s proposed Better Care Reconciliation Act merely adjust the Gordian knot left and right. Policies like these will never untie it. Like Alexander’s men and the ancient beards of Gordia, Congress perpetuates the problem.
Majorities of each political party would herd people toward a heavily regulated health insurance market. They would thereby increase demand for coverage without proportionately increasing the supply of dollars available to cover medical expenses. Stretching the rope like this only tightens the knot.
ACA has demonstrated this. Obamacare insurance markets are in shambles, despite ACA’s individual mandate and tax penalty of $695 per adult or 2.5 percent of one’s household income, whichever is greater, for people who decline to buy insurance. Republicans would stretch the rope, too. The House-approved American Health Care Act would kill Obamacare’s individual mandate and tax penalty, only to reincarnate them by requiring health insurers to collect a 30 percent surcharge from new customers who temporarily left the health insurance market.
Each of these policies fixates on expanding insurance coverage as a means of expanding access to health care. Each of these policies tries to create more rope by stretching it. Thus, ACA has given us—and the dominant Republican proposals would give us—just enough rope to hang ourselves with.
The other channel of opinions, the one focused on the solution, resembles the stroke of Alexander’s sword through the knot. It rejects the stillborn premises that the federal government should direct health care and coerce people to buy inefficient products. It rejects the fallacy that health insurance implies access to care. It rejects the lie that patients empowered to choose will shop around for anything but health care.
People focused on the problem propose wielding the law to generate artificial demand for an artificially restricted supply. People focused on the solution propose liberating current and new suppliers to meet unmanipulated demand.
State lawmakers prove likelier than Congress to enact, or even propose, supply-side solutions for their broken health care markets. Because Obamacare effectively outlawed innovation in insurance products, supply-side solutions aim to expand access to actual health care as opposed to health insurance.
Health Care Without Insurance
One solution adopted by 21 states is to exempt direct primary care (DPC) practices from insurance regulations. This prevents unelected bureaucrats and health insurance lobbyists from regulating out of existence private-practice doctors who are treating patients under DPC’s efficient, innovative model.
DPC physicians do not bill insurance. Instead, patients pay monthly fees ranging from $25 to $125—that’s $300 to $1,500 per year—directly to their physicians. In return, patients are guaranteed a minimum number of doctor appointments, which many DPC providers choose not to limit. The fee also covers labs, tests, and other preventive care services.
The care DPC providers give patients comprises an average of 70–80 percent of all care individuals require. When patients need care that is not covered by their private, doctor-patient DPC agreements, DPC providers negotiate staggering discounts with specialists on their patients’ behalf.
By removing middle-man insurers from the market, DPC physicians reduce their overhead costs by 40 percent or more. This allows them to spend 30-plus minutes with patients instead of giving them only seven minutes of face time, the average duration doctors stuck in the third-party payer model give patients. In addition, DPC doctors can hire midlevel providers to treat patients instead of hiring nonclinical staff to resolve down insurance-related disputes.
Protecting the right of health-care suppliers to launch DPC practices is one way state lawmakers can slice through their respective Gordian knots.
DPC membership is not the only supply-side solution helping patients obtain high-quality, affordable care outside the health insurance market. Another is the prevalence of cost-sharing groups comprising self-pay patients.
Self-payers are not rich; they’re just not stupid. Smart people find out what things cost before they buy them. Really smart people compare the prices of providers selling the same thing—again, before buying anything. Unfortunately, most otherwise intelligent people in the United States check their intelligence at the door of their doctor’s office. They don’t shop for the best value in health care. Most enter and exit having committed themselves to pay unknown sums for care that may be below average in quality and could be obtained less expensively elsewhere.
Many pundits interpret the country’s decades of blind purchases en masse as evidence health care markets are uniquely exempt from basic supply-and-demand laws. Therefore, they argue, governments should regulate health care (and insurance) more than they do other industries.
This thinking is backward. It is a self-fulfilling prophecy that is also self-perpetuating (like a Gordian knot). The fact is people avoid shopping around for health care because the U.S. government has been conditioning them since the 1940s to idolize insurance, which hides the true cost of health care from the buyer, thus hiding the buyer’s incentive to shop for the best value.
Savvier Than Health Insurance
Since ACA became law, self-pay patients of faith have flocked to cost-sharing groups called health-care sharing ministries (HCSMs). For example, enrollment in one such group, Samaritan Ministries International (SMI), grew from 39,000 members in 14,000 households in January 2010 to 225,000 members in 69,000 households in April 2017.
Without using their fellow man’s tax dollars, SMI members (including the author) pay monthly “shares” costing between $200 and $495 per household toward the medical expenses of fellow members. In return, members “contribute” only the first $300 toward each medical need to arise in their own households, plus the full cost of bills less than $300. Members are likely to spend far less in “shares” and “contributions” with SMI than they—or taxpayers coerced on their behalf—would spend on the combined cost of Obamacare-regulated insurance premiums and deductibles.
Unfortunately, as eager as Congress is to continue disbursing massive subsidies for people to purchase health insurance, Congress has neglected the one group of patients keeping health care costs low and costing the government nothing in the process. Republican proposals to replace Obamacare would effectively penalize cost-savvy HCSM members in relation to people stuck in the inefficient insurance system, in two ways.
The first is by excluding HCSM members from eligibility for tax credits awarded to insureds. The second is by failing to make tax-advantaged health savings accounts available for the payment of HCSM member “shares” and “contributions.” Thus, Congress’ obsession with health insurance is manifest in so-called free market Obamacare alternatives that snub the only patients obtaining care in a free market.
Loose It or Lose It
A common thread unites supply-side solutions like DPC, faith-based cost-sharing groups, and doctors who post transparent prices for self-payers. Each is a relatively unregulated invention born of necessity (i.e., created in response to unmanipulated demand), and each expands access to actual health care, as opposed to mere health insurance.
You cannot tie yourself out of a knot, and you cannot regulate your way out of a government-directed health care and insurance system. Trying will only create more knots and more intrusive regulations with unintended consequences, as ACA has repeatedly demonstrated.
Liberty is the only sword sharp enough to slice the Gordian knots of health policy. As all patriots of free-market policy know, they who conquer the country’s health-care knots will, in many respects, rule America.
An early version of this article was published by The Heartland Institute.