mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
What Real Health Care Reform Looks Like

Dr. Michael Ciampi of South Portland, Maine, might do more to reform health care than the entire Obama administration. On April 1, Ciampi decided to stop taking insurance at his primary care practice, charging people instead a fixed, out-of-pocket price for all services. By cutting out the insurance middlemen on all claims, Ciampi will save both himself and his customers time and money. Bangor Daily News:

Before, Ciampi charged $160 for an office visit with an existing patient facing one or more complicated health problems. Now, he charges $75.

Patients with an earache or strep throat can spend $300 at their local hospital emergency room, or promptly get an appointment at his office and pay $50, he said.

Ciampi collects payment at the end of the visit, freeing him of the time and costs associated with sending bills, he said.

That time is crucial to Ciampi. When his patients come to his office, they see him, not a physician’s assistant or a nurse practitioner, he said.

Ciampi made the switch in April, but it is just now starting to get a lot of attention. After the Bangor Daily News piece came out, the story got picked up nationally, and has now been linked to on both Drudge and Gawker.

The attention this story is getting is very good news. We have highlighted similar attempts by doctors to replace insurance with new payment mechanisms. Changing the perverse incentives currently driving up health care costs is a key priority for true health care reform. One way of doing this is to de-emphasize the role comprehensive insurance plays in the system, whether by using catastrophic or high-deductible plans more widely or even by more radical reforms, like Ciampi’s business model.

Ciampi-like models have already been gaining steam, but wider press coverage of this option will help raise national awareness of new kinds of payment mechanisms. We’ve become so used to the way we use health “insurance” that we’ve lost the ability to think about alternatives. Obamacare, whatever its merits, mostly just doubled down on our current system.

Any attempt to push the Ciampi model on the nation through federally mandated reforms would be the wrong way to go, but as more doctors experiment with similar models, and the press continues to cover it, patients and providers across the country might start voluntary shifting away from comprehensive insurance. A bottom-up movement like that could to do more to reform our system than thousands of pages of Obamacare laws and regulations. Ciampi and others deserve credit for testing new approaches on a micro scale.

Features Icon
show comments
  • wigwag

    Ciampi’s model is fine but its not as good as the subscription based primary care approach that Via Meadia has written about previously.
    What Via Meadia alludes to in this post but doesn’t quite come out and say, is that the party driving up the cost of medical care is not the Government, but the insurance company. Health insurance companies are huge intermediaries that impose signiicant costs (up to 30 percent or more) but provide little of value. The key to reducing costs is to reduce the power and role of the private company standing between the doctor and the patient.
    During the debate over Obama/Romney-Care, the Republican Party fought tooth and nail to protect the role of the insurance companies; leftist Democrats fought tooth and nail to replace one miserable intermediatry (the insurance companies) with another (the Government). Can you imagine a more pathetic debate?
    There is one other point that should be made about subscription based plans as well as the model that Dr. Ciampi is experimenting with. One of the problems that everyone agreed needed to be addressed was the impossibility for patients with preexisting conditions to obtain affordable medical care. As intermediaries dependent on skimming off profits from the doctor-patient relationship, insurance companies were massive incentivized to enroll healthy people and eschew insuring ill people who were far more likely to incur large medical costs.
    The subscription model probably solves the problem of patients with preexisting conditions. While it is possible that primary care doctors might eshew membership fees from sick people because it is more profitable for them to only provide care to healthy patients, it is highly unlikely that they will do so. Unlike insurance bureaucracies, doctors forge relationships with their patients; in the best of all worlds, these relationships go on for many years. The idea that a doctor who has been taking care of a patient or a family for years will decide to stop providing care because that patient becomes sick strains credulity. Most people who chose to become physicians do so because they want to heal sick people. Insurance companies exist not to heal the sick but to make profits for their shareholders.
    Subscription based medicine is the solution to America’s problems with escalating health costs. It’s too bad that the debate on health care is largely centered on issues that don’t matter

    • Andrew Allison

      “What Via Meadia alludes to in this post, but doesn’t quite come out and
      say, is that the party driving up the cost of medical care is not the
      Government, but the insurance company.” Exactly!

      But while the pay-as-you-go and subscription models works for primary care, mandatory catastrophic, aka high deductible, insurance is, unfortunately, still necessary. Is the solution perhaps a high-deductible variant of Medicare for catastrophic coverage.
      Whatever the outcome, it’s clear that the present system, which sees half the premium dollar wasted on administrative overhead, must go.

  • ljgude

    I heard a story about two MDs in California who tried to do this but were stopped by legal action. I believe they got them on discrimination because they were refusing to take insurance,but It was several years ago and I forget the details. In any case, given that the healthcare industry spends more on lobbying that the defense industry according the Time article Bitter Pill, it shouldn’t be hard for them to put a stop to it.

  • Corlyss

    The feds don’t like competition with themselves. They’ll chop these upstart models off at the knees. People forget government-run health care is not about health care; it’s about government.

    • wigwag

      Actually, in this case, that’s not true. Obama/Romney Care, also known as the Affordable Health Act, contains specific provisions requiring the Federally run health exchanges and state-run health exchanges (for those states which chose to run them) to include subscription based medical practices as part of the exchanges. The provision in question takes effect in 2014.

      The requirement that subscription based medical practices be included in the health exchanges was one of the few areas of bipartisan agreement. Both smart Republicans and smart Democrats worked together to propel subscription based medicine forward; while the provision didn’t generate alot of controversy, it didn’t generate alot of interest either. This just shows how remarkably dumbed down the debate was.

      There is no magical fix for escalating health care costs. Most of what passes for debate between Republicans and Democrats when it comes to health care is background noise. It’s not about big government, small government, omnipotent government or no government. It’s about empowering the same force that has reduced the costs of long distance telephony, air travel, music, books and periodicals and just about everything else we buy. It’s the same force that will ultimately reduce the costs of items as diverse as higher education and electricity.

      That force is disintermediation and it is about to hit health care (primary care at first) with the same disruptive impact that it has had elsewhere in the economy.

      Like their colleagues in the newspaper business and music publishing, the health insurance companies won’t know what hit them.

      My response to their plight is TFB.

      • Grüss Gott

        Disintermediation is such a big word for middlemen.It is not the insurance companies per say, but the mandates on insurance companies that are big cost drivers, as well as liability insurance (malpractice) of the providers.

        Yes there is savings in eliminating intermediaries, whether government or insurance companies.The cost of air travel and long distance was not about limiting middlemen, but allowing competition which enables customers to shop providers. Also exposing the real cost of goods allows cutovers to make reasonable evaluations of opportunity costs, which will also limit consumption and drive down costs.

  • Stephen

    “By cutting out the insurance middlemen on all claims, Ciampi will save both himself and his customers time and money.”

    This is not quite the case. Dr. Ciampi is doing two things: First, he is opting out of all insurance networks. Second, he is refusing to process insurance paperwork. Insurance doesn’t disappear.

    Patients with insurance will be treated by him as an out-of-network provider. They will then have to spend their own time, and perhaps money, with claims processing for reimbursement at out-of-network rates. At the very least, there is a cost in time for patients who file their own claims and a potential cost in the difference between in and out-of network reimbursement rates.

    It’s likely the case that the overhead cost to a solo practitioner for insurance claims processing runs twenty percent, or more, of gross revenue. Some part of that savings could be passed on to the consumer. So, there is the possibility of cost savings for the consumer.

    One can imagine the rise of claims processing services (H&R Block for health insurance) should more physicians choose to follow Dr. Ciampi’s example. At the very least, people might have a clearer view of what the costs are in the provision and payment for health care services.

  • TheRadicalModerate

    It occurs to me that this has a lot of the attributes of a disruptive change: at the outset, small scale, a parallel solution to the existing market, which satisfies a niche demand, but the ability to rapidly evolve to encompass more sophisticated services and scale up over time.

    We’re never going to reform the existing US health system. But that doesn’t mean we can’t replace it with a better one, a little bit at a time.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service