Which Republican will take on insurance cartel?

By Gerard Gianoli, M.D., F.A.C.S., of the Association of American Physicians and Surgeons (AAPS)

Shopping around is something we do to get the best quality and the best price for our needs. Without price transparency and the ability to shop there is no free market. Imagine if you were limited to one store and didn't know how much something would cost until after you had purchased it. You would be stuck with whatever price the seller decided on. What kind of customer service would you expect? Poor at best, since shopping elsewhere would not be an option. In essence, there would be no real freedom of choice. Prices would be higher, and quality would be lower.

Although it's hard to imagine this happening in our country for most things, it is already a reality for medical care.

Simple experiment: Next time you go to the doctor's office or hospital, ask about the price for treatment. The stunning discovery is that almost no one will be able to give you a price. Not only that, the office may not find it out until several months later.

Why? Hospitals, medical facilities and physicians are contracted with insurers to provide given services at a set fixed price (usually based on the Medicare fixed price). However, that price is different for every physician and for every hospital or facility. Not only that, a patient with one type of insurance policy will be charged a different price than a patient with another type of policy from the same insurance company. There are so many different prices that neither the hospitals nor the doctors can give you a price in advance. The only exception to this is third-party-free physicians, like me, who have rejected insurance contracts and opted out of Medicare/Medicaid.

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Furthermore, "charged prices" are set ridiculously high in order to negotiate more favorable fees from insurance companies. If you are ever unlucky enough to get stuck with the "charged prices," the term "sticker shock" would be a gross understatement. The insurers negotiate from these "charged prices" to get a "discount" so they can show you, their customer, that they provided some value to you. The reality is that the "discounted price" is still significantly higher than the prices you can get if you pay cash in advance and negotiate on your own. The insurers don't care about getting the best price. They only care that the premiums you pay cover the negotiated price plus their profit. So, if the price is higher, they just raise your premium. Consider many large insurance companies plan to raise premiums 25-50 percent for 2016.

Currently, the Affordable Care Act (ACA, or Obamacare) requires everyone to have health insurance. This has institutionalized the problems of restricted choice and price opaqueness, which will lead to higher costs and reduced quality. Health insurance (and Medicare/Medicaid) limits your options to hospitals and physicians that are on your insurance panel, i.e. in-network. Although you can go "out of network," you are cajoled and intimidated to use in-network facilities and physicians. So, the current health-care market restricts your choice of doctors and hospitals and prevents you from knowing the price you will pay until after you receive the services.

In contrast, a true free market – as in cosmetic surgery and refractive eye surgery – drives prices down while quality has steadily improved. Third-party-free physicians have significantly better prices and access than physicians still contracted with the insurance companies and Medicare/Medicaid.

Consider mammography. The "regular" charges for annual screening are in the range of $300-400. With insurance "discounts," the cost to most individuals is $150-250. Medicare pays about $130. However, the cash price, paid in advance, is as low as $40.

While Obamacare only worsens the pre-existing problem of reliance on third-party payment, none of the Republican candidates is addressing this issue. They leave the middle man ("insurer") entrenched. Although their proposals to broaden choices a little are better than going further down the road to a single-payer (government) system, a free-market proponent should be opposed to contracts between physicians/hospitals and the insurance cartel. Patients should pay doctors for their care and be reimbursed by their insurer.

The government and the insurers are saying, "Trust us, we'll do what's best for you." Believe this at your own risk, but my momma told me, "You better shop around."

Gerard Gianoli, M.D., F.A.C.S., specializes in Neuro-otology and Skull Base Surgery. He is in private practice at The Ear and Balance Institute and a clinical associate professor in the Departments of Otolaryngology and Pediatrics at Tulane University School of Medicine. He pioneered treatments for Superior Semicircular Canal Dehiscence and other vestibular disorders. His private practice has a worldwide reach, with patient referrals coming from all over the United States and from around the world.