PATMOS EmergiClinic
1231 Tusculum Blvd.
Greeneville, TN 37745
March 10, 2008
Mr. David Davis
Congress of the United States
House of Representatives
Washington, DC 20515-4201
Dear Mr. Davis:
Thank you for inviting me to your Healthcare Summit and for your recent letter of appreciation for my attending it. I was honored that you asked me.
While my third party free medical practice is different from those of the physicians represented on your panel, I believe this type of approach would be what you would see if patients and families – instead of employers and bureaucrats – made their own healthcare decisions (as you said) “around their kitchen tables.” More cost-effective medical practices like mine would be popping up all over the place if patients were given their own money to spend as they saw fit.
From a policy standpoint, the Bush proposal for a $15,000 standard deduction for all Americans with health insurance would do just that. It is amazing that politicians so vociferously against so-called “tax cuts for the rich” and so seemingly concerned for the uninsured don’t promote this plan. It levels the playing field for the lower middle class and would make insurance affordable for more Americans. Another proposal that would put healthcare dollars in the pockets of ordinary Americans is Senator Coburn’s Universal Health Care Choice and Access Act (S.1019), although its complexity invites abuse by the knowledgeable at the expense of the uninformed.
Putting healthcare dollars in the pockets of ordinary Americans would empower them to take charge of their own healthcare. Most Americans would select policies with high deductible policies without clinic co-pays to reduce their monthly premiums while purchasing their primary care directly at low overhead insurance-free practices like mine. Such practices are serving as models to increase access (especially for the uninsured), decrease cost, and improve quality – the very issues you had the panelists address at the Healthcare Summit. I believe the meeting would have benefited had a physician from such a practice been invited to join the panel. I would have been happy to. Even though my practice has gained little local attention, I have testified before the Joint Economic Committee of Congress on “Consumer-Direct Doctoring”, and my practice has been featured on the front page of the Wall Street Journal, on John Stossel’s 20/20, Geraldo Live, and the Knoxville News Sentinel. Opeds of mine have appeared in The Tennessean and The Commercial Appeal as well as various medical publications.
But any notoriety that the practice might have gained pales in comparison to what the practice has achieved. Since opening this practice a little over seven years ago, we just passed the 8000 patient mark on February 29th, despite being located in a county of only 65,000 residents while having to compete with low co-pay commercial insurance and four nearby government subsidized primary care clinics. Over 60% - or roughly 5000 – of our patients are uninsured, and another 15% or so have high deductible commercial insurance – the type of patients whom many private physicians in our area won’t even see, relegating them instead to local ER’s. By coming here instead, we have saved these direct purchasers of healthcare over $7 million in roughly 25,000 patient visits when compared to what they would have paid at local ER’s. Yet unlike government clinics and hospitals, this private practice does not receive any government favors or privileges. We have not presumed upon other taxpayers by applying for government grants or by seeking non-profit incorporation. We pay our fair share of taxes just as any other small business does in our community.
If these 8000 patients believed they were not receiving value for their money, they would choose alternatives that would cost them fewer dollars (at other taxpayers’ expense, of course). In other words, patients here not only are paying for performance, they are paying a premium for performance over what they could pay for taxpayer-subsidized care. And who could be a better judge of physician performance than the patients who must pay out of their own pockets for a physician’s services?
Insurance-free practices like mine, it seems, demonstrate that the unfettered exchange among citizens – i.e. the free market – is nearly irrepressible, even in healthcare.
Consider the financial and human cost savings at my clinic by comparing information from my clinic with 2006 data compiled by the Medical Group Management Association. The annual overhead at this practice is about $200,000 less than other similar practices that accept insurance primarily because we require three full time equivalent employees fewer per physician (I’m the only physician, by the way). With roughly 5000 patient visits per year, my practice demonstrates that participating in the medical claims process adds about $40 to each patient visit. To put this in perspective, that’s the typical fee at my clinic and the amount Medicare pays physicians for a 99213, an intermediate established patient visit.
Let’s look at the national implications. If all 300,000 primary care physicians in this country settled accounts directly with their patients, the country as a whole would save $60 billion in administrative costs on the physicians’ end alone. Sixty billion dollars is nearly 20% of the total amount of money that all medical practices receive in this country annually.
We would also free up approximately one million Americans currently settling small medical claims to be available for direct patient care. This is not a trivial issue considering the Monthly Labor Review prediction that more than 1.2 million new and replacement nurses will be needed by 2014. Who could better fill these positions than persons already experienced in the medical field?
I think you would have to agree that the tax favoring of employer-based health insurance produces a colossal waste of scarce healthcare resources, not to mention the $200 billion in tax revenue the government foregoes and has to raise elsewhere. My patients, the uninsured, pay disproportionately to make up this shortfall. Yet most of the interests represented at the Healthcare Summit currently benefit from this tax exemption. Little wonder the solutions they suggested would do little more than tweak the status quo.
To paraphrase a 19th century American philosopher, “there are a thousand hacking away at the branches of bad tax policy to the one striking at the root.” According to Nobel laureate economist Milton Friedman, that root in healthcare is the tax exemption for employer-based health insurance.
“There is no more reason for an employer to provide his employees with medical care than there is for him to provide them with food or clothing or housing. The reason why employer provided medical care is so prevalent today is the result of a tax provision introduced during and following World War II which exempted employer financed medical care from taxes. This loophole in the tax system has done tremendous harm. It has caused the medical care industry to develop in an inefficient and unnatural way. The best reform would be to eliminate the tax deduction of any medical care expenses (italics mine). There is no more reason for medical care expenses to be tax deductible than for food, clothing, and housing expenses to be tax deductible.” (Milton Friedman Nov. 2004 – personal correspondence with David Gratzer published on page 186 of The Cure: How Capitalism Can Save American Health Care). 
While putting the ax to that tax privilege today is almost certainly politically infeasible, just leveling the playing filed for those currently not favored will risk offending those powerful interests on the panel who are. Yet, it is the only way that ordinary Americans will be able to make their own healthcare decisions “around their kitchen table.”
To get a vision of citizens in our area already doing this, you are welcome to visit my clinic and see for yourself.
Sincerely,
Robert S. Berry, MD
Greeneville
