Direct-Pay USA Cures U.S. Healthcare System

Imagine a person dying of dehydration while standing in front of an open fire hydrant. That person is a patient in the U.S. healthcare system, such as one of our veterans, dying from lack of timely care. What is pouring out of the hydrant is money.

What is happening? Healthcare money is being diverted away from where it is supposed to go: medical services and goods. The U.S. spends more on our healthcare system than anyone else on earth, over $8700 per person per year. Yet, there is not enough money to provide patient care. Why is that? Where is all that money going?

Estimates range from 31 percent to 40 percent for the cost of healthcare system BARRC: bureaucracy, administration, rules, regulations, and compliance. Those numbers were calculated before we were hit with the cost of ObamaCare: $2.6 trillion in new spending. In 2012, the U.S. spent $3.4 trillion on healthcare, which means that the federal bureaucracy diverted $1.5 trillion (40 percent of $3.4 trillion) from care services to itself. In other words, the U.S. healthcare bureaucracy consumed more money in one year than the entire national GDP of Australia, Spain, or South Korea.

Almost all of the spending on Obamacare is going to BARRC. I should know as I sit on the Board of Directors of a state-based Health Exchange, where we spend money to fulfill the mandates handed down to us from Washington. I suspect that when Obamacare is in full swing, the amount of healthcare dollars that produce no care will be fifty percent, half of all healthcare spending!

If you know the reason why a patient is sick -- the root cause -– you should be able to cure the patient. For patient Healthcare, the root cause is government control (over-regulation) and thus the lack of free market forces. Can you have the advantages of a free market when the one who consumes isn’t the one who pays? Is there free market competition when sellers cannot determine the price they will be paid? In a centrally controlled “market,” where is the incentive to economize?

The cure is for over-control is obvious: release from tight control and restore the free market.

Consider what Washington’s legislation-driven, government controlled market approach has produced.

To fix our broken healthcare system, we need to apply Cause-then-Cure.

First, The Cause

Systems can have cancer, just like people. In the human body, cancer happens when a normal cell gets out of control, ceases to do what it is supposed to do and starts to grow without any limit. For example, if a cell in your intestines becomes malignant, it no longer absorbs food but starts to grab all the energy around and spread out. The cancer has changed the cell’s “operating instructions,” similar to how a computer virus reprograms your laptop or iPhone to do things you don’t want.

The same process can happen to a part within a system. Your body has parts such as intestines, liver, heart and brain. Healthcare too has parts called medical services, insurance, information technology, pharmaceuticals, hospitals, supply services, and bureaucracy or administration. 

When cancer takes over a part within a system that part ceases to do what it was intended to do. It spreads out and grows without regard to how that growth might hurt the other parts of the system.

The Cause of healthcare system sickness is cancer, of the federal bureaucracy. The bureaucracy that is supposed to serve patients and help doctors instead serves only itself. It grows and grows (and grows) despite the harm that growth does by diverting dollars to bureaucrats that are desperately needed to pay for health care services.

Thinking that Washington will cure healthcare is like expecting cancer to cure cancer. 

Then the Cure: Direct-Pay USA

When the Cause of healthcare failure is clear to everyone, cancer of the federal bureaucracy, the Cure becomes apparent. Get the federal bureaucracy out of healthcare -- use Direct-Pay USA. Straightforward? Yes. Easy and simple? Not so much.

Under the Direct-Pay USA plan, the government puts $5000 per year into individual Health Savings Accounts (HSA) for each and every American. Those who contributed to Medicare are also paid out into their HSAs what they put in to the Medicare Trust. These funds can accumulate and may be transferred among family members.

People will pay for their medical care out of the HSA. Sellers of goods and services compete for our business based on both price and verified medical outcomes. Prices will plummet, especially as the regulatory burden is lifted.

Everyone will purchase Stop-Loss insurance that pays all medical expenses after the patient has spent twenty-five percent of the value of the HSA. This allows you to get that $125,000 liver transplant, the same one that cost $1 million before Direct-Pay USA.

If 320 million Americans are paid $5000 each and there are small but necessary administrative expenditures, Direct-Pay USA will cost approximately $2 trillion/year. That is just over half (fifty-nine percent) of the $3.4 trillion the U.S. spent on healthcare in 2012, before Obamacare was implemented.

Direct-Pay USA restores free market forces to healthcare. Consumers are once again payers and thus have a reason to economize. Sellers must be competitive, with lower prices and higher quality, or go lose business.  

Direct-Pay USA removes the massive, enormously wasteful bureaucracy. No more Medicare, Medicaid, VA Administration Hospital System, Obamacare, etc. No more suffocating regulatory burden for providers. No more preauthorization forms or Denials of Care for patients.

With Direct-Pay USA, you control your money. With Direct-Pay USA, your health care is affordable and readily accessible. With Direct-Pay USA, you get the care you want, in consultation with your doctor, not what is allowed by some faceless committee in Washington that meets in secret.

Direct-Pay USA is a cancer-free, market sensitive, SIMPLE healthcare system where you get the care you need and the system won’t shackle future generations with current spending.

Dr. Deane Waldman MD MBA is author of The Cancer in the American Healthcare System (available Thanksgiving 2015); Host of the website,; Professor Emeritus of Pediatrics, Pathology and Decision Science; and Adjunct Scholar (Healthcare) for the Rio Grande Foundation, a public policy think tank. Dr. Deane also sits on the Board of Directors of the New Mexico Health Insurance Exchange, as Consumer Advocate. Opinions expressed here are solely his and do not necessarily reflect the opinions of the Board.  

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