In 2010 during the health care debate Democratic Congressman Jim Marshall (GA- my district) published an article in National Review about increasing consumer pressure on health care.  Read Real Health Care Reform- Why America must move away from its third-party-payer system.

In a side conversation Jim spoke of a single simple rule that would facilitate far more cost reduction than the massive meddling bureaucratic nightmare that his party pushed through.

“The lowest price any provider of health care or services can charge will be for payment at the time of service.”

Health Insurance has been more of a buyer’s club than actual insurance.  Large groups and insurance companies can negotiate lower prices than individuals.  But when you try to buy drugs at your pharmacy without insurance they try to make it up on you.

Insurance is a poor instrument to pay for routine expenses. They must incur the cost of the drug or service plus the cost of administering the claim and the policy.  Doctors maintain teams to file claims according to complicated compliance rules.  All of this can be eliminated by paying at the time of service. We could even require the posting of the top 100 prices (or all of them online) to allow consumers to shop.  The doctor could print a receipt for the consumer to use for reimbursement from the insurance company. Doctors win with lower costs, consumers win with lower prices.  Insurance companies are the big losers because their services become far less valuable.

What about the poor?  SNAP type cards for routine health care could be substituted for cash.

It remains as sound an idea today as it was 18 years ago.