U.S. healthcare is failing.

Healthcare is both unaffordable and inaccessible; insurance is both unaffordable and fails to deliver timely medical care; and national spending is out of control and “unsustainable” (per President Obama).

Who will fix healthcare, a dying system that is taking us with it? Washington? Non-government bureaucrats? Doctors, in the American Medical Association (AMA) or outside it? Corporate medicine like Big Pharma? (READ MORE: ‘Health Care Is a Right’ Might Get You Killed)

The answer? None of the above. They are all doing too well with the current structure, where third parties make both financial and medical decisions — in patients’ best interests, of course.

Washington, D.C. derives tremendous power from the tens of millions of grateful healthcare bureaucrats whose livelihoods are dependent on the federal government regulating and controlling healthcare. Middleman jobs — viz., insurance, health plans, and Pharmacy Benefit Managers (PBMs) — are dependent on federal Byzantine, ever-changing BARRCOME (bureaucracy, administration, rules, regulations, compliance, oversight, mandates, enforcement) generated by D.C.

The AMA continues to assert its authority as representing American physicians even though many U.S. doctors don’t support the organization. The COVID experience demonstrated how Pharma’s profit-motive superseded public welfare. Pfizer and Moderna billed taxpayers for billions of dollars for COVID gene therapy injections — the so-called vaccines — that were improperly tested, did not protect patients and were medically dangerous. (READ MORE: Feds Can’t Fix Doctor Shortage They Created)

These entities have compelling reasons to keep healthcare as it is, with third-party decision-making. Unfortunately, Americans are dying waiting in line for care.

There is a very small bubble of free market healthcare that provides patients with timely, affordable, personalized (know the patient’s name and history), quality care. That bubble is growing and just might save us. Called cash-only, direct-pay, or even concierge medicine, such practice is the antithesis of third-party payment healthcare.

A World Where the Patient Decides

The concept is simple and harkens back to the way medical care was provided before the Great Society (1965). The patient is in charge. The patient decides his or her care. The patient pays for the care.

A direct-pay patient pays a primary care physician a flat monthly fee, ranging from $50 to as much as $125 per adult, and much less for a child. In return, the patient has unlimited access to the chosen physician and is generally seen within 48 hours. The doctor spends whatever time is necessary with the patient and fills out no insurance forms, compliance statements, or security affidavits. The patient decides on treatment based on the doctor’s advice and buys drugs from a pharmacy where the doctor has negotiated cash-only discounts. Compare the average direct-pay family expense of $300 per month to what the average family spent in 2022 with a third-party payment (insurance) structure ($2522 per month). (READ MORE: Now We’re Misdiagnosing Chronic Kidney Disease for Racial Equity)

There is no hassle. Doctors make the same amount of money or more and can spend whatever time they need with the patient without being driven to achieve some benchmark efficiency standard.

Direct-pay medical care is a tiny bubble: small and fragile. It can easily be crushed, given the regulatory power wielded by D.C., federal pressure on media to report misleading, fabricated news, and the influence of special interest lobbies. The bubble is also tiny, representing 0.16 percent of healthcare spending ($6.7 billion out of $4.3 trillion in U.S. healthcare spending in 2022).

Another advantage of direct-pay medicine is the absence of fraud. Virtually all medical embezzlement occurs through the billing process using improper billing codes to increase profit illegally. With direct pay, there is no billing and coding. The doctor hands the patient a bill. The patient, who is also the payer, can see if the services billed were the services provided.

Direct-pay models are available for both medical care and surgery.

A Better Way to Pay for Healthcare

A veteran nurse with severe, debilitating back pain reported to me her personal experience. The spine surgery she needed would cost $126,00 at the VA, but Tricare would pay 60 percent, so her out-of-pocket expense was only $50,000. VA officials said the authorization process and scheduling would take 9-12 months. She contacted the cash-only Oklahoma Center for Surgery. Eleven days later, she underwent uneventful, successful surgery for $11,250 taken from her HSA.

The following table compares charges and payments for insurance-based care versus direct pay. Medicaid paid for 22 percent to as much as 54 percent of charges. In every instance, direct-pay charges were less than insurance. At the same time, direct-pay payments were consistently greater.

A well-funded HSA is necessary. Current rules limit family contributions to $8300 per year but the HSA Improvement Act of 2023 (H.R. 5688) should increase these limits and expand flexibility. This year, the average American family will spend $31,065 on healthcare costs. Imagine HSAs with no contribution limits. Instead of giving most of their money to insurance company profits, the family could simply pay for their healthcare.

With very well-funded family HSAs, Americans could pay “out of pocket” for the majority of medical needs, even hip replacement surgeries or spine operations. With patients shopping for the best value for dollars expended, prices would plummet and service would become readily available.

For the rare, unexpected, but very costly medical catastrophe — heart attack, cancer, auto accident trauma — people could purchase very high deductible ($5,000 or $10,000) health insurance for a fraction of what they are now paying insurance companies. Premiums could be paid from the HSA.

One last, huge advantage of the direct-pay structure: No massive and hyper-expensive healthcare bureaucracy. That’s $2 trillion a year that Americans won’t have to shell out.

Direct-pay medical care, or patient-controlled healthcare, is presently a tiny bubble in the healthcare ocean. If D.C. doesn’t kill it, that bubble could save us.

Deane Waldman, M.D., MBA is Professor Emeritus of Pediatrics, Pathology, and Decision Science; former Director of the Center for Healthcare Policy at Texas Public Policy Foundation; former Director of the New Mexico Health Insurance Exchange; and author of the multi-award winning book Curing the Cancer in U.S. Healthcare: StatesCare and Market-Based Medicine.