Mr. Dowling: Market forces do ultimately win out, but the tax incentive of employer-funded health insurance creates a large incentive to purchase care through insurance rather than directly. This inflates prices and ultimately leads to the problems I wrote about in the op-ed.

PS: Regina Hertzlinger, who I see is a contributor to this blog, is one of the people who inspire me to remember that paying attention to market forces and giving patients choices is better for everyone.

As for shackles imposed on doctors by insurance companies, that is entirely misplaced. Doctors are free to see any patients they choose to, even without insurance, as Dr. Fuchs has shown. Doctors voluntarily choose to join a network. (Agreed to charges/fees are set by Network Operators – often separate and distinct corporations unrelated to insurance companies.) Doctors are hardly forced to join a network. They can even opt out of a network, again as Dr. Fuchs has shown.

The federal government, through the creation of Medicare as as part of LBJ’s Great Society, and state governments, as part of Medicaid, stimulated out of control pricing by creating Usual & Customary fees-paying doctors AND hospitals directly through assignment of Medicare benefits. Rates were set at whatever the market would bear. Medicare had no rate limits or other governors – such as network contracts.

Prior to Medicare, doctors were paid by their patients directly without any middleman insurance company, as Dr. Fuchs likes to think of them. Prior to Medicare, the insurance industry offered Hospitalization Insurance. No such policy of Major Medical Insurance existed. Payments to insured patients (not to doctors or hospitals through assignment) were made in a flat dollar amount by indemnity policies with no regard as to what the hospital charged.

It’s nice to see that Dr. Fuchs regards his business model as progress. To me, it merely appears to be the same physician practice model used back in the 1950s and 1960s. Remember Marcus Welby, M.D.?

I think it also shows that government involvement is not the answer and that market forces ultimately win out – even in spite of government involvement.

Here is a great editorial in the Wall Street Journal on how the health insurance industry acts like the Mafia:

The Los Angeles Times also featured a “doctor against health insurance” editorial on Wednesday (HT to John Goodman):