Government support for the medical cartel is nothing new: the requirement that medical practitioners undergo extensive training unnecessary for many medical procedures and obtain licenses to carry out their work forces up the price of medical care. This benefits existing health professionals and insurance companies at the expense of consumers – especially the poor – and those who would provide health services were it not for the high barriers to entry. Since we trust the advice of doctors, we take them at their word when they say that this state of affairs is necessary to protect patients. When the bootleggers are the Baptists, they’re very likely to have their way.
Efforts to enforce this price-fixing arrangement, though, are normally not as transparent as those taking place in New York City. The story is ancient in internet time (from March this year), but I hadn’t heard about it and it’s extremely revealing.
John Muney is a fully licensed doctor trying to serve the poorer end of the market. His AMG Medical Group provides a fairly comprehensive set of services for a flat fee of $79 per month plus a $10 copayment per visit, with only procedures which can be handled in-house are covered by the plan. Muney says the flat fee decreases the need for paperwork and is part of what makes the plan so affordable.
Dr. John Muney
Unfortunately, this scheme is running afoul of the law. New York State’s Insurance Department sees Muney as a provider of health insurance and, since he doesn’t have the correct government permission slip to provide insurance, is trying to have him shut down.
The problem seems to be that AMG doesn’t charge extra for “unplanned procedures.” This, apparently, puts Muney in the insurance business. A way around this is to charge an extra fee above the normal $10 copayment for these procedures. The problem is that Muney doesn’t want to charge extra. The scheme is doing just fine as it is. AMG is making money while providing dependable and affordable health care to the uninsured.
While it may well be pure inflexible bureaucratic stupidity responsible for Muney’s predicament, it’s hard not to be suspicious. There is a tight relationship between the insurance and medical industries and their regulators, and Muney’s business model threatens to take profits away from insurance companies and doctors. Hanlon’s Razor might apply to cases like this taken in isolation, but state support for entrenched interests is so widespread that I’m very tempted to attribute malice.
Brad Taylor is a graduate student in Political Science at the University of Canterbury in Christchurch, New Zealand. He blogs at 
Sorry I didn’t see this one before. I love this piece and it is so timely.
I had a progressive laugh at me a couple weeks ago for suggesting that medical care would be affordable without, or with drastically reduced, government intervention.
The question is…if he wants to charge less – why doesn’t he just charge less? Instead of setting up an insurance like program why doesn’t he simply lower his fees? That would be the most straight forward way of doing things, and he would benefit all of his patients, not just the uninsured ones.
Because the way he’s doing it shares risk among members (much like insurance) and reduces administrative costs (he doesn’t need to work out costs and bill patients for every visit).
There are a number of concerns about it though, because of that specifically. First and foremost is that he is not an insurance company and does not operate the same way, thus the shared costs are quite finite, and come with little or no legal protections for both the doctor and his patients.
Furthermore, he isn’t going to need to do any more or less paperwork per visit if he requires the patient to pay in full at the time of the visit if he charges less, VS make a monthly payment – which will create paperwork for him, for every patient, every single month.
The straightforward way to do it is to do what other doctors are also doing – simply charge less for the visit, or create a payment plan that is reasonable for the patient and doctor.
The more I read about this, the more suspicious I become of it.
I suspect the reduced paperwork comes mainly from not having to work out what each procedure costs.
I don’t get your objection to risk-pooling at all. Carson downthread is right.
Anok,
Be as “suspicious” as you like. Don’t go to him for your medical care. But don’t use the power of the government to put a gun to his head and force him to change his business model. I don’t really get what your point is. You are “suspicious”, so what? If he doesn’t make money, he’ll choose to change his business model. If he provides awful care, people will choose not to go to him. If he does make money and he does provide good enough care, why should the rest of us give a rat’s posterior about the fact that Anok is “suspicious” of him?
Then he should just charge a penny for those unplanned procedures unless if it has to be above a specific amount. Although there is no way apparently for me to tell him this.
Lol in this case you found an obvious case where the state act’s against the people in a Nonconservative fashion.[Neoliberal in my dialect.]
I find this case amazing in this case this is a case of market intervention for corporations.
It usually is anyway.
Ok, so I found this article entitled Health Care: A Future Free-Market Alternative over on LibertyPile and thought it might add to the discussion.
The definition of “insurance” is arbitrary. Muney’s system is a cost-pooling, as well as a risk-pooling arrangement. It’s much like the old lodge practice system of the early 20th century. If Muney simply charged a fee-for-service, the overall cost might be less for the system as a whole. But it would eliminate the cost-pooling rationale for the individual’s membership.
Our local Ithaca Health Alliance ran afoul of the same “not licensed to provide insurance” law a couple years ago. They charge an annual fee for membership, and members receive a fixed payment if they contract a listed illness. (The benefit is unrelated to who they go to or how much they actually pay.) Some local health providers also give discounts to members, and they also operate a free clinic for uninsured people.
They solved the legal problem by turning the benefits into “grants” that members could “apply” for but were not assured of getting. With many apologies to the members and much assurance that they had no intention of turning down anyone’s grant request.
Sometimes laws are just stupid.