The Modern Trojan Horse: The ACA Ushers in a New Era of Private Pay Medicine

by Guy M. Kezirian, MD, MBA, FACS

February 2015


Private-pay medicine, where the patient pays for services out-of-pocket, used to be reserved for people with disposable income and the means to access top level care. It was a niche market that was limited to concierge medicine and lifestyle services like LASIK eye surgery, cosmetic surgery, fertility treatments, high performance orthopedic devices and cosmetic dentistry. Routine primary care services were generally provided in the reimbursed system and were paid through insurance.

This has all changed. Like a modern-day Trojan horse, the reimbursed medical system has been attacked by the very gift that most people believed would expand it to single-payer, centralized control. And few people saw it coming. The change was subtle yet effective. It came in the form of higher deductibles.

As a result of Obamacare, many deductibles have sky-rocketed to $5000 and even higher per individual. Under a plan with a $5,000 per-individual deductible, a family of four with an annual income of $75,000 doesn’t really have health insurance. They may have major medical insurance for hospitalized care, and most of their primary care services are now being provided in the private-pay medical system. Now everyone – not just the well-to-do – are now paying in cash for much of their medical care.

Literally overnight, the size of the private-pay space may have expanded by more than five times from around $20 billion to over $100 billion per year. This has not been lost on businesses, though most of the medical system still seems blithely unaware. CVS and other businesses were ready for the change and created walk-in clinics to capture the opportunity CVS alone has over 800 walk-in clinics in the back of pharmacies that provide routine care.

The emergence of walk in clinics staffed by non-physicians will create competition for primary care physicians. For years the dogma has been that there is a shortage of primary care physicians. This will change as patients seek care in walk-in clinics staffed by physician-assistants and nurse-practitioners. Soon, instead of patients being greeted with the rude medical-hello of “do you have insurance?” the conversation will start with the patient asking “how much will this cost?”

Who would have thought that the Obamacare would create a free-market, fee-for-service, private-pay medical system? Certainly not most physicians, and from the rhetoric it seems that not many politicians did, either. Most Americans understood Obamacare to be a move toward a “single payer, health care for all” medical system. As far as primary care is concerned, nothing could be further from the truth.

The higher deductibles were not advertised with the ACA legislation, but the architects of Obamacare certainly knew that higher deductibles would create a new market based, private pay system. The irony is rich. The single-payer advocates who backed Obamacare accomplished what advocates for a private-pay medical system never could. The result is a huge expansion of the fee-for-service system that the political backers of Obamacare thought they were working to eliminate.

Make no mistake: The American medical system has become a free market medical system and primary care is now largely private-pay. The ACA has proven to be a brilliant Trojan horse maneuver, accomplished with such deft deception and skill that few saw it coming. Many are still unaware that it has occurred. The doctors better seize the opportunity soon or they may miss out on the biggest opportunity in generations to design a better medical system.

I never thought I would say this, but thank you Mr. Obama. Obamacare has destroyed a bloated, overpriced medical system and has opened the door to free-market primary care medicine. Now is the time for physicians to do their part and make the new system work for patients.