Medical care paid for in cash - and cheaper

More doctors are opting out of the insurance system, billing patients directly and passing on the paperwork savings.

The founders of SimpleCare believe it's "the future of health care." Its goal: to restore the "soul" of America's medical practice.

This loose network of doctors and patients believe they can do it by opting out of the expensive, complex, and bureaucratic world of insurance and managed care. Instead, they're trading in simple dollars and, they argue, common sense.

Unlike the Park Avenue cash-only doctors who cater to the rich, these providers serve moderate- and low-income people - those without insurance or with a high-deductible plan. The goal is to give the same quality of care, but with a discount by passing along the paperwork savings.

That's made visiting a doctor's office possible for thousands of people who otherwise couldn't afford it - people like Aleata Leete, a semiretired nurse on a fixed income. And it's given more than 1,500 doctors a new sense of freedom in their practice as they lower the cost of services. Some analysts believe that if the trend continues, allowing many of the 43 million uninsured Americans access to affordable healthcare, the overall cost of healthcare could come down.

But there are many skeptics, mostly because of the current economics of healthcare. Malpractice insurance rates are soaring, reimbursement from the federal government for Medicare and Medicaid isn't keeping up with the costs, which new technologies constantly push up. Then there's the question of how many people can pay out of pocket to visit the doctor, even at a reduced rate.

"Every physician hates managed care and their dream is to have a practice with no insurance, but it doesn't seem to me financially feasible," says Robert Blendon of Harvard's School of Public Health in Boston. "When you look at the economics of it, it's not going to add up. "

Still, the idea of SimpleCare is catching on fast across the country. Since it was founded in Renton, Wash., six years ago, more than 22,000 people have joined.

The way it works is fairly simple, although, like everything else in America's Rube Goldberg-style healthcare system, it takes some extra explaining. Right now, it's illegal for doctors to charge people without a health plan less than people with Medicare or Medicaid. That's to avoid fraud. Many insurance companies write similar limitations into their contracts.

That's left many physicians frustrated, particularly those in rural areas with lots of uninsured people.

SimpleCare gets around that federal law because, while it's not health insurance, it is a health plan, and thus members are free to negotiate their own prices. Doctors who sign up agree to pass on the administrative savings to member patients, who agree to pay at the time of the visit.

"Now we can see all of our patients in the way that's best for them," says Dr. Laura Hamilton who practices in rural upstate New York. "It has eliminated the guilt that we feel for charging people more than they can afford when we know they need healthcare. We love it."

It's been a boon for many of her patients, like Ms. Leete who's been diagnosed with diabetes and heart trouble. Her insurance doesn't cover doctors' visits. And a regular office visit where she lives costs as much as $120. But because she's a SimpleCare member, Dr. Hamilton charges her only $30 for a short visit.

Before she joined, she used to avoid going to the doctor until she was desperate, and then she'd end up in the emergency room. "You know if you wait, it's going to get worse, and it's going to cost the insurance companies a lot more money," she says. "But if you don't have the money, you don't have it."

Since she's been seeing Hamilton, her diabetes has been brought under control, and as soon as her heart feels "funny," she makes an appointment.

Some observers say that the growth in the number of doctors who opt out of the insurance system is an indication of its failure and an indictment of the healthcare system as a whole. But the insurance industry counters that it's doing its best to streamline its bureaucracy. It points out that nine out of 10 doctors contract with managed-care companies, and almost all - even most SimpleCare doctors - still accept some kind of insurance because that's what most Americans have.

"What we want to do is to work with the physician and the rest of the provider community to improve systems of payment, systems of interactions, and overall relationships," says Mohit Ghose of America's Health Insurance Plans.

That could help bring down the cost of care and ease some of the frustration with the system. But as the number of uninsured patients continues to grow, few experts think that will be any where near enough to ensure all Americans get the healthcare they may need.