Regence Blue Shield’s recent announcement that they were dropping almost 500 physicians from one of the health plans Boeing offers its engineers, illustrates the fundamental problem with our current third party payer system of financing health care. Third party payers, such as Regence, are payers that front most of the cost of medical services. Other third party payers include employers, the government, or any payer who is not the patient. The person receiving the care is removed from the basic decisions in health care – what treatment to get and from whom – because those decisions are made by the bill payer.

Regence based their decision on their rating system which was designed to measure “the relative quality and efficiency of health care providers.” Like all health insurance companies, Regence is under pressure from employers such as Boeing to control costs. The incentives for these companies, however, do not match patient goals and so an awkward tension is created between the entity paying for health care services, the employer paying for health care coverage, and the patient seeking care. Here, the decision is problematic for two reasons. First, 8,000 patients now have slightly more than a month to find a new doctor at a time when many physicians have closed practices and are no longer accepting new patients. Second, physicians are being rated by a system in which they don’t know the criteria, nor are they able to appeal. Ultimately, it is the patient, not the payer, who suffers.

The third party payer problem can be cured by transitioning to a consumer driven health care system. The patient in a consumer driven system has an account, such as a flexible spending account, health reimbursement account, or health savings account, from which the patient directly pays for health care. This system is growing each day; for example, at least 3.2 million Americans already have health savings accounts and these accounts have only been available for two years. Under such a system, the patient is in control of her health care dollars, and more responsible for her health care decisions. If Boeing employees were part of a consumer driven system, they would be immune from the turmoil caused by changes to a plan’s provider network because the choice of their provider would always be their decision, not that of a third party.

While a consumer driven health care system is a laudable long-term goal, short term solutions are also necessary to address issues of provider rating and quality assurance. Naturally, it is imperative that physicians be qualified, competent practitioners. No one wants medical errors to occur. And yet quality is an elusive term when referring to the highly educated, trained physician whose profession is a mixture of art and science.

One short term solution is a rating system for physicians taking into account cost, quality, and expertise. Standard criteria should be developed by the insurance industry to meet the employers’ needs for high quality, cost efficient plans. But such criteria must be transparent, known by the physician in advance, measurable, and subject to an appeals process. Moreover, this information should be accessible to the enrollees of the health plan.

Another short term solution is to enact meaningful medical liability reform. A recent study by PriceWaterHouseCoopers found that 86 cents out of every dollar spent on health insurance premiums paid for medical services such as hospital care, physician care, medical devices and prescription drugs. Ten percent of these 86 cents, or almost nine cents, are attributed to medical liability insurance and defensive medicine. Reducing medical liability costs is a better way to lower the cost of health care than analyzing individual physicians practicing within a flawed system.

Imagine being one of the 8,000 patients who received a letter stating that their doctor was not up to an insurance company’s standard of “quality and efficiency.” Boeing engineers have been able to exert pressure on Boeing and Regence to resolve the current situation. But in general, patients in a third party payer system are attenuated from the financing structure and lack market choices, such as switching to another insurance company. Moreover, in addition to scrambling to find a new physician, patients now wonder whether the care they received from a dropped physician met the standard of care. This concern could catalyze malpractice claims, further burdening the system, and possibly without cause.

Solutions such as a transparent rating system and medical liability reform would help avoid situations where numerous patients have to find a new physician because of the actions of a third party payer struggling to control costs. Then the health care system may be stable enough for more systemic improvement – consumer driven health care.