Authorizing Prepaid Medical Service Agreements

S.128 would legally authorize the issuance of prepaid medical services, as a product that is distinct from health insurance. Prepaid medical services are defined as medical services provided by one or more individuals, or by an entity through one or more individuals licensed to practice medicine, pursuant to a contractual agreement for a periodic fee. In other words a business or individual could pay a doctor or group representing doctors a set fee in exchange for those doctors performing medical services over a certain length of time, with no cost at the time of service. Prepaid medical service contracts would establish the range of medical services that are covered by the contract and fee. Any contractual disputes between the provider and patron could be taken up by the department of consumer affairs and or the administrative law court.

There are a number of benefits to prepaid plans. Fees under prepaid contracts may be less expensive than insurance premiums because the contracts wouldn’t be required to cover all of the different medical services the state mandates health insurance policies cover. Prepaid medical service plans may also help restrain costs and expenditures in the healthcare sector by removing the incentive the current insurance system provides to perform more medical tests or procedures than are necessary to ensure a patients well-being. Unlike under an insurance system a prepaid contract will not pay healthcare providers for every procedure they conduct or test they run, instead providers will receive a flat fee which will incentivize providers to avoid unnecessary expenses. Prepaid medical services are just one example of many market innovations that could improve healthcare in the U.S. if the government would simply stop inhibiting the market.

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