Boutique Medicine: Tax it, Don’t Ax It

Sick of waiting weeks for a doctor’s appointment? Or hurried visits? Well, “concierge physicians” have got a deal for you. Just pay a retainer to a practice (usually between $2,000 and $5,000 annually), and you’ll get immediate attention, long visits, and personalized preventive care. There’s just one catch—when you and, say, 400 other health care “consumers” sign-up at a given practice, it drops the other 1500 patients it had been serving to concentrate solely on retainer patients.

Is this problematic? Some important Democrats say yes, and have moved to kick “concierge physicians” out of the Medicare program. Tommy Thompson resisted that move when he headed HHS—and now he’s on a leading concierge franchise’s board. But since he’s left, some lower level officials at HHS have been raising concerns about “boutique medicine.”

After thinking about retainer care for a while, I have a few conclusions about these efforts. In a nutshell: I think it’s unwise to try to ban concierge care outright. But I do worry about it. It’s consonant with a larger movement that TNR describes: “to radically transform health insurance altogether, so that risk is gradually transferred away from large groups ( i.e., the government and large employers) and onto individuals (i.e., you).” If health insurance starts to move from a “defined benefit” to a “defined contribution” model, we can count on a diversion of scarce medical resources from a common risk pool to pockets of well-heeled consumers. Here’s why I think so…


There’s been a lot of controversy over boutique medicine because people haven’t been disaggregating the services it covers. Retainer contracts cover preventive care, queue-jumping, and amenity-bundling. Most commendably, concierge physicians are aggressively counseling their patients on how to avoid getting ill. More questionably, they are trading enhanced access for cash—a clear example of queue-jumping relative to their previous business practices and the standard of primary care prevalent in the US. Most troublingly, they are bundling medical care with unrelated amenity services (such as lavish waiting rooms and comfort for the “worried well”) in order to avoid legal and regulatory bars on “balance billing” and multiple standards of care.

My take is: encourage the preventive care, and tax the “queue-jumping” and amenities. After my ventilator post, I can just hear the protests now—why tax health care?! If you care about access, subsidize it via other means!

I disagree because I think retainer care takes physicians out of the general pool and puts them at the disposal of a very small group of patrons. The supply of doctors is basically fixed by the Council on Graduate Medical Action and aggressive lobbying by the AMA to prevent more immigration of doctors to the U.S. (While I worry a lot about the former strategy of physician-income-maximization, I don’t oppose the latter policy—it’s very troubling how many LDCs are losing medical personnel to the “highest bidder.”)

As this article notes, “the top 10 percent of income earners now take in an extra $750 billion a year because of their increased share of national income.” I don’t mind if this group uses that cash to buy 90% of golf courses, Jaguars, or plover’s eggs. But I do care when doctors are brought off line just to specially serve a small class. The diversion of resources reminds me of the rise of cosmetic surgery, and I base some policy prescriptions on New Jersey’s recent tax of plastic surgery. I also see promise in Oklahoma’s approach to the rise of specialty hospitals (which only take on the most lucrative types of medical interventions, and leave ER and costly cases to public institutions).

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