Government intervention creates bloated bureaucracies that spike cost.

In virtually every realm except for health care, Americans expect to know the cost of a good or service before purchasing it. Consumers and employers have grown accustomed to scheduling and paying for medical appointments and procedures without any idea of the out-of-pocket costs after insurance coverage. Stories abound of people being charged for trips to the emergency room, ; being invoiced for going to an in-network hospital but unknowingly being  provider; and receiving . Such unexpected outlays frequently lead to financial stress and even . In such an opaque market, it’s no surprise that employer costs for health care have been .

These high costs have multiple causes, including post-World War II wage freezes, which led to the tax exemption for employer-provided health insurance—; rising administrative and drug costs; perverse insurance-company incentives; and price-insensitive customers.  the federal agency that administers Medicare and Medicaid, in 2018 U.S. health care spending grew 4.6 percent, reaching $3.6 trillion, or $11,172 per person—a 17.7 percent share of the nation’s GDP. The average among , a proportion that the U.S. surpassed in the 1970s.

More and more doctors across the country want to reduce costs and bring price transparency to the system. In 1997, anesthesiologist Keith Smith left his hospital job and opened the Surgery Center of Oklahoma (SCO) in Oklahoma City. “I wanted to see if markets could actually work in our convoluted health care system,” he told me. “I didn’t want to be an accessory to a crime anymore. Our mainstream system is criminal because of the way it fails to prioritize the care of patients.”

During his first week in business, Smith got a call from a woman needing a breast biopsy. She asked him how much the procedure would cost at his clinic. He had no idea—no one had ever asked before. Smith called his surgeon and the testing lab for a quote, calculated his own cost for the 20-minute procedure, and gave her the estimated price—which ended up being well within her deductible, and a fraction of the price she was given when she pressed a local hospital for an estimate. Smith and his team decided to bundle prices for all their procedures and then made the radical move of .

Almost immediately, Oklahoma hospitals, insurance companies, and legislators went on the offensive and tried to shut down SCO. Insurance companies made it mandatory for consumers to meet their deductible with in-network providers: if they went out-of-network to get a service, their deductible would reset to zero for the year. This made SCO’s otherwise-affordable services cost-prohibitive for many patients with insurance. The center’s waiting room emptied.

But SCO quickly discovered other types of consumers, such as companies with self-funded health-insurance plans, as well as international patients. Employers with self-funded plans take on the financial risk of providing health-care benefits to their employees instead of paying premiums to health-insurance companies like Aetna or Anthem. Though it’s generally larger companies that self-insure—Wal Mart is a well-known example—high costs in health care are driving smaller companies, including those with as few as 50 employees, to move in this direction as well. Self-insured employers have incentives to keep costs down, even if it means

When self-insured companies from across the country learned that procedures at SCO cost a fraction of the bill at most other medical institutions, they began offering their employees incentives to go there, including stipends, paid time off, and even covering the cost for a friend or family member to accompany them. SCO also saw an influx of customers from Canada and Europe. Though these patients had government-funded coverage, delays in treatment for urgent conditions led them to pay out of pocket for treatment at SCO.

In 2014, Smith co-founded the Free Market Medical Association, a group of physicians committed to bringing price transparency and increased quality to American health care. “We founded the FMMA so that the nation could learn how we did this,” Smith explained to me. “We have offered total and complete transparency over our competitors, and we showed that this was a viable business model.” The costs of health care have  but at Smith’s SCO, with only four exceptions where the cost of procedures decreased, prices have not changed since 1997.

Inspired by Smith, others across the country have joined FMMA. Sean Kelley is founder and manager of Texas Medical Management, the  From a family of physicians, Kelley learned that many unnecessary surgeries are performed as a result of perverse incentives created by insurance companies and price opacity. He founded TMM with the vision of helping patients and doctors interact, uninhibited by third parties, to solve health problems. “As states get the Covid-19 crisis under control,” Kelley told me, “and as elective surgeries begin to resume, this is an opportunity to reconsider how surgical procedures are delivered.”

Andy Poole—CEO of the Monticello Community Surgery Center, another institution in the FMMA network—shared a similar story. During his career as a health-care administrator in the Virginia hospital system, he saw how insurance companies and providers created bureaucratic bloat that hurt patients. “It is mind-blowing how long this convoluted system of ours has been allowed to endure,” Poole told me.

“Some people say that health care is too important to leave to markets,” Smith says. “I say it’s too important to leave to government!” Without the pressures of the market, Smith is convinced that there is no accountability and no incentive for health-care providers to pay attention either to value or quality.