The Ass⁠i⁠m⁠i⁠la⁠t⁠⁠i⁠on of Telemed⁠i⁠c⁠i⁠ne

By: The James Madison Institute / 2019



By: Brooks Davis

According to a recent article in U.S. news, a telemedicine company named Teladoc, which provides routine examinations is saving insurance providers $472 on average per call. This trend is a counter to a fact most of us are acutely aware of – that the trajectory of healthcare costs has been upward without much relief. Overall, healthcare costs have continually risen since the 1960’s and in 2017, another 3.9 percent increase lead to a total $3.5 trillion in spending. Ultimately, these figures mean higher premiums, co-pays, and deductibles for patients. In fact, rising out-of-pocket costs have become so significant that many people are choosing to avoid the physician altogether. The great thing about free markets, however, is that when a need becomes big enough, innovation tends to fill it. Enter telemedicine. Telemedicine is the broad term used to describe the practice of remote interaction between a patient and a doctor using technology. The early advent of telemedicine has included videoconference primary care visits, enabling diagnosis and treatment from within someone’s home. Using technology, companies like Teladoc are both improving access to care and reducing overall healthcare expenses through innovations that help patients avoid travel to doctor offices or the ER.

Approximately 97 percent of the United States is considered rural land. More than 19 percent of the population of the U.S. lives within that – about one in five Americans. For this cohort of the population, traveling to a primary care doctor requires more time, energy, and money. According to a 2013 study by Truven Health Analytics 71 percent of emergency visits every year are unnecessary. Unnecessary ER visits have two major effects – they increase overall healthcare costs and they clog ERs for true emergency needs. Through the advent of effective telemedicine, health complications can be evaluated in a safe and timely manner. Ultimately, it will save lives.

Many stroke victims struggle with life outside a hospital due to the increased odds of repeat occurrences. One such individual is Donald Hixon, a resident of rural Oregon. One summer evening while having a conversation with his son, Mr. Hixon became unable to control his body and went into a confused state. He was rushed to a local emergency room where trauma staff set up telecommunication measures with Oregon Health and Science University. OHSU has a stroke specialist, Dr. Wayne Clark, who accurately diagnosed Mr. Hixon’s stroke and walked the local staff through the necessary procedures. Thanks to telemedicine Mr. Hixon was able to save thousands of dollars on air transportation expenses and future visits to Portland. He now has his checkups at his local clinic, also via telemedicine with Dr. Clark in Portland.

While the expansion of telemedicine will have advantages for patients and for healthcare providers, state-level policymakers and the Food and Drug Administration are now faced with the challenge of how to best administer the right balance of promoting innovation in a largely 20th century regulatory system. As an example, the adoption and expansion of telemedicine is occurring at an inefficient pace due to unreasonable licenses and onerous application fees. Doctors face substantial restrictions due to the variability in each state’s licensing system. Currently, growing a patient base from another state means a doctor is required to either obtain a special license or join an “interstate medical licensure compact.” The IMLC process is expensive and poses onerous restrictions on doctors’ practices. Also, it presently does not have a single license that permits practices in every state. Doctors are required to apply for each individually, which disincentives application and members.

This system is inefficient and ultimately incompatible with innovation. As telemedicine continues to grow, a more simplified license could and should be implemented. Such a license should be up to each state’s discretion, but instead of requiring separate licenses to operate nationally, doctors could still be held to that state’s licensing rules. This could improve licensed provider numbers, lower unnecessary expenses, and allow telemedicine to assimilate and innovate smoothly.

Brooks Davis is a student at Florida State University and a policy intern at The James Madison Institute.