By Todd Wei
Beneath Obamacare lies another possible alternative to the healthcare model.
Support for other healthcare models has been appearing in the background since the signing of the Patient Protection and Affordable Care Act. As a relatively new healthcare model, Direct Primary Healthcare’s goal is to improve the quality of basic primary care and lower patients’ medical bills. The model is quite simple: patients pay a monthly fee directly to their health care provider for unlimited access to a set of services. In this regard, insurance companies are virtually removed from the financial relationship of the patient and doctor.
The benefits of direct primary care almost appear too good to be true. Patients pay a flat monthly rate, similar to their monthly cell phone bill, directly to their doctor to satisfy all their basic health care needs. The access to a primary care doctor includes same-day appointments, regular checkups, cuts and burns, infections, flu shots, skin exams, blood tests, and more.
This plan is also qualified under Section 1301 of the Affordable Care Act: “The Secretary of Health and Human Services shall permit a qualified health plan to provide coverage through a qualified direct primary care medical home plan that meets criteria established by the Secretary.” This criteria has not been announced yet but because direct primary care does not cover major health conditions, which are required under the “minimum essential health benefits” outlined in the ACA, the Secretary will most likely require patients to enroll in a high-deductible wraparound health plan to cover chronic illnesses and surgeries.
One of the core benefits argued in favor of Direct Primary Care is the greater attention directed towards the patient. Without an insurance company, doctors can spend less time filling out paperwork or checking insurance cards and more time caring for their patients’ health. Doctors typically generate income based on the number of patients they see due to the pay-per-visit setup; however, since doctors are paid over a period of time, DPC puts less emphasis on the quantity of visits and more emphasis on the quality.
Proponents of DPC argue that the overall pairing of DPC with a high deductible plan will be cheaper than traditional health plans. Currently, some health plans have a pay-per-visit fee represented through copayments, but DPC patients would pay a fixed rate of less than $100 per month for unlimited access to primary care. Direct Doctors Inc., a practicing direct primary care service operating in Rhode Island, charges just $10 a month for children under 21, $50 a month for adults between the ages of 21 and 44, and $75 a month for adults between the ages of 45 and 64.
According to the IRS, a high deductible health plan has a maximum out of pocket deductible of $12,900 for a family of four in 2015. Based on the pricing from Direct Doctors Inc., that same family would pay roughly $1500 a year for direct primary care. This means that a DPC and high deductible plan would save thousands of dollars annually compared to a $20,000 preferred provider organization (PPO) plan under ACA.
There is also the claim that DPC encourages people to go and see their doctors more often when they are sick. According to a CNNMoney report using data from the Commonwealth Fund, around 43% of America’s working-age adults in 2012 did not visit a doctor or receive other medical services due to the cost. Not seeing a doctor can worsen an individual’s symptoms and overall health, which may require more expensive medication or serious procedures in the future. One of the goals of DPC is to keep people out of emergency rooms by tending to their basic health needs first. If doctors and physicians can prevent an illness or injury from worsening, it will save time and resources spent on future care.
Although the benefits seem great, DPC comes packaged with lingering issues. Physicians practicing DPC can offer same-day appointments and hold longer visits because they are allowed to see fewer patients under this model. As more Americans obtain health insurance, this poses a potential problem where many people may experience longer wait times just to find an available doctor. As a result, there will be a consistent shortage of physicians available to see their patients at any given time. A 2015 study by the Association of American Medical Colleges predicts a 46,000 to 90,000 shortage of physicians by 2025, which means DPC would exacerbate the growing issue.
In addition, if there is a low supply of physicians coupled with a higher demand for direct primary care and more patients enrolling in the plan, costs will certainly rise. DPC allows people unlimited access to primary care, which means patients will not hesitate before visiting their physician because it does not cost anything extra. Therefore, medical centers need to find ways to cover increasing costs, and one of the most likely methods would be to raise prices. The less than $100 monthly rate may experience price hikes over the years if demand for DPC grows.
Another concern is how DPC would fare in the industry. Not many people are aware of “concierge medicine”, the generic term for practices such as DPC, and those that are already enrolled in a plan may be reluctant to switch to a much less established health model. We have already seen the complications when it came to adopting Obamacare, which is a government mandate. It will make trusting an alternative model that has not been fully integrated into the ACA and IRS much more difficult.
A combination of DPC and a high-deductible wraparound plan could potentially be cheaper if it ever achieves the scale necessary to make it viable. However, insurance companies are likely to resist DPC at all levels since it is a threat to their revenue and profit. Obtaining a high deductible plan or some type of insurance product may become more difficult or expensive in the future if there is greater competition between insurance companies and direct primary care plans.
The Secretary of Health and Human Services has yet to establish criteria for DPC to be considered as a valid health plan. Even if it were valid, the IRS currently prohibits people with high deductible plans paired with Health Savings Accounts from having a second health plan. Furthermore, direct primary care is not currently considered a “qualified medical expense”, so employees cannot pay their DPC physicians with their HSA funds. In order to avoid the legal implications and extra costs, people may find it simpler to just buy a traditional PPO health plan.
Only a handful of insurance companies have adopted primary care, including Qliance, Michigan Employment Benefits Service (MEBS), Keiser Group, and Medlion. Qliance claims to have saved 20% on its average cost of care compared with traditional health providers. Despite all of this, if DPC does capture success and doctors are making decent wages, there is a chance that it will attract more primary care physicians, reducing the national physician shortage. Patients may experience better quality services and even be healthier. The rise in monthly costs may also eventually stabilize and lower people’s medical bills as well, but all of these perks hinge on DPC’s growth.
Ever since the transition to a full implementation of the Affordable Care Act, DPC has not been a prominent government priority. Also, given the current state of fragmentation of DPC plans, there is no central lobbying group for DPC. However, in order for concierge medicine practices such as DPC to be successful, the lingering issues that can inhibit its growth such as increasing costs and legal framework under the ACA need to be ironed out. If it does, there is a chance that DPC can succeed but as of right now, it does not appear quite ready to be administered on a national scale.