The American healthcare system needs a foundational shift in order to lower costs and drive better outcomes. Recently, a friend shared that she expects her monthly health insurance premium to jump from $100 to $700 early next year. If she sticks with her current health plan, her family of four’s monthly health insurance expense will be more than their mortgage. The fact is, private health insurance is rapidly becoming unaffordable for working families.
Primary care accounts for >80% of most peoples’ healthcare needs, and while it’s necessary to have health insurance to cover hospitalizations, specialty care, and other high expense medical care, health insurance is not a great way to pay for Primary Care, when you consider the incentives embedded in the insurance reimbursement model.
How Does Everyone in Our Health System Get Paid?
Depending on the model, the financial incentives between patients (on one side) and health plans, hospitals, health brokers and providers (on the other side) are not usually aligned. Health plans are paid by percentage of total premiums. For hospitals, more admissions means more revenue. Brokers are paid by commission from health plans based on the total number of people enrolled. And, physicians within the fee-for-service system are paid based on the number of clinic visits (with some bonuses based on quality metrics that can lower downstream costs).
Are the incentives in any of these payment models to lower healthcare costs, improve health outcomes, or save money for patients or employers who pay for healthcare?
A Better Way to Pay for Primary Care
By contrast, let’s look at the incentives with Direct Primary Care (an alternative to the fee-for-service model), where medical providers are paid a flat rate per patient per month. The incentive is to keep patients healthy and happy so they want to remain patients month after month. Direct Primary Care (DPC) is a subscription-based model, where in exchange for a flat transparent monthly fee, patients get unlimited access to a doctor for comprehensive Primary Care.
There are no copays or deductibles, no extra fees for each individual visit or even for common procedures. Patients enjoy more personalized care, longer visits, and have direct access to their personal doctor by text, phone, email. Patients are also afforded deeply discounted pricing on medications, labs, and imaging.
DPC is not insurance, but when combined with high-deductible insurance or a health savings plan, it can lower long term costs of healthcare while providing secure, high-quality care. Individuals and families in the Methow Valley can purchase Direct Primary Care locally at Liberty Bell Family Medicine, and, I hope, from other providers in Okanogan county in the future.
DPC is an Affordable Option for Working Families and Small Businesses
Many small businesses and nonprofits aren’t able to offer health insurance because of the high cost, but local employers can use the DPC model to offer health benefits to their employees. Employer-based DPC plans are customizable to fit any business’ budget.
The recent bill passed in Congress now opens the door to using a direct primary care option for employees that can really drive down health care expenses for businesses and organizations that provide employee health benefits, including using pre-tax Health Savings Account (HSA) dollars to pay for DPC. What’s even more compelling to me is the prospect of building a network of small businesses and local employers to build a self-funded plan or other non-traditional option with DPC covering the vast majority of most patients’ healthcare needs, and a High-Deductible Health Plan (HDHP) covering speciality care and hospitalizations. I think this model could serve rural communities like ours in a powerful way.
Why would a small business want to offer DPC health benefits to their employees? Multiple studies show that offering employer-based health benefits is good for both employees and the employer. Workers receive high quality care, and the employer has a recruitment tool for attracting good employees. In addition, the employer sees less absenteeism and improved mental health and physical capacity in their employees. In the long run, health benefits help employers attract and retain their best employees, and more working people in our community have access to high quality, affordable care.
If you are a local employer, consider looking into Direct Primary Care benefits for your employees. If you have questions, don’t hesitate to reach out. We’re happy to talk through options that will meet your needs and your budget.
Dr. Kellar McCloy, MD
Liberty Bell Family Medicine (Twisp)
