While Democrats and Republicans debate the merits and drawbacks of reforming America’s broken health insurance system, few policymakers are paying attention to perhaps the biggest reason health insurance is so expensive: The actual cost of healthcare, which insurers have to pay, is out of control.
There are many reasons the cost of providing healthcare has been steadily rising in most sectors of the healthcare industry. One of the most important is that the traditional health insurance model wastes piles of cash. It pays health insurers to act as middlemen between patients and their doctors. Patients continue to use their health insurance to pay for virtually every healthcare service, including those that they could easily pay for on their own, like primary care visits, flu shots, and routine exams.
Insurers’ involvement in nearly every primary care visit is causing healthcare expenses to skyrocket. Patients are being forced to pay extra so insurance companies can facilitate transactions they really don’t need to be involved in. Not only does this cause the cost of primary care services to rise, it also forces doctors to squander time filling out paperwork instead of treating patients. Some doctors choose to hire more staff to handle much of the administrative work, also contributing to the rising cost of providing primary care.
As I recently noted in testimony before the U.S. Senate Committee on Health, Education, Labor, and Pensions, “We don’t expect our homeowner’s insurance to pay for blown light bulbs or routine maintenance. Imagine how complex and expensive it would be to purchase gasoline if we used our auto insurance to pay for fuel. This is what we expect from our health insurance, yet we are surprised that it is expensive, inefficient, and impersonal.”
Fortunately, there is a better way to provide primary care, one that offers high-quality healthcare services for much less money and without inflicting mountains of complicated insurance paperwork and government regulations on doctors.
Direct primary care is a membership-based primary care model that provides patients with a set number of healthcare services in exchange for a flat monthly fee. At Epiphany Health, the direct primary care practice I founded in North Port, Fla., we charge just $ 65 per month for an adult membership and $ 25 for one child. (A membership for each additional child is just $ 10.) A family of four pays only $ 155 per month.
In exchange for that fee, we offer all of our members the primary care services they need most often, including physical exams, EKG testing, strep and urine testing, blood-thinner monitoring, minor surgical procedures, joint injections, and much more. Patients don’t pay a single penny more for these services beyond the cost of their membership fee.
But then sometimes patients need additional tests and services, such as a CT or MRI scan. We have discovered ways to provide these tests at affordable rates, too, by cutting out health insurance companies with third-party partners in the area.
The insurance companies of patients who need an MRI and choose to get a scan at a nearby emergency room often pay as much as $ 10,000 for a single visit. Depending on patients’ insurance agreements, they could end up paying thousands. At direct primary care practices, patients pay a tiny fraction of the cost. For example, member patients at Epiphany pay just $ 225 for an MRI and $ 175 for a CT scan.
DPC agreements don’t cover everything, of course. Patients who take advantage of direct primary care still need a health insurance plan to cover the most expensive and complex health problems, such as advanced surgical procedures. However, because most of the healthcare services people need can be covered by a DPC agreement, patients with DPC agreements only need to purchase less-expensive “catastrophic” health insurance plans.
The potential savings of expanding the use of direct primary agreements, coupled with catastrophic health insurance, are immense. I gave a hint of just how immense in my congressional testimony: “According to the Milliman Medical Index, in 2018 the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization plan is $ 28,166. Of that, the employee contribution is $ 12,378 per year, with $ 4,704 being for out-of-pocket costs paid when using healthcare services. Using these numbers, an employer sponsored PPO for a family of four will cost $ 281,660 over 10 years. … A membership in Epiphany Health Direct Primary Care plus an underwritten short-term limited duration [health insurance] plan would cost $ 39,960 over 10 years, assuming it were allowed to be renewed that long. The net difference is a $ 241,700 ten-year potential savings for one family.”
If this model were to become the norm in U.S. healthcare, Americans would save billions in unnecessary costs. The only way for that to occur, however, is for policymakers at the state and federal levels to embrace reforms that liberate providers to develop and expand direct primary care practices and liberate patients to take advantage of the opportunities direct primary care provides.
For starters, stop kicking direct care doctors out of Medicare. Currently, for a direct care physician to contract with a Medicare patient outside of the traditional fee-for-service structure, the doctor must opt out of Medicare entirely. This greatly limits that doctor’s other professional options. Direct primary care providers shouldn’t have to opt out of Medicare to provide more affordable services for Medicare patients.
Additionally, people should be able to use the funds in their health savings accounts to pay membership fees to direct primary care providers. Obama-era rules make direct primary care the only physician service that is totally ineligible to accept HSA dollars for payment.
Third, states shouldn’t regulate direct primary care providers as if they were health insurance companies. Only 25 states have laws on the books declaring that direct care agreements are not a form of health insurance.
The answer to reducing Americans’ healthcare costs is right under lawmakers’ noses. All they have to do is act.
Lee Gross, M.D., is the president of the Docs 4 Patient Care Foundation and the founder of Epiphany Health Direct Primary Care.