$938,824,142. How fair adjustments to the $70 DPC assumption reduce the billion dollar savings claimed in the AEG/WP report by 85%.

A billion here, a billion there, and pretty soon you’re talking real money.

Attributed to Senate Everett Dirkson (R-IL, deceased)

This spreadsheet recomputes net five year savings from direct primary care if AEG/WP’s assumptions of (a) a $70 per month DPC fee that (b) stays constant for the next ten years are replaced with the assumptions of (a) $101 per month DPC for the year 2020 that (b) trends upward at the same rate as other medical costs.

The case for replacing the $70 fee with a $101 fee is set out in this prior post.

The case for replacing the assumption that DPC fees will stay flat for a decade with the assumption that fees will trend upward at the same rate as other medical costs is set out in this prior post.

The same spreadsheet also includes calculators used to determine the expected annual per policy premium savings given different values for the monthly fixed direct primary care fee. The spreadsheet replicates AEG/WP’s computation methodology with precision; cell formulae are readily viewed.

These computations show how the proposed adjustments reduce the computed savings from direct primary care by over 85% from nearly $1.1 billion dollars claimed by AEG/WP reports authors to less than $140 million dollars.

Importantly, the calculations discussed here actually assume the validity of AEG/WP’s major assumption about the ability of direct primary care to reduce the cost of claims for downstream care. This post only addresses the inflation of claimed savings that result from the AEG/WP’s authors being unrealistic about the cost of direct primary care.

Whether these authors were accurate about the effectiveness of direct primary care in reducing claims costs for downstream services is left for other posts. If DPC is as effective as the AEG/WP report assumes, then every direct primary care at realistic prices might still offer $140,000,000 in savings. On the other hand, if direct primary care is only two-thirds as effective as AEG/AP claims, then not a penny of savings would materialize.

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