An update appears at the bottom of the page.
“Healthcare Innovations in Georgia:Two Recommendations”, the report prepared by the Anderson Economic Group and Wilson Partners (AEG/WP) for the Georgia Public Policy Foundation, makes some valuable contributions to deliberations about direct primary care. The AEG/WP team clearly explained their computations and made clear the assumptions underlying their report.
This facilitates the public discussion that the Georgia Public Policy Foundation sought to foster in publishing the report. I have been examining those assumptions in prior posts and there are more to come. In this post, I continue a multi-post evaluation of AEG/WP’s claims regarding the effectiveness of direct primary care in reducing downstream care costs.
A unique and powerful opportunity for quantitatively informed assessment of such claims has come from a DPC clinic serving employees of Union County. There, health plan members are able to choose between receiving primary care in a DPC clinic or through physicians under traditional model of insurance and fee for service.
Mark Watson is the county official responsible for this innovation. He made available some key data needed for comparing medical costs for DPC patients and those receiving primary care to the John Locke Foundation (“JLF” is NC’s version of GPPF) and others, . The most recent report about Union County by JLF claims that DPC patients experience costs that are 28% lower than those in traditional primary care.
But the very same report expressly notes that the DPC group patients have lower medical risk scores than the traditional group patients.
A large part of medical risk scoring derives from patient age. In that regard, Watson had Union County’s human resources office compile basic demographic data on the two populations. These data showed that the average participant in the DPC group was at the time of compilation about four years younger than an average participant counterpart in the traditional group.
Four years may not seem like much, but age/claim cost curves are steep. A figure of 5:1 is widely cited in comparing the medical claims experience of 64 year-olds relative to 21 year-olds. Even an age/cost curve with an average slope of 4:1 can explain every penny of the 28% cost differential between two Union County groups separated in age by four years. If the 5:1 ratio most broadly accepted is accurate, than Union County’s primary care option actually increased the county’s costs.
Younger people, lower claims cost, lower premiums.
It is virtually certain that what looks like a claims cost reduction is an illusion resulting from the segmentation of Union County’s insureds by selection bias.
Likely sources of selection bias at the Union County clinic are discussed here.
Union County’s presentation of comparative claims data is available here.
Union County’s summary of comparative age data is available here.
Union County’s contract with its direct primary care clinic operator is available here.
Age-cost curves may be viewed here.
Update: See this post for some cost-adjusted data that confirms signficant selection bias, while still suggesting that direct primary care has net positive effects.
DPC Referee 