Every published claim that direct primary care makes a significant dent in necessary health care spending is dubious at best. See, for example, here, here, here, here, here, here, here, here, here, here and here. When the data from the Union County clinic — a Georgia Public Policy Foundation favorite — is age-adjusted, it indicates that the direct primary care option is at least as likely to have increased that county’s overall costs as to have reduced them. There is no proven performance that would justify the State of Georgia mandating that insurers offer direct primary care.
The major attraction of direct primary care to some advocates surely is its potential for limiting the public subsidies health care, whether for Georgia’s indigents or Georgians of modest means. Even if direct primary care could be shown to have some ability to lower overall healthcare spending, that ability needs to measured against a realistic expectation of what health care costs.
The recent report on healthcare innovation prepared on behalf of Georgia PPF by AEG/Wilson Partners was based on annual claim cost to insurers for the year 2020 of just under $5000 per person per annum for the relatively inexpensive large employer insurance market. The figure did not include a penny for insurance company administration and profit. It was also based on policies with an actuarial value of under 80%. That puts the annual average cost of healthcare goods and services well over $6000.
The annual cost per person of Medicaid expansion has been with sight of that number. For 2018, the 94% federal share and the 6% federal share worked out to a little over $5200 a year. That’s also almost exactly what Union County paid for each person covered by its direct primary care plan in 2016; but those county beneficiaries paid on average an additional $379 out of their own pockets to bring the average 2016 cost for Union County insureds in its much-praised DPC clinic over $5500. ACA Medicaid expansion does not look too bad in that light.
Bad idea #1. Direct primary care as an alternative to ACA Medicaid expansion.
A 2017 GPPF proposal for Medicaid is built around a direct primary care model claimed to be so cost-effective that the healthcare of indigent Georgia citizens can be safely be budgeted at $2500 per person per annum; and the same GPPF proposal would, concurrently, relieve Georgia public hospitals of all obligations to the indigent. That’s well under half the amount that the GPPF’s vaunted Union County spends on its direct primary care members. It’s magical thinking, or cynical.
Bad idea #2. Massive cuts to public employee benefits based on migration to direct primary care.
The aforementioned GPPF-sponsored healthcare innovation report, without a word of explanation, identifies the State Health Benefits Program as an “obvious candidate to pioneer” direct primary care. How long before GPPF proposes huge budget cuts for the SHBP built around wholesale migration to direct primary care? Hopefully, not until direct primary care has proven its worth in a fair, significant marketplace test.
Bad idea #3. A §1332 waiver implementation, or any other scheme, that encourages the seemingly healthy to enroll at direct primary care clinics without maintaining an insurance plan that offers comprehensive, catastrophic coverage.
Here’s what the people running direct primary care have to say about maintaining wrap-around health insurance.
From SALTA, a direct primary care firm founded by one of the principal authors of the GPPF direct primary care proposals, says: “We recommend you continue to carry private health insurance to cover the additional medical services not covered in the program”
From CHI Health Clinics, one principal sources relied in the GPPF direct primary care proposal: “Do I still need health insurance? Yes, by all means keep your insurance to cover specialty care, hospitalizations, high-cost imaging, medications and true emergencies.”
From Nextera, another main source relied on in the GPPF DPC proposal:”Patients are generally best served by combining Nextera Healthcare membership with a high-deductible insurance policy to cover specialist physician and hospital services.”
From Evans Direct Primary Care (Evans, GA): “You need healthcare insurance for hospitalizations, ER and specialist visits, X-rays, Labs, Meds, etc. . . .”
From Southern Care Direct (Calhoun, Georgia): “[O]ur affordable fees make our high level of service ideal for individuals with low cost, high-deductible insurance plans (with or without accompanying health savings accounts). . . .”
From Direct Primary Care of Marietta (Georgia): “All patients should maintain current health care insurance coverage or purchase a high deductible health care plan to cover emergent, urgent, hospital, specialist, radiology, laboratory, pathology, home health, Physical or Occupational Therapy or any other medical service not provided by [us].”
Let’s follow what direct primary clinics actually preach about wrap-around coverage, rather than combine claims of direct primary care efficiency with a §1332 waiver to support bad health insurance choices.
It is also likely that diversion of significant numbers of the relatively healthy into direct primary care plans with no other insurance would create a very large adverse selection problem. That in turn would tend to convert ACA-compliant, full benefit plans in the individual market into high-risk pools with premiums unaffordable to the unsubsidized middle class.
Instead of these three bad ideas, let’s look at this somewhat better idea.