An HSA break for DPC monthly fees?

Update: See additional considerations here.

HSA owners have the privilege of using before tax dollars for medical expenses but they are generally barred from using HSA dollars to pay supplemental health insurance premiums. The HSA privilege itself is usually justified by the argument that more “skin in the game” or “financial stewardship” for patient/consumers breeds cost-consciousness, reducing overutilization when compared to patient/consumer choice buffered by insurance. Giving the same break to supplemental health insurance premiums is rejected, therefore, because it takes skin out of the game.

So, why extend favored HSA tax benefits to a patient/consumer’s choice of unlimited access/subscription direct primary care plans, that carry an obvious risk of overutilization and, indeed, whose virtue is said to lie in letting patients consume heavily without incurring additional office visit fees?

The fairest answer to that question is that financial stewardship by financially sovereign patient/consumers includes their own choice of any combination of services and payment arrangements that seems best.

But that rationale proves too much, for it applies equally well to sovereign patient/consumers who choose supplemental health insurance.

DPC advocates meet this argument with semantics about whether DPC is “insurance” or “transfer risk”. But from the particular policy perspective that favors sovereign patient/consumer financial stewardship there is no significant difference between a patient who decides that the best way to navigate a high deductible insurance plan and still get needed care is to commit to a fixed subscription payment to a direct primary care clinic and a similarly insured patient who chooses instead to make a fixed payment to a supplementary insurer.

Rather than seeking better HSA treatment for direct primary care subscriptions than than is afforded supplemental insurance, direct primary care practitioners could simply provide their services entirely on a direct pay fee for service basis. So why would sound policy grant privileged HSA treatment for subscription plans justified by low barriers to utilization?

Some DPC advocates emphasize that a subscription model stabilizes practitioner income. But ultimately this stabilization relies on the statistical pooling of collected fees so that net gains on patients needing fewer services are available to offset net losses on patients needing more services. From a consumer perspective, it matters not whether payments are pooled by a provider or an insurance company.

The real reason DPC providers favor both a subscription model and favorable HSA treatment for subscription fees is the more ordinary one: both are likely to improve the bottom line of DPC providers. Fair enough.

But let’s be clear, giving HSA owners who choose DPC subscriptions a tax break specifically withheld from HSA owners who choose supplemental insurance amounts to a governmental thumb on the consumer choice scale, not some form of “health care freedom”.

That said, a tax break for DPC subscription fees might be warranted, if direct primary care subscriptions could be demonstrated to be sufficiently superior to alternatives — including direct primary care on a fee-for-service basis. Show me.

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