Downstream consequences when employers fall for non-risk-adjusted data brags.

Do you remember when Union County’s three year DPC commitment for 2016-2018 was claimed to be saving Union County $1.25 Million per year? So why did Union County’s health benefits expenditure rise twice as fast as can be explained by the combined effect of medical price inflation* and workforce growth?

Union County Budget and Bureau of Labor Statistics

For the first year or two, a clinic owner in an employer DPC option may get away with presenting the employer with data brags that package selection bias artifact as DPC cost-effectiveness. The wiser employers will figure selection bias out before making the mistake of tossing all their employees into direct primary care based on non-risk-adjusted data.

For those employers who do not figure this out, it will be interesting to watch the DPC clinics adapt to the influx from the sicker, older population. Better, it will be outright fun to hear DPC clinic owners explain why having more employees in their clinic led to an increase in PMPMs for DPC patients. Since it will be hard for them to suddenly come to Jesus on the cherry-picking issue, where will they turn? Probably to blaming a combination of Covid-19, insurance companies, and Obamacare.


*For medical cost inflation I used the Bureau of Labor Standards medical goods and services marketplace statistics. I thank economics student David Schwartzman for pointing out that in the employer insurance sub-market the rate of increase was higher. Kaiser Family Foundations annual Employer Heath Benefits Survey data indicate that for the period 2015-2018, costs increased 11%. Substituting 11% from KFF for the 8.5% from BLS, I compute that the 47% increase in Union County was not 200% of that expected, it was a mere 175% of that expected.

Of course, I might have attempted a narrower focus. I fully realize that the average increase might have been different for North Carolina employers, or for county employers, or for county employers in North Carolina. Then, too, there are a total of counties named Union in a total of 17 states. I confess that I deliberatelty refused to determine the employer health coverage cost inflation rate for the other 16 Union Counties. Life is short.

It might also be the case that bringing DPC to Union County created such great opportunities for affordable health care that DPC employees married at a higher rate, and decided to have more children. And, of course, the presence of DPC might have helped Union County recruit a large tranche of new employees with enormous families.

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