FFS primary care is higher quality than DPC. “Proved.”

One pet theme of most D-PCPs is, “Who can better determine quality better than my patient?”, a question invariably coupled to its speaker’s brag about a high patient retention rate.

And yet, in the Union County employee DPC clinic study, the actuaries observed a huge risk selection bias against the DPC, enough to require a 8.3% risk adjustment. Yet, the actuarial values of the competing DPC and FFS were very close to each other. So if cost did not drive the adverse selection made, what did?

A commonly given explanation is that older, sicker patients preferred sticking with their established PCP rather than being forced to choose between a small number of doctors working for the DPC clinic.

But does this not evidence that access to a larger community of fee for service doctors produced quality care? After all, who can better determine quality than those chronically ill patients who turned down DPC clinics?

DPC redux.

Why would anyone expect that spreading the annual compensation of a primary care physician over one-third as many patient panel members would result in cost savings?

Why would anyone expect that finding a physician to give quality care that matches her needs among no more than two thousand direct primary care physicians would be more likely than finding quality care that matches her needs among the one hundred and fifty thousand who accept insurance?

DPC’s narratives can be just as misleading as their quantitative studies.

Advocates for the DPC movement have many stories to tell the public about how great DPC is. Some of their most potent narratives, however, are as misleading as their slew of quantitative studies. One root cause is that DPC advocates seem unable to imagine anyone else being as clever as they are.

The ur-brag of all of DPC is the preventative value of barrier-free primary care visits. Let us mostly put aside that many DPC clinics all but beg their patients to choose high deductible plans out of one side of their mouths, while they use the other side to decry the effect of high deductibles on primary care. And let’s put aside that for those with no insurance, the high price of DPC monthly fees is its own barrier to care.

There’s still this. The numbers of third-party insurers, individual and employer, that have figured out the virtue of low barrier primary care is very, very large.

The vast majority of employer plans make primary care visits pre-deductible. Yes, there are copays – almost always modest, especially given that employer plans go to people with real jobs who can, therefore, afford reasonable co-payments. Then, too, many employers have HRAs that meet hundreds of dollars of deductibles, typically starting with the first dollar.

Then, look at the individual market. In the ACA individual market, cost-sharing reductions bring copay, deductibles, and mOOP down to trivial sums for those with incomes up to 200% FPL. And for those with higher incomes, many plans with even very high deductibles come with pre-deductible primary care visits. Even ACA catastrophic plans come, by law, with three pre-deductible primary care visits.

Many of the most important preventative services are covered without cost-sharing for nearly all insureds, But, because DPCPs do not make insurance claims, DPC patients often end up paying for them. A proud DPC subscriber recently tweeted, with joyful amazement, that the only part of her pap test for which she had to pay was pathologist’s interpretation; that part would have been free with her insurance.

A recent self-brag by an employer-option DPC shed crocodile tears over the health risks to the 6.9% of non-DPC members who “received no care at all” in a particular study year, so adjudicated because they had no filed claims during the period. A few pages earlier, the same study bragged about all the phone calls the DPC provider took on matters like prescription refills or quickly advising patients on what to do about a fever or sprain. Does it never occur to DPC advocates that non-DPC patients with trusted FFS-PCPs often dispose of similar matters similarly? Have they never seen patient portals? Have they not heard that large medical systems (and insurers) have 24/7 triage nurses of whom you can make inquiries about fevers and sprains without charge? Do they not remember that one of the historical reasons PCPs turned to the subscription model was so that they could get paid for traditionally un-billed services like routine prescription renewal or telephone triage for fever and ankle sprains?**

The average person in the country has about 1.5 primary care visits a year. 6.9% of them managing a given year with no visits is quite expectable. Absent evidence correlating health outcomes with higher frequency primary care visits, the quite expectable is also the quite acceptable.

One particular DPC advocate keeps repeating that, “a primary purpose of direct primary care is to prevent a claim from happening in the first place.” To the extent that he is saying that DPC docs with an eye on business development will go far to keep their downstream utilization stats looking good, he’s probably right. That’s not necessarily a good thing.

On the other hand, to the extent he is suggesting that FFS-PCPs do not think about how to keep their patients from needing downstream care, that’s profoundly insulting.

One pet theme of most D-PCPs is “Who can better determine quality better than my patient?”; this is invariably coupled to a claim about that D-PCPs high patient retention rate.

And yet, in the Milliman report on the Union County employee DPC clinic, the actuaries observed a huge risk selection bias against the DPC. The given explanation: sicker patients preferred sticking with their established PCP rather than being forced to accept one of a small number of clinic doctors. To my mind, this seems to evidence that access to a larger community of fee for service doctors produces quality care: who can better determine quality than this chronically ill patients who turned down DPC clinics?

A favorite DPC advocate argument is, “Insurance is for big things. You insure your car for accidents but not for oil changes.” But there is a flip side. I do not have a primary car care subscription plan with the garage that does my oil change/maintenance checks, tuneups, and routine small repairs. So why are DPC docs selling insurance against colds and office based procedures like suturing and foreign body removal? (Yeah, I know, “DPC isn’t insurance. Yadda. Yadda.”)

DPC advocates brag that their frequent long visits result in their catching problems early. Even putting aside the lack of hard evidence that DPC practices actually do “catch it earlier”, are DPC advocates really unaware that plenty of FFS doctors catch plenty of conditions early? That the very phrase “caught it early” is vastly older than DPC? Most specifically, does every DPC doc deny ever having “caught it early” when they were in earlier FFS gigs or in their current FFS side gigs?

** Just a few years back, distant from home, but where I had a few friends and family, I once arrived a bit unwell and without medicine, but nothing emergent. About an hour after I arrived, I got a call from a local FFS practitioner. “Hi, I’m Doc X, a friend of Bob S. Bob thinks you may need a ‘script or something. What’s going on?”

KPI Ninja’s Nextera study: a “single blunder” introduction

The KPI Ninja report on Nextera’s school district program claims big savings when employees chose Nextera’s direct primary care rather than traditional primary care. But the analysis reflects inadequacy of a high order. Here’s a starter course of cluelessness, actually one the report’s smaller problems.

The report ignored the effect of an HRA made available to non-Nextera members only. But $750 in first dollar coverage gets a cost-conscious non-Nextera employee a lot of cost-barrier-free primary care for her chronic condition. And, unlike the dollars the SVVSD spends at Nextera, every HRA dollar the district covers for a non-Nextera employee still applies to her deductible.

Is Nextera the best choice for her?

If she’s a math teacher at Longmont High, the odds are extremely high that she’ll figure this out, then reject Nextera.

No one, not even a KPI Ninja, can make sense of the SVVSD’s programs without considering the profound effect of the HRA — shifting costs, shifting utilization, and shifting member plan selection.

Fun – duh – mentals of plan comparison

You cannot accurately assess cost differences between plans without addressing significant differences in plan benefit design.

You cannot accurately assess utilization differences between plans without addressing significant differences in plan benefit design.

You cannot accurately assess selection bias between plans without addressing significant differences in plan benefit design.

A $750 HRA is a significant difference in plan benefit design, large enough to seriously affect a $913 savings claim.

The KPI Ninja report failed to address the HRA. For that reason alone, one might think it reasonable to disregard the report in its entirety.

But that might be too fair to KPI Ninja and Nextera. There’s lots more and it gets worse. The KPI Ninja/Nextera report is nonsense piled high.

The HRA issue and many others are discussed at length in these five posts:

KPI Ninja/Nextera report: every single cost comparison has an 10% “benefit design” error describes how in his “School District Claims Analysis“, the actual Analyst overlooked key differences in how the actual “School District” pays actual “Claims“.

KPI Ninja’s Nextera Risk Measurement Charade focuses on the study’s major failure on population health measurement issues. While Nextera and KPI Ninja bragged of risk adjustment performed by an academic research team, neither the team and nor the risk adjustment were real.

Nextera did not reduce inpatient hospital admissions by 92.7% focuses on a single astonishing utilization claim from the Nextera report, that might reflect a severe error in basic data collection — one that just by itself would account for every penny of the claimed savings. Or is it just cherry-picking at the Olympic level?

KPI Ninja’s Nextera analysis: more than enough problems collects many of the study’s other problems relating to design, data limitations, induced utlitization and so on. There are many deep cutting deficiencies in the Nextra report.

Nextera’s Next Era in Cherry-Picking Machine Design focuses on the need for any report on the SVVSD plan to reflect the differences in benefit design. Although updated recently to bridge to the published report, its core content predates the published report by months, and it was shared in early summer 2020 with both KPI Ninja and Nextera.


By some reckoning, this is the 100th post on dpcreferee.com.

Nextera did not reduce inpatient hospital admissions by 92.7%.

Abstract: KPI Ninja’s report on Nextera’s direct primary care plan for employees of a Colorado school district clinic claims profoundly good results: nearly $1000 per year in savings for every Nextera clinic member and a staggering 92.7% reduction in inpatient hospital admissions. Both claims rest on the proposition that a population of middle-aged. middle-class, white-collar, healthy Colorado teachers, spouses, and children families experience an inpatient hospital admission rate of 246 per 1k, 30% greater than Colorado’s Medicare population.

In their path-breaking report on Direct Primary Care to the Society of Actuaries, the team from Milliman Actuaries described a model framework for an employer direct primary option. They concluded that DPC was a break-even monetary propositions when DPC monthly fees were set at an all-ages average of $60 PMPM, $720 PMPY. That modeling was based on data from the first, and still unique, wholly disinterested, actuarially sound analysis ever performed on a direct primary care clinic; the particular clinic had long been treated by the DPC community as a darling poster child; and Milliman Actuaries have an impeccable reputation.

Just months after the Milliman report, Nextera set out to entice potential employers and members with a report from its analyst, KPI Ninja. That case study claimed that Nextera saved the Saint Vrain Valley School District $913 PMPY. But if Milliman was anywhere near correct when it set $60 PMPM as a break even, zero savings proposition, then a $913 PMPY savings for an even more pricey Nextera clinic looks too good to be true.

A bottom line so at war with the expectations of informed experts, like the world class Milliman Actuaries, is a red flag. It prompts close examination of the data and the analysis on which it rests.

And there it was: data on the non-Nextera population’s hospital utilization that is far too bad to be true.

If we take KPI Ninja’s risk measurement at face value, both the Nextera and non-Nextera populations were quite healthy, with both populations likely to have medical costs well less than half those of a national reference data population (ACG® risk scores less than 0.400). This makes sense for a school district population with its likely surfeit of white collar, middle class workers. The district is also in Colorado, which has relatively low hospitalization rates compared to the nation at large — a recent report by the Colorado Hospital Association pegs the statewide rate at under 80 inpatient admissions per 1k. The KPI Ninja report puts Nextera’s own IP admit rate at a plausible 90 per 1k (not particularly laudable as it is double the IP admit rate of the Union County, North Carolina DPC practice studied by Milliman).

On the other hand, the KPI Ninja report puts the non-Nextera inpatient hospitalization rate at 246 per 1k. That large (1590), relatively healthy, and teacher-heavy population of school district employees and their families, tracked for a full year, were presumably hospitalized at more than 3.2 times the rate of average Coloradans. Indeed, the 246/1k admissions rate KPI Ninja reports for the non-Nextera cohort, comprising mostly white collar adults and their children, with an average population age in the thirties, is nearly 30% higher than the admission rate for Coloradans receiving Medicare, a group more than three decades older.

Pooling all the patients studied by KPI Ninja from both cohorts yields a blended IP admit rate of 195/1k which is still higher than the Medicare IP admit rate of 190/1k. Given the age and gender mix in the two cohorts, application of national statistics (AHQR’s HCUP data) would predict IP admission rates of 88 (Nextera) and 96 (Non-Nextera).

That all those middle-aged adults and their kids have the same IP admit rate as a Medicare population does not pass the smell test.

There appears to be a massive error at work here, and there is enough of it to explain away all of Nextera’s $913 claims cost brag without breaking into a sweat.

Consider an alternative: what if Nextera cut inpatient hospital admissions by a “mere” third, starting from a presumptive non-Nextera IP admission rates of 136 per 1K. 136/1k is still an outsize IP admit rate for a commercial population. 136 per 1k would still be more than double the highest reported IP admit rate appearing in ANY prior study of direct primary care. And that highest report (58/1k) came from the study by the professional and fully independent Milliman actuaries.

Moreover, within the landmark Milliman study, the DPC was found to have only an IP admission rate reduction for DPC of 25%. The 136/1k I propose here for the non-Nextera corresponds to a Nextera rate reduction effect of a full one-third. Even with that generous upgrade for Nextera over Milliman, and assigning hospital costs per admission for non-Nextera patients calculated from the Nextera report ($8317), use of 136/1k wipes out every penny of the $913 cost reduction claim.

Of course, it did occur to me that perhaps the difference in hospital utilization might be accounted for if the non-Nextera population were significantly risker than the Nextera population, i.e., as if the Nextera population had been cherry-picked in the way the Milliman report anticipated. I had suggested as much in my June post reacting to an initial release of Nextera’s raw data.

But the CEO of Nextera has expressly told us by Youtube video that the Johns Hopkins ACG® Research Team found the risk difference between the populations to be statistically insignificant. In that statement, Dr. Clinton Flanagan was completely incorrect, but let’s indulge that falsehood for a moment, yet still try to account for the insanely high IP rate for non-Nextera patients.

The 90/1k IP admission rate for Nextera’s own members is nearly identical to the national average for a group of like age and gender (88/1k per HCUP, see above.) This suggests that Nextera-care is pretty ordinary, so we cannot attribute Nextera’s 90 to 246 “win” on IP admit rates to Nextera’s special magic.

So, how did the non-Nextera cohort come to have 246 IP admits per thousand?

Does the very act of eschewing Nextera cause bad health luck — cancers, infectious disease, car crashes, moose attacks, etc?

If not bad luck, then perhaps bad doctors. Is the fee for service primary care physician community in the Saint Vrain Valley incompetent?

One thing that has always struck me is how the DPC community drifts so easily into impugning its fee-for-service competitors. Attributing a 246 per 1k hospital admit rate to the patients of the local FFS primary care community libels those primary care practitioners.

A Nextera press release, and a YouTube video both directly claim a 92.7% reduction in IP admit rate. For most of a year, Nextera also included that claim that in its lengthy report. That claim was silently retracted in their most recent version. Warning members of the public that rejecting Nextera’s services could increase their risk of hospitalization by 1200% goes far beyond reasonable commercial “spin”. It’s misleading medical advertising that warrants investigation and sanction. It still stands in their press release and YouTube video.

Apart from adverse selection on an epic level, the most likely explanation of a seemingly insane IP admit rate is that the data describing a dominating stack of school district health care money has been mishandled by Nextera’s analytical team.

A reported 246 per 1k admit rate for any cohort of middle-aged, middle class, white-collar workers and their children is just too bad to be true.

The KPI Ninja report has numerous additional weaknesses, including a failure to adequately address population risk measures, benefit design, study design, and data limitations.

That red flag flies high. Nextera’s claims of $913 savings, a 92.7% reduction in inpatient hospital admissions, and both without cherry-picking are too good to be true.

Nextera’s Next Era in Cherry-Picking Machine Design

Note: revised and redated for proximity to related material. Original version June 27, 2020.

In June of 2020, Nextera HealthCare had a hot new brag:

These results were not risk adjusted. But they desperately needed to be.

The St Vrain Valley School District had this health benefit structure for its employees during the period studied:

The school district’s 10% coinsurance rate for the PPO predates the arrival of the Nextera option. The school district also has a Kaiser Permanente plan that includes 10% coinsurance. The school district created the unique 20% coinsurance rate for Nextera DPC patients to help fund the added primary care investment involved. Here’s how that benefit structure impacts employees expecting various levels of usage in an coming year.

As the image above shows, Nexera reported $5,000 per year is as an average utilization level for an employee member of the district; an employee expecting $5000 in utilization can gain over $900 dollars by rejecting Nextera. Every penny of that advantage for the employee comes out of the employer’s hide — and then it shows up in Nextera’s table as a Nextera win. A employee with moderately heavy utilization – but still only about twice the average and still far short of her mOOP— might even hit the jackpot of shifting $1787 from her pocket to the employer, simply by rejecting Nextera. Heavier utilizers, those who surpass their maximum out of pocket – will all gain at least $750 by rejecting Nextera.

This benefit design pushes a large swath of risky, costly patients away from Nextera.

But that tells only part of the story. As if pushing unhealthy patients away by increasing cost-sharing does not do quite enough to steer low risk patients to Nextera, a difference between employee share of premiums specifically drives children into the Nextera cohort. A Nextera employee pays $1600 less per year to add coverage for her children than she would pay to have the same kids covered in the non-Nextera plan. About 24% Nextera population is under 15 years old, versus about 13% for the other group. On the other hand, those 65 and up are four times more likely to reject Nextera. The overall Nextera population is about 6.5 years younger on average as a result.

And notice that even after Nextera starts with a younger, healthier pool, those who elected Nextera will face vastly more cost-sharing discipline under their benefit plan than their PPO counterparts. They can be expected, in aggregate, to consume less. They will have lower “induced utilization”. Per the Milliman team, this should be considered by those evaluating the impacts of DPC.

If the employer’s claims costs are adjusted for both (a) the youth and health risk difference between Nextera and non-Nextera populations, and (b) the confounding effect of induced utilization, Nextera’s cost savings brag will likely be shredded.

Indeed, we have good reason — from from Nextera’s own previous study of the exact same clinic — to suspect that a population risk-adjustment of more than a third is quite likely. Adjust the Nextera brag by that third and the savings will not simply vanish, they will turn into increased costs.

In this regard, moreover, a 2016 Society of Actuaries commissioned report, explained that all the available risk adjustment models failed to completely compensate for adverse selection. Ironically, their selection of a “highly adverse” population for evaluating the performance of the major risk adjustment methodologies was one with a claims cost history that was 21% higher than the average. In Nextera’s earlier self-study of the same clinic, the prior claims cost history of the non-Nextera cohort was an astronomically adverse 43% higher than the Nextera cohort.

Update: October 22, 2020. So now Nextera has published an extended account of its SVVSD program. It’s here here.

(It was “there” before Nextera sent down the rabbit hole its claim that a Johns Hopkins research team had done the cherry-picking analysis; that claim persists in this slide.)

A video version, here.

I reply here , here , here and here.

Medi-Share gives its Christian take on DPC downstream cost savings: $31 — a year.

Christian Care Ministry (“Medi-Share”), whose 400,000 members account for more than a quarter of health cost sharing members nationally, recently acted to allow some of its members to receive credit for their entire direct primary care membership fees up to $1800 per year.

That there is a certain synergy between DPC and health cost sharing plans is testified to in countless instances of mutually interested cross-promotion. But in the end, these are separate economic entities with their own bottom line financial needs.

Precisely because direct primary care entities refuse to work with actual insurers, we do not have much data from insurance companies from which we glean what their actuaries think DPC might be worth.** But a multi-billion dollar, 400k member cost-sharing entity, even if “non-insurance”, needs actuarially skilled professionals to make ends meet. So, when a major cost-sharing ministry rewards direct primary care members with a financial incentive, that may tell us what insurance companies will not.

Tell us what you really think, Medi-Share!

Only one of Christian Care Ministry’s options offers DPC benefits. That plan comes with a $12,000 annual Annual Household Portion (“AHP” is ministry-speak for “deductible”), but it allows its members to apply the full amount of their direct primary care fees toward that AHP. That could be as valuable as lowering an annual deductible from $12,000 to $10,200.

And we can easily estimate the actuarial value of that reduction. Here’s a screen shot from the Colorado ACA plan finder for 2020 for the premiums paid by a 38 year old Coloradan for two Anthem plans that differ only by $2150 in deductible. It costs $2.62 a month to reduce an annual deductible from $8150 to $6000. Necessarily, a reduction of $1800 a year cost less. As well, a reduction of any amount of deductible downward from a higher starting point will have a lesser value than that same amount from a lower starting point, i.e. , Medishare’s $1800 reduction downward from its $12,000 AHB is actuarially worth less than an $1800 reduction down from Anthem’s $8,150.

So there it is. $31 a year.

Wow. In a DPC with a $90 a month fee you’ll be spending twice as much on primary care as the average person using fee for service, but your downstream care savings are estimated by Medishare to be worth a whopping $3 a month on downstream care. It’s like getting one $1500 ED visit for free — every forty years or so.

** On the other hand, we do have the word of the former CEO of the now-defunct Qliance DPC to the effect that, for some presumably nefarious reason, insurance companies were not appropriately responsive to Qliance studies that claimed 20% overall cost savings.

HSA breaks for DPC defeat the purpose of HSA breaks

HSAs are intended to encourage more cost-conscious spending by placing more of the health care financing burden on out-of-pocket spending by the users of services, as opposed to having the costs of those services incorporated in payments shared over a wider group of plan enrollees regardless of service use. H/T Blumberg and Cope. HSAs are a legislative response to a problem in health care economics that occurs when “consumer demand for health care responds to the reduced marginal cost of care to the individual”. As clarified by Mark Pauly in 1968: when the cost of the individual’s excess usage is spread over all payer-members of a group, the individual is not prompted to restrain her usage.

In direct primary care subscription medicine, there is a marginal cost of zero for every medical service the individual consumes. All demanded units of DPC covered medical services are paid by monthly fees collected from each member, regardless of that members service use.

That’s precisely opposite to the reason for HSAs.

The HSA tax break exists to get patient-consumers to commit to putting more “skin in the game” through a specified, high level of deductible; the legislative designers forbade participants from “taking skin out of the game”, i.e., from defeating the legislative purpose by taking a second “health plan” that reduces that commitment and the effective burden of that deductible. This is why it is perfectly clear that secondary coverage (e.g., as a dependent on a spouses plan) is HSA-disqualifying.

The undefined words “health plan that is not a high-deductible health plan” in the HSA legislation should be interpreted to include any health payment arrangement, including direct primary care, that lowers the burden of high deductibles and defeats the purpose of the legislation. IRS’s interpretive discretion does not extend to undermining the intent of HSA legislation.

DPC advocates’ brag about how “there’s never a deductible”, no matter how many covered primary care services a patient actually utilizes. That’s exactly why paying DPC fees is incompatible with the reason for HSAs.

A benefits attorney retained by some DPC clinics has opined that the IRS should allow DPC subscribers to use HSA because DPC “complements” high deductible insurance. But Congress obviously intended a very specific health care payment model for complementing the coverage provided by high deductible insurance coverage — high deductibles!

DPC from 30,000 feet, on September 2020

  • Even with all the overhead reductions that come from not taking third party payment and/or from not billing on a fee for service basis
  • Even with those reductions transformed to increased primary care access that results in clear reductions on ED visits and other urgent care needs
  • Still, Direct Primary Care with panels of 600 patients per PCP, priced at $75/adult/$40/kid per month, does not financially outperform traditional, third-party paid, fee-for-service based primary care. (Search “Milliman” in this blog.) (Maybe 2-3%. Search “Anderson” in this blog.)
  • That $75/$40 is what it takes for a 600 patient panel to support a single PCP at average family physician compensation.

In other words, the DPC model has not miraculously enabled PCPs to “punch above weight” overall. Subscriptions for 38 minute visits, loosely scheduled to allow same day visits, and facilitate 24/7 access end up costing about as much as the existing FFS alternatives.

Perhaps, the whole DPC package makes the patient healthier in some way that does not show up as a financial savings. This is unproven. But DPC docs have not been content with one unproven overall claim. From its beginning, DPC has insisted on two unproven claims: better overall health and lower overall costs. The most clear recent emphasis has been on lower cost. The most clear recent evidence has been to the contrary.

So now they just fake it.

Helping those patients most dependent on DPC means defeating the DPC/HDHP/HSA “fix”.

Plus, two more reasons to reject the “fix”.

Direct Primary care clinicians and advocates often point out, accurately, that they serve a broad socio-economic range of patients. The range is well illustrated by a pair of oft-appearing themes, “concierge care for the middle class” and “affordable care for those who fall between the cracks”. In turn, the themes are reflected in two almost polar opposite insurance profiles for each of which DPC presents a solution: those in the middle class with sound, high-deductible insurance policies and those with low incomes for whom standard health insurance of any form is beyond their limited means.

The uninsured are not a tiny sliver of DPC subscribers. A recent survey put their numbers at about a quarter of DPC patients, and many DPC docs say 30-40% in their own practice. Indeed, a January NPR piece on the use of DPC by HDHP holders immediately prompted the DPC Alliance to vigorously advise the public that the economically disadvantaged are the “focus” of quite a few direct primary care practices.

The middle class HDHP group predominantly join DPC for mixed reasons of economy and concierge-like convenience, making a relatively good situation even better. Many of them — surely those with the most discretionary spending ability — are able to save. The low income uninsured on the other hand, enter DPC subscriptions to make the best of a bad situation, and they have essentially nothing to bank.

The Primary Care Enhancement Act and similar initiatives seek to provide substantial tax subsidies for direct primary care subscription fees, but these flow only to those who have BOTH high deductible health insurance plans AND enough spare income to facilitate actual savings accounts. But this kind of “fix” does less than nothing to those on the other side of the income/insurance divide; for them, the “fix” actually makes things worse.

Economics 101 teaches that government subsidies increase the price of the subsidized goods or services. The middle-class DPC members with insurance may, or may not, see net benefit from a subsidy; since the supply of family physicians is tight, most of the subsidy will probably flow to the providers as increased subscription fees. In any case, what low income DPC members will get from a “fix” is higher subscription fees.

Already priced out of standard insurance and forced into direct primary care, they will be pressed even harder. And some will find themselves forced out of direct primary care.

Subsidies for middle class savers (and/or their DPC physicians) may or may not be warranted by the purported virtues of direct primary care. But subsidies that are directed toward DPC’s financially soundest subscribers should not come at the cost of pushing DPC’s most financially desperate and loyal patients out of their best chance of quality care. Almost any other way of investing federal resources in DPC would be more fair and better targeted.

Do no harm.

But wait, there’s more.

Bonus # 1: The DPC/HDHP/HSA fix aggravates an income inequity among the insured population that is already baked into the DPC cake.

The signal feature of the DPC world is that direct primary care clinics do not take insurance, so entry is overwhelmingly on a cash only basis. DPC is effectively unavailable to anyone who is insured but does not have the financial resources to buy an additional layer of primary care services that neither draws insurance reimbursment not get credited against a deductible. By the same considerations, DPC becomes increasingly available as the income ladder is ascended.

When that socioeconomic reality is coupled to DPC emphasis on small patient panels and easy access, the resemblance of DPC to concierge medicine undercuts any argument for relaxing HSA rules on DPC. In fact, the HSA break amounts to a regressive subsidy that supplements funds being spent on DPC; this has the effect of growing the rate at which DPC becomes increasingly available as the income ladder is ascended. An HSA break brings DPC closer to concierge care.

Bonus # 2: the DPC/HSA fix aggravates the rural health care provider shortage

DPC advocate claims of being all things to all men sometimes take the form of, “DPC is the best hope for primary care in rural areas.” But the effect of a DPC/HSA fix will be to drive DPC physicians toward areas where middle class HDHP savers are in large proportion and away from rural areas where there are plenty of the poor and disproportionately few in the middle class.

DPC is way different than you paying Neflix. Notes

The State of New York has the financial capital of the country (arguably the world), has the most insurance companies in the country, and was the biggest state for the longest time. For these reasons it is generally looked to for leadership in the law on financial subjects primarily governed by state law. Here’s their statute.

(a) In this article:  (1) “Insurance contract” means any agreement or other transaction whereby one party, the “insurer”, is obligated to confer benefit of pecuniary value upon another party, the “insured” or “beneficiary”, dependent upon the happening of a fortuitous event in which the insured or beneficiary has, or is expected to have at the time of such happening, a material interest which will be adversely affected by the happening of such event.

(2) “Fortuitous event” means any occurrence or failure to occur which is, or is assumed by the parties to be, to a substantial extent beyond the control of either party.

Every state has the idea of fortuity, contingency, unforeseeability, something substantially beyond the control of the parties.

Many states, probably most, do indeed regulate service contracts/extended warranties for home and automobiles as insurance. Many regulate prepaid legal services as insurance.

Not Netflix, because it is sold on the basis that the subscriber’s utilization level is substantially within the subscriber’s control.

I can watch every night as I wish. For a DPC visit, I need to have a medical need to attend.

Other ways in which Netflix differs, from a policy perspective.

Netflix expressly reserves the right to change permitted utilization and pricing at any time for any reason, can vary server capacity, can vary program quality (its payment for licenses probably depend on many times a show is streamed).

DPC has explicit and implicit guarantees of quality and quantity, there’s a professional standard for determining need for a visit and quality of what has to be performed.

Marginal costs for Netflix supply are low, inputs are readily expandable, high utilizers have at best modest effect on supply or quality available for synchronous use by others; significant economies of scale; elastic supply.

DPC visits by patient X fully excludes patient Y from synchronous use (or MD from golf course); high marginal cost; supply vastly less elastic.

Way different social value for failure of the vendor to deliver.

Netflix: disrupted video streaming

DPC: disrupted access to health care

Netflix server outage in Seattle: 20K viewers each spend 5 minutes switching to Hulu

Qliance closes doors: 20K patients in Seattle hunting for PCPs accepting new patients; not getting med refills or timely A1c; trying to add health care plans outside of enrollment periods.

Systemic effects: If Netflix diverts TV addicts from Hulu, who cares. If DPC diverts a relatively healthy sub-population from, say, ACA compliant individual market policies that are guaranteed issue that would make ACA guarantees for those with pre-existing conditions more expensive.

If Netflix usage was essential to life and if the need for Netflix usage surged owing fortuitous viral infection, it might be wise to regulate Netflix

Finally, in considering whether or not DPC should be regulated as insurance, consider a DPC that finds itself with 50 spaces to fill and has to determine whether to make a pitch at/to

(a) an architecture firm full of middle-class and up college graduates working mostly at home this coming fall or

(b) a small meat-packing firm full of low income low education folk working indoors in close quarters.

Then consider DPC writ large, with clinics competing for business. Reread the foundational works of health care economics, and tell me why DPCs won’t end up as a primary care microcosm of underwriting, cherry-picking, death-spirals, and all of that.