This week, JLF’s Jordan Roberts published a research brief on a huge potential change in health care. According to Roberts:
President Trump signed the Executive Order on Improving Price and Quality Transparency in American Healthcare to Put Patients First in late June of this year. It allows a patient to use tax-advantaged health savings account dollars for direct primary care. The executive order has significant implications for health care access and spending.
Health savings accounts (HSA) are a tax-advantaged savings account that must be exclusively used for qualified health expenses. To qualify for an HSA, an individual must be enrolled in a high-deductible health plan. Both the employer and employee can contribute to this account on a pre-tax basis. Direct primary care (DPC) is a type of primary care arrangement that does not utilize insurance. Instead, a patient or family get around-the-clock access to the primary care doctor for a small monthly fee… usually between $50 and $100 depending on age and family size.
Money from HSA accounts, as things currently stand, cannot be used for direct primary care. Roberts writes:
Under the qualified health expense section of the tax code that delineates the services HSA dollars can be used for, a DPC membership fee is not included. Instead, DPC membership fees are considered a “second health care plan” rather than a legitimate expense for which to use HSA dollars. In this way, the government prohibited consumers from using their own money to purchase affordable primary care from a doctor they chose.
These direct primary care services could be an affordable and appealing health care solution for many Americans. Roberts explains:
With no insurance paperwork to fill out, doctors can spend more time with patients to help with actual treatment and disease management… [And] pairing an HSA with a DPC membership and a high-deductible health plan could provide a significantly more affordable health coverage arrangement than typical commercial insurance plans provide.
The executive order gives the Secretary of the Treasury 180 days to draft regulations on this issue.