Medical expenses in America are on the rise, and the medical insurance industry plays a huge role in this trend. As JLF’s Jordan Roberts writes in a research brief this week:
Health insurance creates an extra layer of costs and bureaucracy in the process of purchasing health care. Health care services purchased with health insurance are more expensive than it otherwise would be because it was purchased with insurance rather than through direct purchasing. The health insurance system in our country is filled with extra expenses that aren’t related to health care at all. Each one of us pays for these excess costs through higher health premiums.
This issue is especially apparent in the field of primary care in which more and more patients are opting-out of adopting a primary care physician. Roberts explains:
Despite all of the clear evidence of the importance of primary care, many individuals still either don’t have a primary care doctor or do not see one. Research has shown that in recent years, the number of Americans with a primary care doctor has decreased, especially among younger individuals. It may be that they struggle to afford the out-of-pocket costs with primary care or lack the necessary insurance coverage to even get in the door. Regardless, this demand problem is concerning. A lack of primary care at a young age can later result in higher health care costs later in life.
One solution that removes the costs and bureaucratic burdens on physicians as well as makes seeing a primary care physician easier and cheaper for patients is Direct Primary Care (DPC). Roberts explains:
There are several benefits to DPC. First, the monthly payment for an individual or family is equal to the out-of-pocket expenses for a few visits to the doctor’s office if one were to use insurance. Primary care is much more affordable in this arrangement compared to paying for it with traditional comprehensive health insurance. Second, with the absence of insurance paperwork, doctors can spend more time with patients. DPC doctors can spend more time developing relationships with many more patients by forgoing insurance paperwork. Third, removing insurance from the equation allows DPC doctors to contract with laboratory services providers and drug wholesalers to purchase these products at cost for patients, again significantly more affordable than when someone uses insurance.
Proposed legislation in North Carolina would remove the regulatory burdens on DPCs that treat them like insurers, and proposed federal legislation would make it easier to buy DPC memberships. Roberts writes:
Fortunately, the North Carolina General Assembly is working on legislation that would prohibit DPC providers from being subjected to insurance regulations. Protecting DPC providers from insurance regulations will go a long way in ensuring that the industry will continue to thrive in North Carolina.
While North Carolina is working to protect this business model from being regulated as insurance, Congress is working to make it easier for people to use their health savings accounts (HSA) to purchase a DPC membership. As crazy as it sounds, the IRS does not classify a membership to a direct primary care office as a qualified expense for an HSA.