Economic Implications of Direct Primary Care on the Market

As talks to repeal and replace Obamacare permeate the halls of Capitol Hill, many have inquired to the effectiveness of a single payer system and the costs that might be reflected in insurance premiums. Yet one doctor, Linnea Meyer, may have found a compromising solution to either political spectrum in the form of direct primary care, removing tertiary parties within the healthcare system and allocating resources towards patient care. In Dr. Meyer’s humble primary-care office in downtown Boston, there isn’t a waiting room, an office staff or even insurance claims to file. Instead, patients pay Dr. Meyer a monthly fee for her primary care service, ranging between $25 and  $125 a month

According to Meyer,” getting that third-party payer out of the room frees me up to focus on patient care.” In doing so, Dr. Meyer is able to disregard cumbersome restrictions that impede her practice and burden her under obscene regulatory costs. Later stating that “this kind of practice is why I went into medicine, and that feels so good.” This small but growing movement of physicians deciding to bypass insurance companies and charge patients on a revolving monthly basis has emerged as a viable alternative to high premiums.

Though this process is similar to concierge medicine it is far more affordable to the consumer and significantly less costly for the doctor: According to the Direct Primary Care Journal, the average monthly fee for direct primary care is $25 to $85; compared to $100 or more a month for concierge practices that also charge patients for routine visits.  In addition, concierge practices often cost as much as $25,000 a year, with an emphasis on affluent baby boomers in high-cost urban areas. In relation, direct-primary-care practices span the scale from small, independent offices like Dr. Meyer’s to multistate networks that occupy vast regions; with some working with employers and insurers to expand health care options for patients.

In spite of this, less than 2% of the nation’s 900,000 licensed physicians are involved in a direct primary, though some argue that the model has potential to grow within a free market system as proposed by congressional republicans in both the House and Senate. Tom Price, the new Health, and Human Services secretary introduced legislation which called for replacing the Affordable Care Act with tax-credit-funded health savings accounts. As it stands, the IRS prohibits using HSA funds to pay direct-care membership fees, yet this might soon change as bills to lift that prohibition have been introduced in both the House and Senate.

Furthermore, the American Academy of Family Physicians supports direct-pay systems, highlighting the inefficiency and subpar service received by patients within traditional single-payer systems. In a statement, John Meigs, the group’s president, noted that “patient satisfaction goes up, physician satisfaction goes up, quality goes up and costs go down because you don’t have to prove it to Uncle Sam or an insurance company.” Doctors have even expressed support for the system, as it provides a steady income stream from memberships fees while creating a more personal relationship between patient and physician. As Terry Ann Scriven, a direct-primary-care doctor said, “I’ve cared for eight patients today and it’s only 11 a.m., but I haven’t seen any of them in the office because they didn’t need to be seen.”

Yet while primary care service would be orchestrated through one’s primary physician, patients in direct-primary-care practices still need insurance to cover hospitalizations and other costly services. But with their primary-care needs covered, they can choose high-deductible plans with lower premiums. Josh Maibor of North Attleborough, Mass., says the $60 a month that he and his wife each pay Dr. Cunningham for unlimited care “is less than we’d pay in copays for a single visit.”

Not to mention, a direct-primary-care model may work particularly well for patients with complex medical conditions who need careful monitoring and help coordinating multiple specialists; as the massive cost that occurs as a result of reported checkups may be curved as a result of paying a flat fee initially. Overall, the practice appears to be rising in demand amongst physicians, and possess an inherent ability to complement Republicans and their agenda to reform health care.

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