Last week’s Grand Rounds, hosted at Bedside Manner, included an interesting article from Dr. Alan Dappen at Get Better Health. Dr. Dappen is inviting his fellow primary care physicians to switch their practices over to a system of directly contracting with patients rather than with health insurance companies and Medicare/Medicaid. He explains that 75% of people would be able to receive their primary care services for about $300 a year in this sort of system. Their health insurance could still be used for emergencies, higher-cost specialists, and serious illnesses or injuries. The doctors would be able to focus on treating their patients rather than billing health insurance companies, and thus office overhead would be lower, resulting in doctors being able to charge less for their services and still make a reasonable income.
There’s a lot that I like about this idea. I’m a fan of high deductible health insurance coupled with HSAs, and I believe that in an ideal world, health insurance would only be used as a safety net when people needed very expensive care. Routine care and low-cost treatment would be something that people would include in their budgets, and pay for directly. They would be able to shop around, compare prices, and possibly use less care because they would be paying for it themselves. Hopefully, health insurance premiums would be lower too, as carriers wouldn’t have to pay for small, routine health care bills.
But we don’t live in an ideal world. Some people don’t have room in their budgets to add even an extra few hundred dollars a year for health care. Some are used to the idea of comprehensive health insurance that covers everything with copays, and a lot of people balk at the idea of shelling out $75 or $100 to see a doctor when they know that it “costs” $25 if they use their health insurance copay. People with HSA qualified health insurance are more likely to stop taking maintenance medications than insureds with traditional policies that cover the meds with copays. People without health insurance often just don’t get seek out health care at all. While it sounds good to say that people should be able to budget for their day-to-day health care needs and use health insurance just for the big stuff, it doesn’t work that way for a lot of people.
Personally, I would be open to the idea of seeing a family practice doctor who doesn’t contract with health insurance carriers, and paying for routine care out of pocket, if there were some way to combine that with a discount on our health insurance premiums. We have a $5000 family deductible, so we pay for all of our own care each year unless we go over that $5000 threshold. But as long as we see in-network providers, any amount that we spend gets counted towards our deductible, and preventive care is covered by our insurance policy before we meet the deductible. So if we were to start seeing a family practice doctor who billed us directly, we wouldn’t get any credit towards our deductible for money we spent at that doctor’s office (meaning that if we had an emergency or large medical bill, we’d still have to pay the full $5000, in addition to whatever we might have paid the doctor that year), and we’d have to pay for all of our own preventive care too. If we also had to continue paying the same price for our health insurance, this would amount to more out of pocket exposure for us each year, rather than less.
If the DocTalker Family Medicine idea were to become more widespread and if insurers could account for this type of care when setting premiums, I can see it making a lot of sense for healthy families who want to use health insurance for large medical bills and budget for smaller bills themselves.
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Hi Louise,
You raise some good points in your post. The value in allowing for direct contracting for providers to the public is somewhat limited by how the HSA or HDHP is crafted by the insurer. I am not sure there is a case for not carrying insurance at all, but you could certainly argue that consumers should be able to save on total costs by going direct. By shopping for care and making their own choices, people will actually reduce the Payer’s risk with their own efforts. This sea change we are seeing is putting insurance companies back into the insurance business – underwriting risk, not paying for maintenance.
When HMOs and full coverage plans took charge of all care, not just major medical and hospitalization they also took on a huge administrative load. By short-circuiting the payment model between doctors and patients insurance and government programs have found themselves responsible for making sure all the transactions make sense – an impossibly large task. It is like checking everyone’s grocery bills for them. Actual patients, if they need to watch the costs themselves, are much more careful than any claims scrubber or claims administrator could be.
Case in point: if I had to pay out of pocket to have my six year old’s glucose and cholesterol checked when the chance that he is diabetic or has heart disease is nil, I would say no. No one is going to put a 6 year old on Lipitor or Glucophage. Did I get him the tests? No. Would I have if someone else was paying? Probably. Am I getting less care since I am watching the bill? No. I might get a kit at the pharmacy to test these things or spend my money on a more pressing need like an eye exam that also is not covered.
By my count a third of Americans are in the market for healthcare out of pocket this year. Either with no insurance, high deductible, or simply no doctors in network, about 110 million of us are shopping for care. Since we launched in June we have had 15,000 + searches for care in New York alone. People need the doctors to join un-networks like FairCareMD.
Insurance companies that tap into this movement don’t just stand to gain more lives, but also reduce total costs. Let people have control of their own care and take the burden off your own shoulders for a change.
The challenge for the payers is to incorporate and embrace the cost reduction possibilities that direct contracting brings. By reducing the patient’s pay-outs they will be reducing deductible usage and thereby reducing their exposure and reducing overhead administration costs we create a Win-Win, even for the insurance company. Sure, CDHPs are scary, but then so is taking off the training wheels on your kid’s bike.
Finally, a note on the cited study about HSA participants taking less medication: A study like this that only measures one metric of health – medication compliance, is not looking at the whole picture. If they also looked at lifestyle changes, obesity, exercise, and the overall health of the patient they would certainly paint a different picture. Empowered patients make their own choices and sometimes more medication is not what the patient wants. It is far better and less costly to improve one’s diet than repeat the mistakes that made us unhealthy in the first place – another benefit of letting patients watch the bottom lines themselves. While there was one RWJF study that showed CDHPs improved health, I am not aware that there is a real substantial basis that indicates health betterment or decrement once people are in charge of their healthcare spending. Taking less drugs, on it’s own, is not enough information. It would be an interesting, though challenging study. Some other leaders of the Direct Pay movement and I are applying to RWJF for such a study for which we are seeking an HDHP or HSA plan collaborator.
Thank you for publishing the Direct-Pay response Louise. I look forward to hearing from Payers who would like to partner on creating such an offering to the public and participate in our study.