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Reinsurance, Direct Primary Care Can Improve Georgia’s Health Care Market, Study Finds

July 25, 2019
By Jake Grant

Establishing a reinsurance program for the individual health insurance market and requiring large insurers to offer direct primary care coverage in their plans could help Georgia address “continuing problems” in the state’s health care system, a new study

Healthcare Innovations in Georgia: Two Recommendations, by the Anderson Economic Group and Wilson Partners and published by the Georgia Public Policy Foundation (GPPF), examined potential state health care policy innovations that could be offered under federal Section 1332 waivers to find the best ways to expand health care in rural areas, lower the cost of insurance in the individual market, ease the process for small employers to provide health insurance, and promote “responsibility and engagement” between doctor and patient.

More than one million Georgia residents do not carry health insurance, because they find it too expensive or inadequate, the study states. The high cost of health insurance has put small employers in a particularly tough spot because costs and compliance make it difficult for them to bring on more full-time, permanent workers. Twenty-one percent of Georgia firms with fewer than 50 employees offer health insurance.

Calls for Reinsurance

One element of the solution would be for Georgia to adopt a reinsurance program, which would stabilize rates for individual health plans, the report states.

A reinsurance program provides funding to insurers who agree to cover individuals with high health care costs. Having such a backup plan for more expensive enrollees gives insurers and consumers greater assurance about upcoming costs and enables insurers to keep premiums low so they can expand the pool of healthy enrollees, the study states.

The report describes how such a program could work and how it would save money. The state would set up a fund that large insurers could tap once an enrollee’s claims exceeded $50,000 a year. All insurers, including those serving the employer market, would participate, and those buying insurance could save $500 per policy per year, according to the report, which in five years could add up to $1 billion dollars overall in savings for consumers.

The report says $250 million will be required for the program in its first year and $200 million of that could be funded by federal premium tax credit payments that are passed through to the state government.

Recommending DPC

A second recommendation in the study, the Georgia Primary Care Access Option, would require large insurers to offer direct primary care (DPC) as an option. Direct primary care charges patients a monthly, quarterly, or yearly flat fee for care.

Similar to a gym membership, this payment covers all or most primary care services, instead of charging for each service through a third-party insurance company. 

DPC would be especially beneficial to rural communities, the report states. With a 5 percent participation rate, the savings to Georgians in the aggregate could top $1 billion in the first five years.

The report says a “modest” state subsidy would be needed to help doctors set up DPC practices in underserved areas, and this subsidy would be offset by additional tax revenues and other savings. DPC would “also significantly improve satisfaction with health care,” the report states.

Bringing Doctors, Patients Together

DPC Frontier founder Phillip Eskew, who is also a physician, attorney, and policy advisor to The Heartland Institute, which publishes Health Care News, says DPC improves the health care experience.

“Efficient and effective primary care requires a consistent long-term relationship with uninterrupted communication between patient and physician,” said Eskew. “DPC is one of only a handful of ways to achieve this in our dysfunctional healthcare system that fragments information and communication at every possible opportunity. Administrators and policymakers blame EMRs [electronic medical records] and HIPAA [the federal Health Insurance Portability and Accountability Act] regulations while the true culprit is looking back at them in the mirror.”

Making It Happen

Georgia’s legislature and governor would have to approve the recommendations outlined in the report, in order for the reforms to go forward. GPPF president Kyle Wingfield says the interest is there.

“The Foundation has been an enthusiastic champion of proposals to boost competition in the marketplace, lower costs, and improve access to quality care,” Wingfield told Health Care News.

“When the governor began searching for ways to tailor federal health-insurance programs to fit Georgia’s needs, we had a slew of proposals at the ready,” Wingfield said. “We also jumped at the opportunity to publish the study by Anderson Economic Group and Wilson Partners because we believe it’s important for Georgians and their lawmakers to see the possibilities.”

Jake Grant (jakeg42294@gmail.com)writes from Alexandria, Virginia.

Internet Info:

Anderson Economic Group, Healthcare Innovations in Georgia: Two Recommendations, Georgia Public Policy Foundation, May 10, 2019: https://www.heartland.org/publications-resources/publications/healthcare-innovations-in-georgia--two-recommendations