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Research & Commentary: New Executive Order Expands Direct Primary Care

August 9, 2019

In this Research & Commentary, Matthew Glans examines a new executive order from the Trump administration that would allow patients to use tax-advantaged health savings account funds to pay for direct primary care services.

According to a 2018 United Health Group report, 13 percent of Americans live in a county with a primary care physician shortage. Currently, primary care doctors face numerous regulations and a reimbursement system that is slow and costly, creating overhead that can eat up to 60 percent of a practice’s revenue. In fact, most new doctors do not train in primary care residencies, exacerbating the problem.

According to the American Journal of Medicine, the percentage of U.S. primary care physicians decreased from 50 percent in 1961 to 33 percent in 2015. The United Health study also found only 288,000 out of 869,000 physicians practice primary care. Unfortunately, this problem is likely to worsen before it improves. The United Health study estimates by 2030 there will only be 306,000 primary care providers in America.

Fortunately, President Trump has worked to address this problem with a new executive order. In short, the order helps increase patient access to direct primary care (DPC). Under the order, patients will be able to use tax-advantaged health savings account (HSA) funds to pay for DPC services. This would allow tens of thousands of patients to use HSA funds for DPC, thereby removing an unnecessary obstacle for those seeking affordable primary care options.

Under a DPC agreement, patients pay a monthly membership fee, typically ranging from $50 to $80. As part of the membership, patients receive a more-generous allocation of appointments than they would otherwise receive under most traditional health insurance plans. Some agreements even include same-day appointments and house calls.

Direct primary care empowers patients and doctors, giving them greater freedom to establish and participate in models that work best for their unique needs. Freeing doctors from the burden of insurance requirements and allowing them to connect more with their patients at a one on one basis is likely to encourage more physicians to take on primary care as a profession and do so in areas that are currently underserved.

DPC removes layers of regulation and bureaucracy and allows physicians to focus more time interacting with patients. Routine tests and procedures are included in most DPC plans. However, lower membership fees are typically charged for programs that do not provide these additional services. According to the Direct Primary Care Frontier, the number of DPC practices has increased from only a few in the early 2000s to nearly 900 as of August 2018.

Under a DPC model, medical practice overhead can be reduced by as much as 40 percent annually, according to the Docs4Patient Care Foundation. DPC reduces costs across the board. A study in The American Journal of Managed Care found DPC patients are 52 percent less likely to use services at an expensive hospital than at a traditional private practice. The authors found “increased physician interaction is the reason for the lower hospital utilization and ultimately lower healthcare costs.”

Direct primary care, when paired with a catastrophic health insurance plan and HSA, provides an affordable and convenient alternative to traditional insurance or Medicaid. DPC agreements empower patients to choose the health care model that best suits their unique needs and circumstances. State lawmakers should remove unnecessary regulatory barriers to DPC, which would help alleviate the nation’s primary care shortage.

The following documents examine direct primary care in greater detail.
 

Policy Diagnosis: Seize the Moment to Reform State Health Care Laws
https://www.heartland.org/news-opinion/news/policy-diagnosis-seize-the-moment-to-reform-state-health-care-laws?source=policybot  
In this interview, Michael Hamilton asked Dr. Hal Scherz, board secretary for the Docs4PatientCare Foundation, how the Trump administration is changing the health care regulatory environment and what actions lawmakers should take to improve health care.

Don’t Wait for Congress to Fix Health Care
https://www.heartland.org/publications.../dont-wait-for-congress-to-fix-health-care
Heartland Institute Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs, or submit even more ambitious requests for waivers to the Department of Health and Human Services, a suggestion the Trump administration has encouraged.

Research & Commentary: Ten Health Care Reform Options for States
https://www.heartland.org/publications-resources/publications/research--commentary-10-health-care-reform-options-for-states  
Heartland Institute Senior Policy Analyst Matthew Glans outlines 10 steps state legislators should take to improve the cost and availability of health care in their states.

Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
https://www.heartland.org/publications-resources/publications/direct-primary-care-an-innovative-alternative-to-conventional-health-insurance?source=policybot
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care which alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws encouraging this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Restoring the Doctor-Patient Relationship: How Entrepreneurship Is Revolutionizing Health Care in Maine
https://www.heartland.org/publications-resources/publications/restoring-the-doctor-patient-relationship-how-entrepreneurship-is-revolutionizing-health-care-in-maine
Liam Sigaud of the Maine Heritage Policy Center analyzes the current direct primary care (DPC) landscape in Maine, evaluates how DPC is benefiting patients, highlights some of the challenges DPC practices face, and offers policy recommendations to promote this type of practice in the future.

Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
https://www.heartland.org/publications-resources/publications/where-obamacare-leaves-questions-direct-primary-care-may-offer-answers?source=policybot
Proponents of the Affordable Care Act (ACA) set out to remake American health care in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled down on a broken, decades-old status quo making health insurance “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.

Direct Primary Care: Practice Distribution and Cost Across the Nation
https://www.heartland.org/publications-resources/publications/direct-primary-care-practice-distribution-and-cost-across-the-nation?source=policybot
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus, host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact the government relations team at governmentrelations@heartland.org or 312/377-4000.

Author
Matthew Glans joined the staff of The Heartland Institute in November 2007 as legislative specialist for insurance and finance. In 2012, Glans was named senior policy analyst.
mglans@heartland.org @HeartlandGR