Direct Primary Care’s Promise

by Charles Katebi

Progressives constantly frame the debate over healthcare reform as a false choice: should healthcare be financed through insurance companies or the government? Both options leave patients at the mercy of third parties.

Now an alternative known as Direct Primary Care promises to put the patient back in the driver's seat. The patient pays a flat monthly fee or retainer, and in exchange, physicians provide primary care services. These services include checkups, urgent care, and chronic care management.

Fees average between $50 and $100 per month, a third of the cost of the average insurance premium in America and one-fifth of the average premium in Wyoming. Direct Primary Care removes insurance entirely from a patient's interaction with their doctor, leaving them free to pay only for the primary services they will be using.

This direct model reduces the cost of care by aligning the interests of physicians with their patients. Unlike the traditional fee-for-service system where doctors are paid for every procedure they perform, the incentive for physicians within Direct Primary Care is to control costs over the long-term. Patients pay a single fee every month, so it is incumbent upon their doctors to keep them healthy without providing excessive or unnecessary care.

Direct Primary Care also benefits physicians. Negotiating with insurance companies cost medical practices $215 billion in administrative fees in 2011, accounting for a quarter of all hospital spending. Contracting directly with patients would cut these enormous administrative costs, allowing hospitals and private practices to spend that money on services for patients. Is it any wonder that a 2014 survey found that 20 percent of physicians either practice direct care or were planning to over the next three years?

State lawmakers across the country recognize Direct Primary Care's potential to improve health care access and have taken measures to protect physicians offering it from overregulation. Thirteen states have passed laws defining its practice as "not insurance" and exempt from the authority of state insurance commissions.

In 37 other states, including Wyoming, physicians still face legal and regulatory obstacles to offering direct patient care. Since direct care providers assume financial risk when they offer patients unlimited access to primary care for a fixed monthly fee, some states consider them a "risk-bearing entity" and have smothered them in a deluge of insurance regulations. It's time for Wyoming to recognize the value of Direct Primary Care.

Under the Wyoming Constitution, Article 1, Section 38 reads:

"Any person may pay, and a health care provider may accept, direct payment for health care without imposition of penalties or fines for doing so."

However, if a physician bases their fees on their patients' medical history (the same way insurance companies determine premiums), Wyoming's Department of Insurance considers them a "risk bearing entity," and subject to its statutes. It is these regulations that have made health insurance unaffordable to begin with.

If Wyoming provided regulatory certainty to physicians that practice Direct Primary Care as some states have, we could make real gains in making healthcare more affordable and accessible. A study found that individuals who had received direct patient care cost 20 percent less than those that used traditional insurance, savings $679,000 for every 1,000 patients. Wyoming residents currently pay the highest health insurance premiums and deductibles in the country. Direct Primary Care could save them thousands of dollars in health expenses every year.

Unlike virtually every other sector in life, patients have almost no control over the healthcare they buy. Insurance plans are mandated to cover dozens of procedures most people will never desire or use. And doctors are paid based on the quantity of procedures they perform and not on their effectiveness. Under Direct Primary Care, patients decide what primary services they want and pay a single fee for them. Wyoming should follow the example of its neighbors and modernize its health care laws.