Direct primary care could revolutionize private health care finance
Silicon Valley is internationally noted as a technology innovator. Now it’s home to another form of innovation, this time in medical care with something known as direct primary care. Direct primary care involves patients pre-paying for routine medical services. In the case of Silicon Valley startup primary care company MedLion, patients pay $49 per month and $10 per visit. “MedLion is able to provide high quality medicine at a price point nearly any family can afford,” notes David Chase on the TechCrunch blog.
I’ve opined that with burgeoning health care costs and their hyperinflationary effect on premiums for insurance and managed care plans, we could see a bifurcation of the market where these traditional forms of medical coverage are used only for major, unexpected expenses and not routine care such as provided by direct primary care providers. In that respect, it’s back the future when “major medical” coverage of decades past was designed to cover only what its name denotes to protect people from financial catastrophe. After all, that’s the key benefit of any form of insurance.
The direct primary care model could be embraced by both employers that have been shifting more risk to employees in the form of higher deductibles and co-pays as well as individuals seeing monthly premiums starting to rival the size of mortgage payments. If this happens, it would represent a major realignment of the private health care finance system. It could also lead small employers and individuals to opt for “bronze” level qualified health plans that state health benefit exchanges must offer beginning in 2014 under the Patient Protection and Affordable Care Act. Such plans must be cover 60 percent of an individual’s actuarially projected medical costs and would offer lower premiums than qualified plans covering 70, 80 and 90 percent of expected losses. With the current level of growth in premium rates, by 2014 bronze level plans may be the only ones that are affordable for many, as I’ve speculated in a previous post.