The Swamp in Washington, D.C., and its crony capitalist retainers do not want to lose their grip on the trillions of dollars that slosh through the “healthcare” sector—approaching one-fifth of the U.S. economy.
The one thing that would cut costs (not just spending), restore sanity, protect the patient-physician relationship, unleash innovation, and encourage excellent care is to put patients in control of their own money. Under the current third-party payment system, made much worse by ObamaCare, a huge part (one-third? one half? who knows?) of the healthcare dollar is diverted to bureaucrats, compliance officers, administrators, CEOs, managed-care profits, middlemen such as pharmacy benefits managers, and other swamp dwellers who contribute nothing to the actual care of patients. Then a goodly share goes to lobbyists and congressmen to keep the racket going.
There are two disruptive innovations that threaten the sweetheart deals in the Swamp: Health Savings Accounts (HSAs) and DPC—Direct Primary Care or Direct Patient Care.
HSAs give individuals spending their own money the same tax advantages long enjoyed by employer-owned health benefits plans. But from the very beginning they were crippled by restrictive regulations concerning funding and use of the funds. For example, the accompanying “high-deductible health plan” has to have a deductible that is not too low, and not too high, but just right.
DPC is a direct arrangement between doctors and patients, which cuts the red tape out of medical care, kicks the bureaucrats out of the exam room, and is set to sweep across the U.S. whether the Swamp likes it or not. Dr. Marilyn Singleton, president-elect of the Association of American Physicians and Surgeons (AAPS), explains DPC like this: “The Direct Primary Care (DPC) model is burgeoning as patients yearn for quality time with their doctor at an affordable price. Here, all primary care services and access to basic commonly used drugs at wholesale prices are included in a fixed transparent price,” often around $50 to $75 per month.
At present, patients have to pay their monthly DPC membership fees with after-tax dollars. They have already lost 15% of their earnings to the payroll tax, the heaviest burden borne by low-income workers, along with the income tax. Workers who have an employer-owned health plan have hundreds of pre-tax dollars extracted from their earnings to go to the third-party payer. (It only looks like the employer is paying—the worker earned the money.) So, health plans, which sell promises to pay for approved medical services, have a huge competitive advantage over practices that actually provide the services.
Why not combine the two? Why can’t patients use their HSAs—supposedly their own money—to pay DPC fees? Because the IRS says they can’t. Not only that, if they have a DPC membership, they can’t even make a contribution to their HSA.
Congress was considering a simple bill to fix that—H.R. 365. But on the way to the House Ways and Means Committee, provisions were sneaked in, with very limited time to comment, and the bill number was changed to H.R. 6317. Some things from the Affordable Care Act (ACA) were inserted, along with provisions that independent DPC doctors said would favor huge corporate entities—purveyors of big-box medicine—that want to dominate the market. The government would micromanage what a DPC could or could not offer, based on the AMA’s copyrighted procedure codes, and cap the fee that the DPC could charge—not just the amount that could be paid from an HSA. It would allow only Direct Primary Care. It would not allow Direct Patient Care arrangements with specialists; for example, a direct care agreement with an endocrinologist to manage diabetes would not qualify. Then the bill was incorporated into H.R. 6199, with some of the objectionable features removed, thanks to patients and doctors who spoke out. We’ll see what emerges from the sausage factory.
The rationale for restrictions, especially the cap on fees, was the scoring by the Joint Tax Committee, which calculated that more money would go to HSAs and less to the tax man: $1.8 billion over 10 years. Never mind that employer health benefits cost the Treasury $3 trillion over 10 years, 1,700 times as much.
Physicians are calling on President Trump to intervene to stop the obstruction of patient freedom by the IRS and Congress. Allowing patients true flexibility to use HSAs for DPC will turbo-charge the ability of patients with short-term and association-based plans to stretch their medical dollars and get the best care from the physicians of their choice.
President Trump could order Treasury Secretary Mnuchin to take immediate action to reverse the IRS rules made by former Commissioner Koskinen and also tweet shame Congress into passing real reform.
Why would anyone favor blocking patients with HSAs from DPC physicians—except middlemen profiting from the status quo?