Direct Health Care Services for the Uninsured

Two weeks ago I wrote about some of the unintended, but positive, consequences that could result from employers dropping employer-sponsored health insurance (ESI). Following that post, many weighed in about various other consequences of such behavior from employers and what that means for health care coverage for millions of families in the US. One issue in particular caught my attention; not only because of the touching stories associated with the discussion, but because of the unique and inspiring methods some providers are utilizing to compensate for the lack of insurance coverage.

As Jodi Carroll of VoteFacts.org underscored, millions of women and men in the United States are reliant on their significant others employer to provide their family’s health insurance. Women, in particular, are disproportionately reliant on husband’s employers for coverage, with children who are also dependents.

Although there are positives that might ultimately develop in the individual market due to ESI, the current and near future are exceptionally frightening for many families and employers have started down that slippery slope by excluding many dependents from future insurance coverage.

Given the recent discussion in the media, spouses and children being dropped from employer coverage is a growing concern. In the context of a bloated and dysfunctional health care system, this significant and immediate alteration in health insurance coverage could be very difficult for many households to absorb financially, particularly if their income falls just above the threshold for federal subsidies to purchase policies in the upcoming health insurance exchanges.

But, what if these spouses and children had an option that could provide them with most of the services they need, and was easily accessible and affordable.

Throughout the nation, in response to shifts in health care, many small direct health care providers are opening shop. These direct providers are able to combat many concerns through price transparency, easy access and lower costs as they establish what is basically a menu of cash only services. Further, these one-on-one scenarios improve decision-making between patient and physician and take out the need for insurance and proof of citizenship.

While many services are not available through these direct providers, a bulk of what the majority of people need are. Chronic disease management, acute care services and preventative care are all available at a face value, affordable price.

Residents in North Carolina have embraced a shining example of this new system. Access HealthCare is a direct care provider in NC with results to be impressed by. One of their diabetic female patients, and her teenage son, had lost their health insurance when her husband them, taking his ESI with him. According to her KevinMD website interview, she was working two retail jobs to fund her diabetes treatment and medical, at a cost of $5,000 a year.

However, once she found Access Healthcare, her annual costs were reduced to $450 annually and her health care results improved.

Similarly, according to Dr. Brian Forrest, founder of Access Healthcare, “a patient who normally has an 80/20 plan (like Medicare Part B) might end up having to pay 20% of their fee to see a specialist for a stress echo. If the cardiologist I use gives them an 85% discount to just pay cash up front, then the patient actually spends less out of pocket by not using their insurance.”

Although not all medical care can be preventative or primary, Dr. Forrest contends that “only about 1% of the population gets hospitalized annually. Only about 5-10% of patients that seek care at a physician office cannot get the services they need in the outpatient setting.”

For now, most of what people need can be found in offices like those mentioned above. However, I would still encourage citizens to purchase, at minimum, catastrophic coverage for hospitalization.

Additionally, as we begin to see the intended and unintended consequences of the Affordable Care Act, it is vitally import that we are open to new ideas and creative methods for meeting the nations changing health care needs.

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Dropping Employer-Sponsored Insurance Could Benefit Health Care System

Special thanks to Emily Egan for her thoughtful contributions, writing and ideas for this post. 

In 2010 President Obama told the American public that if they liked their health care coverage, they would be able to keep it. And, despite his signature health reform law, the Affordable Care Act (ACA), intending to expand the country’s employer-based health insurance system, many now estimate that the law will, in fact, do just the opposite. It is projected that a consequence of the coverage provisions implemented in 2014 will be for many companies to drop health care coverage for their employees.

To date, the majority of research studies, modeling estimates and employer surveys have predicted some level of employer insurance drop. While this is usually framed as a negative consequence of the law, moving away from our employer system may actually have positive implications for the health care system and individuals.

As a result of an expanded individual market, Americans participating in the health care system might see benefits in three specific areas: cost, transparency and portability.

The benefits would not manifest through Americans losing employer sponsored coverage, but in gaining new coverage from a choice of plans in a more robust individual market.

The individual market for health care insurance is historically underdeveloped compared to the employer-sponsored market due to high costs, individual underwriting, and the ability of insurers to deny applicants based on pre-existing conditions. This system began as a result of wage caps during World War II, and then expanded when preferential tax treatment for employer plans was codified into law. The dominance of employer-sponsored insurance (ESI) was solidified in an era of single income households where the breadwinner rarely changed jobs.

However, the individual market will soon experience substantial changes as a result of the ACA, and could become much more attractive to individuals as their choices increase. Further, knowing that employees will be able to find decent coverage elsewhere could become an incentive for employers to dump ESI.

In terms of improving cost, it is possible that when individuals have more consumer choice with regard to plans (rather than a single plan or a choice of several tied to one employer); most would be likely to choose lower-priced plans that require higher deductibles and out-of-pocket spending. This price sensitivity would not only reduce the aggregate amount spent on insurance, but may work to reduce unnecessary utilization of medical services and more price sensitivity when it comes to choosing providers, medications, and treatment plans. Which could, in turn, lead to an additional improvement: transparency.

Anyone who has attempted to navigate through the health care system can attest to the lack of transparency from providers and health systems. Most individuals do not ever see pricing information, as they are largely shielded from health care costs via their insurance providers. However, if individuals begin paying for treatment out of pocket up to a certain deductible, the demand for transparent and bundled prices should increase, and providers would be forced to respond or risk seeing patients walk away. We’ve already seen the popularity of retail clinics among those who are uninsured and use of high-deductible health plans by many Americans, in part, because of the clear pricing structure.

The third potential positive implication of significant ESI drop could be felt through an increase in the demand for portability of plans. Labor markets of 2013 look very different from those of the post- World War II era. Job transitions occur much more frequently, and with ACA implementation, health insurance providers are likely to alter their network of physicians. For patients with complex or chronic conditions, switching networks and losing access to a trusted physician as a result of a job transition, a job loss, or early retirement, can have harmful health consequences. However, with individual insurance coverage, loyalty to providers exists outside of ESI. Americans could soon have more flexibility to keep their coverage by not using ESI.

While it would certainly be preferable for major shifts in health care to be the result of thoughtful and well-researched strategy, there are potential unintended positive results of new ACA policies that align incentives such that it no longer makes sense for employers to purchase expensive insurance plans on behalf of employees.

Consequentially, the transition is unlikely to be a smooth one in the coming years, but the benefits of changes in individual market insurance coverage could outweigh the unavoidable growing pains of the changing market.

If a cycle of positive individual market results increases, more and more people could move to the individual market, by choice or force.  Only time will tell.