President-elect Trump’s Impact on Direct Primary Care

President-elect Trump says his plans for healthcare reform are ‘huge’. We weren’t sure how this translates into actual policy, so we sat down with several leaders in the healthcare community to ‘read between the lines’ on what his statements and implied policies might mean for our industry and, more specifically, one if its most innovative practice models: Direct Primary Care (DPC).

Key Players

While President-elect Trump will likely wield his characteristic trump card often during his tenure, his lack of specific healthcare experience suggests he will rely heavily on a team of experts assembled in his administration. It seems appropriate, then, to begin our analysis with a sketch of the players themselves.

President-Elect Trump

Trump campaigned on a promise of a full “repeal and replace” of Obamacare. Post election, he seems to be wavering on this commitment. Experts now expect many of the Affordable Care Act’s more popular components to remain, including coverage for pre-existing conditions and the ability of minors to stay on a parent’s plan until age 26. How Trump plans to accomplish this while targeting core components like the individual mandate remains to be seen, though experts believe that innovations like DPC may hold the key.

An excerpt from Trump’s previous transition website reads: “The Administration’s goal will be to create a patient-centered healthcare system that promotes choice, quality and affordability with health insurance and healthcare, and take any needed action to alleviate the burdens imposed on American families and businesses by the law.” Despite this wide-reaching rhetoric, Trump’s administration has deliberately avoided presenting a specific plan to replace the ACA. Thus, any implementation of these goals requires some speculation.

That said, we can begin to extrapolate his opinions from his overarching perspective. Ryne Bessmer of Strada Healthcare, who pitched the concept of DPC to Trump during his campaign, opines: “Donald Trump doesn’t like people buying things from outside America. Right now, people are fleeing our country to get affordable healthcare. Any policy that brings free market reforms to reduce cost and keep jobs for citizens in America is something he’s going to push through.”

Tom Price, MD

The nomination of Tom Price as Secretary of Health and Human Services is another huge win for market based innovations like DPC. Price, himself a physician, has said, “We want a system that is affordable for everybody, that is accessible for everybody, that is of the highest quality and provides choices for patients. With real, patient-centered reforms we can build a more innovative and responsive health care system – one that empowers patients and ensures they and their doctor have the freedom to make healthcare decisions without bureaucratic interference or influence.”

Price has also authored The Empowering Patients First Act (H.R. 3400) to repeal the ACA and start over with what Price describes as “patient-centered solutions.” These solutions would include “expanded health savings accounts” and “protecting and strengthening the doctor-patient relationship.” First introduced to Congress in 2011, the Act has gained support since then, and currently boasts 86 co-sponsors.

Additionally, Mr. Price frequently argues against the ACA because it interferes with the autonomy of patients and doctors in making medical decisions. This same objection could also be levied at insurance companies, which often influence patient autonomy by withholding reimbursement for all but a select few procedures, and by requiring pre-authorization before many forms of care can be delivered. This is antithetical to the “patient-centered” healthcare system which Price and other republicans support.

Jay Keese, Executive Director of the Direct Primary Care Coalition, puts it this way: “The selection of Tom Price signals the administration’s full commitment to supporting market-based reforms such as DPC.”

Ben Carson

Former presidential candidate Ben Carson is a retired neurosurgeon with extensive experience as a medical practitioner. Once named a short-list candidate for Secretary of HHS, Carson’s nomination as Secretary of Housing and Urban Development is not without implications for DPC as well. Keese recalls, “doing patient-centered care around federally funded housing is something we’ve had our eyes on from a policy perspective for a while, so there’s definitely opportunity for Dr. Carson to play a role in healthcare in a shift towards block-grant disbursements for Medicaid.”

In the past Carson has repeatedly expressed enthusiasm in restructuring American healthcare around the DPC model. Dr. Lee Gross, a DPC doctor and community thought-leader who met with Carson personally, observes that “Carson is in favor of taking the middle-man out of healthcare, allowing direct payment from person to doctor.” Carson has also expressed interest in replacing the ACA with high-deductible health plans paired with Health Savings Accounts that can be used to pay for consumer driven health-management services like DPC.

Like Price, Carson’s appointment into Trump’s administration bodes well for DPC.

The Republican Ethos

Since Republicans have gained control the House, Senate, and Presidency, the Republican opinion is particularly important for the upcoming term. The general Republican ethos favors the expansion of DPC. Per Jay Keese, “the results of the elections should be a net plus for DPC. Republicans in general support a more market based approach to health reform.”

Republicans traditionally support less federal intervention and making healthcare a free market, both goals that align well with DPC. While the specific actions remain hazy, Trump’s administration and a republican-controlled legislature are likely to move the country’s healthcare systems closer to DPC’s vision.

Expected Changes

With this in mind, here are a few of the short term changes our experts see on the horizon:

Unblock HSA Spending For DPC

As DPC begins to pick up steam amongst both patients and providers, many patients are confused by the fact that they can’t use pre-tax dollars in their Health Savings Accounts (HSAs) to pay for it. Pairing a DPC membership with a high deductible ‘catastrophic-only’ insurance plan seems like exactly the market innovation HSAs were intended to serve. Yet language used to prevent HSA spending on gym memberships is also used categorically against healthcare services like DPC.

Companies like Hint Health—a membership management platform for DPC providers—have observed that while there is dramatic uptick in the number of consumers willing to pay for this category of service using personal credit cards, the lack of institutionalized payment methods are still a large barrier to adoption. “It creates a double pay issue in the mind of a consumer”, says Michael Lubin of Hint Health. “They don’t understand why they’re buying a second healthcare product on top of their benefits package, so they wind up thinking they’re double paying for healthcare. Allowing DPC memberships to be associated with an HSA benefits program will do a lot to make consumers more comfortable with this model.”

Legislation currently sits in committee that would alter this IRS classification by clearly defining DPC as not-a-health-plan. Keese has spent years lobbying on its behalf. While this language is unlikely to pass before the end of the year, Keese is optimistic it will be top of mind for the incoming administration. “As the new Congress begins to consider the legislation that would enable HSAs to play a significant role in replacement of the Affordable Care Act, we have already made significant strides with Congressional leaders on both sides of the aisle. Changes to the tax code which make DPC compatible with HSAs [are currently] our highest priority.”

Dr. Phil Eskew, a practicing DPC thought-leader, agrees with him. “The HSA correction bill is a one-page correction bill that should breeze by,” he says. “It has pretty-much unanimous support. Most experts agree [the correction is] a good idea.”

Dr. Julie Gunther, a fellow DPC practitioner, thought leader, and CEO of SparkMD—a DPC clinic in Southwest Idaho—suggests a speedy timeline for the correction when she writes, “It is expected that The Primary Care Enhancement Act (H.R. 365) will pass in early 2017.”

In addition to the three specialists quoted above, every other expert interviewed for this article suggested that this IRS correction was imminent without much opposition.

Strikedown of Individual Mandate

In addition to those fortunate enough to take advantage of employer sponsored health plans, there still remains a significantly large segment of consumers who can’t afford to pay for both an insurance plan and a DPC membership. Despite the fact that a DPC membership could cover 90% of their medical needs at a fraction of the cost of an insurance plan, they are forced by the Affordable Care Act into purchasing a costly plan from the exchange instead.  

Republicans have expressed a strong desire to repeal the individual mandate, which would allow more flexibility of choice in healthcare spending. According to Dr. Gross, “middle-class America is hurting with the ACA. ACA plans are so expensive that many patients have to decide whether to have the [government-mandated] coverage or the needed care. Many cannot afford both. With a repeal of the individual mandate, consumers will not be penalized for spending their healthcare dollars on their personal healthcare needs instead of the unaffordable coverage.”

The Republicans could cancel the individual mandate by either immediately waiving the tax penalties for non-compliance, or through a full repeal-and-replace overhaul of the ACA. Dr. Gross says it wouldn’t surprise him if Trump put out a cancel of the fees. While waiver of the penalties would be a major partisan battle with strong pushback from insurance companies, he says the cancel still wouldn’t surprise him.

And Keese agrees with this possibility when he says, “Senate Majority Leader Mitch McConnell (R-KY) has pledged to use the budget reconciliation process requiring just 51 votes [to] almost immediately strip out less popular ACA items like the individual and employer mandates.”

While the individual mandate would be a larger political battle than IRS reclassification, it also seems feasible given the current Republican mindset.

Medicaid Block Grants

In addition to these two national changes, republicans have signaled interest in pushing public health plans out of the federal domain through limited-strings-attached block grants of Medicaid funding to states. This could bode extremely well for DPC, as many states would then have leeway in applying Medicaid funding to patient-centered practice models.

Already, “Some states have looked at DPC as a way to save costs for their Medicaid,” says Dr. Gross, although “currently, states that want to do a DPC pilot need to find some narrow routes to do that based on waiver programs based on federal Medicaid rules.”

The Trump administration has also promised to give more control of Medicaid to the states, and has brought on Seema Verma, who specializes in creative Medicaid reforms, as the new head of the Centers for Medicare & Medicaid Services.

At the moment, Republicans control all 3 branches of government in 24 states. Even given the current restrictions, Dr. Gross expects “some Medicaid pilot program brought forward” in those states.

Even in states not entirely controlled by Republicans, the political climate looks promising for DPC. After all, DPC enjoys bipartisan support. According to Dr. Gross, “With only one exception, any state that’s brought forward DPC legislative protection has done so in a bipartisan manner. Language of the federal legislation relating to DPC was itself even Democratic.”

Keese agrees that upcoming changes from this recent election will increase DPC usage. “The Trump campaign was supportive of a significant shift to market based health, including… block-grant Medicaid to the states,” he says. These block grants would remove federal mandates and allow states to use the funds more freely, including on programs like DPC.

Prospects Bode Well for DPC

In short: the political climate seems promising for DPC.

Over the next term, look out for the following:

• A clarification that allows HSAs to pay for DPC, likely in early to mid 2017
• A potential repeal of the individual mandate, removing DPC’s double-pay issue
• More state-based Medicaid pilot programs focused on DPC
  
  

Though there is a lot we still don’t know about what this new administration has planned for their first agenda, the outlook is good for DPC. 

“There is a lot of uncertainty about what’s going to happen in healthcare, but a move towards more free market healthcare is one of the certainties. There’s no question about it.” -  Jay Keese