Open Season: Pairing Insurance Choices with Direct Primary Care

We find ourselves in yet another holiday season, for many of us a wonderful time of the year, but for some this can be an emotionally charged and stressful time. It is certainly busy, and as if there was not enough to stress about already, it is also that time of year when our governmental agencies update health insurance options and allow modifications to coverage in the Affordable Care Act’s Health Insurance Marketplace. A period known as open enrollment, typically from November 1st through December 15th. During last year’s open enrollment period, 21.3 million Americans opted for a marketplace insurance plan, 5 million more than the previous year. While some states have state specific insurance marketplaces, Florida participates in the federal marketplace which uses the HealthCare.gov platform. I would like to echo a point made in a prior blog post: health insurance coverage is no guarantee of access to routine healthcare, but it is of vital importance for “catastrophic” coverage. In the case of an emergency, accident, or hospitalization, it provides at the least a financial safety net of sorts. There are a number of insurance options available to choose from within the marketplace, and in this article I briefly review the main categories of coverage plans, along with their relative advantages and faults. I also will be discussing how these different plans may impact yearly healthcare costs for patients choosing to enroll in a direct primary care clinic, such as Sana Sana Clinic. The main benefit remains the unparalleled quality of care, but many patients who opt for a DPC clinic can also see a financial benefit, with much better care at either no extra cost, or even at a bit of a discount, compared to the more traditional insurance based model. This article is most directly pertinent to those of you who will be electing a marketplace insurance plan, but many of these options are paralleled for patients insured through their employer. While the open enrollment period for employer based insurances varies by company and major life updates, the information below will remain helpful when it comes time to make these critical decisions regarding your coverage. 

Before reviewing the yearly healthcare costs, there are a few fundamental insurance terms to understand in regards to the costs of coverage:

• Monthly premium: an unavoidable cost, this is the amount you will be paying monthly to your insurer. The average monthly premium for individuals and families has risen by just over 20% relative to 2018 

• Deductible: the amount you will be spending on health related services and medications before your insurance begins to pay anything. A bit of variation between plans, but for most this amount is in the hundreds to the thousands of dollars range, oftentimes disincentivizing patients from seeking preventative care that they need. 

• Copayment: a fixed amount paid to your healthcare provider every time you are seen for care, such as a $20 payment to the doctor. This is usually paid even after you have hit the deductible mentioned above. 

• Coinsurance: a cost that is paid to your healthcare provider as a percentage of the billed services, for example you may be responsible for 20% of healthcare costs whereas the insurance is responsible for the remaining 80%. Similar to the copayment, usually paid even after hitting the deductible. 

• Out-of-pocket maximum: a set amount of money, above which you are no longer responsible for paying your healthcare costs, and your insurance covers 100% of your coverage. Marketplace plans have a hard cap on how high this maximum is, but it remains quite high. In 2025 the individual maximum will be $9,200, and for a family $18,400.

It is worth mentioning that patients enrolled in a Direct Primary Care practice are no longer subject to the costs of copayments or coinsurance costs, as these are only charged when insurance is billed for services. Given how high deductibles are (and rising), many patients find they are spending about the same, or even less, for a much greater quality of care and attention at a DPC practice. My 30 to 60 minute visits beat the 7 to 12 minute visits that have become the industry standard under the traditional model. Try as we might, we have not yet figured out any substitute for the immense value of the actual time you spend with your physician, a testament to the often underappreciated importance of a human relationship with your doctor. However, to best understand how these insurance plans may fit in with a DPC membership, we shall examine the different varieties of insurance plans available in the marketplace, and how they compare in regards to the typical insurance costs outlined above. 

There are a few different ways to categorize these insurance plans, the type of plan generally determines where you can use your health insurance coverage. Unique to the marketplace plans, they are further subdivided by a metal score, ranging from bronze to silver to gold and up to platinum, roughly reflecting the cost sharing equation of the plan. Bronze plans have lower monthly premiums and higher out of pocket costs, whereas platinum plans have very high monthly premiums coupled with lower out of pocket costs, with silver/gold plans landing between them. The type of insurance plan is often the first decision point, below is a broad overview of the different available plans in regards to where you may seek care, general expected costs, and some pros and cons for comparisons:

• HMO (Health Maintenance Organization) 

  • Care: you are restricted to the network of providers that participate in the insurance plan, with the exception of emergency care. You must choose or will be assigned a primary care physician, who coordinates your care, and if and when needed can provide you with a referral to see a specialist. Without that referral your specialist would be unable to bill your insurance.

  • Costs: lower premiums, and generally lower out-of-pocket costs. You can expect a fixed copayment for each visit. 

  • Pros: in theory, emphasizes primary care and prevention, resulting in overall lower healthcare costs.

  • Cons: least flexible, provider choices are limited to the network and subject to change yearly. Referrals needed for specialists often results in a bottleneck with your primary care doctor

• PPO (Preferred Provider Organization)

  • Care: insurance may be used with any doctor, allowing greater flexibility. There is a network of providers who are directly participating with the PPO and care with these providers will be a bit cheaper. Referrals not needed for specialist care. 

  • Costs: higher premiums, and higher out-of-pocket costs, coinsurance charges as a percentage of cost to be paid by you are typical. 

  • Pros: greatest flexibility and choice in healthcare providers, and no need for referrals for specialist care 

  • Cons: very expensive, and often little transparency as to cost with complex billing structures given the mix of in-network and out-of-network rates and charges.

• EPO (Exclusive Provider Organization)

  • Care: similar to the HMO plans, coverage is limited to in-network providers except in emergencies, however unlike the HMO plans referrals are not required to see in-network specialists. Primary care physician selection is thus not obligatory. 

  • Costs: generally lower premiums compared to PPO plans, and lower out-of-pocket costs when remaining within the network. 

  • Pros: no referrals needed, similar to PPO plans, but at a lower cost relative to PPO 

  • Cons: no coverage for nonemergent out-of-network charges. Referrals are not needed but you are restricted to the network of providers 

• POS (Point of Service) 

  • Care: a hybridization between HMO and PPO plans, you must select a primary care physician who will be required for referrals. You can expect lower costs in-network, but can still be used with out-of-network providers albeit at high cost 

  • Costs: mid-range premiums and out of pocket costs, anticipate fixed copayments that are higher out-of-network

  • Pros: similar to HMO, in theory the emphasis is on primary care, but the higher cost point allows more flexibility in choosing providers. 

  • Cons: similar to HMO plans, primary care provider referral is needed and oftentimes a bottleneck. Out-of-network care quickly erodes most savings if used.  

• HDHP with HSA (High Deductible Health Plan with Health Savings Account) 

  • Care: can be used within most insurance networks, but will only kick in after the higher deductible is met 

  • Costs: lower premiums, with much higher deductibles. Almost always paired with a HSA (Health Savings Account), an account where you may contribute pre-tax dollars, has the potential to accrue tax-free interest as generated by savings interest and sometimes some investments. HSA dollars can be spent on health care expenditures without any tax burden. 

  • Pros: low premiums and upfront costs, great flexibility, encourages saving money for healthcare needs with significant tax advantages. 

  • Cons: until deductible is met, very high out-of-pocket costs, if the HSA is not well funded these will be a substantial financial strain. 

If your head isn’t spinning enough from the HDHP with HSA-HMO-PPO-EPO-POS-BBQ alphabet soup of options, you must then consider the metal tier from bronze to platinum (okay there’s no BBQ insurance plans but I just tossed that one in to make sure you were paying attention). Thankfully the metal tiers are more straightforward, and the main deciding factor should be your anticipated healthcare needs for a given year (within your budget), the tiers are broken down as below:

• Bronze: lower premiums with very high out-of-pocket costs, a choice for patients with very limited anticipated health needs

• Silver: mid-range premiums and out-of-pocket costs, particularly beneficial for patients who qualify for cost-sharing reductions as determined by income

• Gold: higher premiums, with lower out-of-pocket costs, targeted to patients anticipating a relatively high use of medical services 

• Platinum: the highest premiums with the lowest out-of-pocket costs, a valid option for patients with the highest anticipated level of healthcare needs 

The marketplace insurances have provided millions of Americans with access to coverage who might have otherwise been uninsured. The breadth of choices available is a great thing, allowing patients some agency in the decision and tailoring to their own needs. However, for a growing number of the insured, the choices are increasingly narrowed as the costs of healthcare continue to increase at a rate far exceeding inflation and wage increases, while whittling away savings. According to a 2023 survey as reported by Nerdwallet.com, 55% of Americans would need to take out a loan or rely on credit cards to cover a $1000 emergency medical debt, and 25% have reported having to dip into their savings or retirement funds to cover bills in the past year. It should come as no surprise that we have seen a surge in popularity for the most economical of the insurance options listed above, namely the High Deductible Health Plan with a Health Savings Account (HDHP with HSA). According to data from the US Bureau of Labor Statistics, 51% of private industry workers elected such plans in 2023, and the trend is mirrored in those insured with marketplace plans, with deductibles rising over time. Many studies have found that due to the high deductibles, enrollees in these plans reduce their healthcare spending, to the extent of not seeking highly beneficial primary care coverage. Foregoing preventative care is often not an active choice, the barriers to access regardless of insurance type are immense. Those who do have a physician will be incurring charges they might not be able to cover. The lack of preventative care comes at a heavy future cost, often resulting in undiagnosed and unaddressed disease. When these issues begin to display symptoms that force you to seek care, they will almost inevitably be much more expensive to care for, requiring more intensive interventions and frequent visits. The cost of an emergency room visit is in the thousands on average, and you cover that cost until the deductible is met. It feeds into a cycle that contributes to escalating medical costs, and in addition to suffering the health consequences, these patients are further burdened by medical debts at an increasing rate. Faced with such a dysfunctional system, savvy patients and doctors alike who have the ability are breaking the cycle entirely by returning to the essential foundation of high quality primary care and preventative services. 

“An ounce of prevention is worth a pound of cure.”

-Benjamin Franklin to Philadelphians facing the threat of fires in 1736

A relationship with a primary care physician is an investment in your own health that will pay dividends in regards to savings in avoided healthcare costs, and more importantly your own quality of life. The best marriage of access and cost is offered by Direct Primary Care practices. The monthly fee is transparent and predictable, and with same-day and next-day appointments and lines of communication, costly urgent care and emergency room visits can be entirely avoided with better and faster care at no additional cost for members. The decision regarding insurance coverage is a very personal one and varies not only by the individual but even by the year or season. No blog post will guide you to “the best choice,” but for those considering enrolling in a DPC practice, there are some insurance plans that adapt better to the model. It is worth considering for the many of you exploring this year’s HealthCare.gov coverage offerings during open enrollment, or when electing options during the varied enrollment periods under employer provided plans. 

The HMO and POS plans are constructed around the premise of a strong relationship with an in-network primary care provider who is the only one that can sign off on referrals. As DPC doctors are out-of-network by definition (we do not bill insurances), this presents an immediate issue if specialist care is required, as an in-network primary care provider would need to agree to offering a referral. It remains possible to pay a membership to a DPC practice and benefit from the excellent quality of care, however the in-network primary care provider will remain a major bottleneck and add another cook to the kitchen. The great flexibility offered by PPO plans allows patients a great deal more freedom, and coverage is highly adaptable to DPC models. However, these plans are constructed around a high monthly premium (which dwarfs most DPC monthly membership fees). Between the high insurance premium and the membership fee, the fixed monthly costs are quite high for these patients. Given most of these plans charge coinsurance, these patients stand to save substantially by opting instead for the discounted lab rates and generic medications as offered by many DPC practices, as we will be offering at Sana Sana Clinic. The EPO plans do not require selection of an in-network primary care physician, similar to the PPOs, and with slightly lower premiums and out-of-pocket expenses. The caveat being that the insurance is used in-network, as the cost for out-of-network care becomes very high. EPO plans are also adaptable to a DPC clinic, but as they are a hybridization of the HMO and PPO models, they share some of their difficulties. The monthly fixed costs of premiums and membership fees, while lower than comparative PPO plans, will still be on the higher end. Perhaps more restrictive, these plans offer very little or usually no coverage for out-of-network charges. Your DPC doctor can handle the majority of your care needs, but if you need a specialist you are reliant on your DPC doctor to help refer you to one in your network. Depending on how extensive that network is in your area, this can present a major hurdle. It is surmountable with careful research and planning, such as choosing a plan that includes in-network specialists who’ve cared for you before or who you otherwise would feel comfortable seeing. There remains a real risk that you will have need for a specialist consultation for an unforeseeable issue, and choosing in-network may mean a very long drive, very limited choice, or even both. 

We’ve nearly made our way through the alphabet soup of plans, the BBQ model isn’t actually a thing and while finger-licking delicious, BBQ food is not exactly healthy, leaving the HDHP with HSA as the only (real) model left to cover. As previously noted, an increasingly popular choice of coverage, these plans can work quite well with a DPC membership. The DPC movement continues to grow and now there are numerous research studies into the model, but we are still in the “early adopter” phase. Even amongst doctors, outside of primary care providers, many of my physician colleagues have little to no familiarity with the model. Despite limited research, a study published in 2021 reported patients with HDHP’s enrolled in a DPC membership can expect to save on average 20-30% on healthcare costs in a given year. The greatest benefit remains the excellent quality the model is constructed on, but the potential for some savings along with the transparent, predictable monthly payment structure are worth factoring into your coverage choices. Ultimately your decision regarding health insurance should be guided by what you feel works best for you and your family. The web is filled with resources and data to help guide you, but the time your doctor can offer you can’t be matched outside of the direct model. I hope this primer proves helpful and I encourage all of you making coverage decisions to weigh your options carefully. Your healthcare should be valued and is worth investing in.

References 

Abelson, R. (2022, July 7). Opinion: Medical debt health care cost. The New York Times. Retrieved from https://www.nytimes.com/2022/07/07/opinion/medical-debt-health-care-cost.html

Centers for Medicare & Medicaid Services. (2024, November 1). Historic 21.3 million people choose ACA Marketplace coverage. Retrieved from https://www.cms.gov/newsroom/press-releases/historic-213-million-people-choose-aca-marketplace-coverage

Healthcare.gov. Dates and deadlines. Retrieved from https://www.healthcare.gov/quick-guide/dates-and-deadlines/

Healthcare.gov. Out-of-pocket maximum/limit. Retrieved from https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/

Healthcare.gov.  Plan types. Retrieved from https://www.healthcare.gov/choose-a-plan/plan-types/

Healthcare.gov. Your total costs. Retrieved from https://www.healthcare.gov/choose-a-plan/your-total-costs/

Kaiser Family Foundation. (2023). EHBS 2023 Section 1: Cost of health insurance. Retrieved from https://www.kff.org/report-section/ehbs-2023-section-1-cost-of-health-insurance/

Mechley, A. R. (2023). Direct Primary Care: A Successful Financial Model for the Clinical Practice of Lifestyle Medicine. National Center for Biotechnology Information. Retrieved from https://pmc.ncbi.nlm.nih.gov/articles/PMC8504342/

NerdWallet. (2023). 2023 savings report. Retrieved from https://www.nerdwallet.com/article/banking/data-2023-savings-report#:~:text=Average%20savings%20near%20%241%2C000%20per,is%20most%2Dcited%20savings%20goal

Office of the Assistant Secretary for Planning and Evaluation. (2023). Marketplace deductibles. Retrieved from https://aspe.hhs.gov/sites/default/files/documents/748153d5bd3291edef1fb5c6aa1edc3a/aspe-marketplace-deductibles.pdf

U.S. Bureau of Labor Statistics. (2024). 51 percent of private industry workers participated in high-deductible health plans in 2023. Retrieved from https://www.bls.gov/opub/ted/2024/51-percent-of-private-industry-workers-participated-in-high-deductible-health-plans-in-2023.htm