Research & Commentary: Direct Primary Care Would Bring Higher Quality Health Care and Cost Savings to Iowa Medicaid

Published March 4, 2021

Health care costs are burdening our society and leaving the most vulnerable populations with few options. Medicaid, in its current form, is unsustainable. From 2013 to 2018, the number of Medicaid enrollees increased by nearly 28 percent, to more than 67 million. In 2017, the cost of Medicaid reached $581.9 billion, accounting for 17 percent of total health care spending nationwide. What’s more, there is evidence Medicaid costs will continue to increase. According to a recent report from the Centers for Medicare and Medicaid Services, Medicaid expenditures are expected to rise at an average annual rate of 5.7 percent from 2017 to 2027, a rate that far exceeds annual U.S. GDP.

In many states, the increased cost of health care can be traced to overregulation, rising drug prices, and new enrollees needing more medical care than expected. The goal of all future policy in regard to health care should aim to create more accessibility and lower costs across the board. One of the best ways to achieve these goals is Direct Primary Care (DPC).

In short, DPC offers an alternative to a third-party insurance option that offers lower costs for similar, if not better, coverage. A possible solution to reducing the burden of Medicaid on state budgets would be allowing DPC coupled with a catastrophic health insurance plan and health savings account.

Currently, 32 states have passed DPC laws and 12 states have pending legislation. Iowa does have DPC laws, and Sen. Julian Garrett (R-IA) recently introduced legislation that would create a pilot program that would allow Medicaid beneficiaries to opt into direct primary care plans.

Expanding DPC agreements to Medicaid is a commonsense solution to a statewide health care crisis. Sen. Julian Garrett issued the following statement on DPC and the many benefits it can bring to Iowans: “I was the floor manager for a bill establishing Direct Primary Care in the private sector here in Iowa in 2018 that was passed by the legislature and signed by the Governor. I was impressed with the potential savings over the cost of traditional health insurance policies, and the fact that health care providers can spend more time with their patients since they spend less time on paperwork. This session I have introduced SF 81, that instructs the Department of Human Services to establish a pilot program to set up a Direct Primary Care program for Medicaid patients. The State of Iowa and the federal government spend billions of dollars on health care for low income people in Iowa each year. I believe we can potentially provide better care for our Medicaid participants at a substantial savings to our taxpayers with a DPC program. DPC provides basic health care services. Participants also need a catastrophic insurance policy to cover the big-ticket items such as cancer or a heart attack.”

Moreover, one of the main struggles in states with large rural populations is retaining direct primary care physicians. The Hawkeye state is facing a severe shortage of primary care doctors. According to a report by United Health Group, 13 percent of American patients live in a county with a shortage of primary care physicians. The demand for physicians is outpacing the supply and according to the Association of American Medical Colleges, Iowa ranks 46th out of 50 states for the total number of physicians per 100,000 people. Unfortunately, this problem is going to get worse before it gets better, unless policy is put in place to address the physician shortage.

Furthermore, studies show that DPC reduces medical costs by as much as 40 percent annually, according to the Docs4Patient Care Foundation.  A study in The American Journal of Managed Care found DPC patients are 52 percent less likely to use services at an expensive hospital than at a traditional private practice. Not to mention, DPC allows doctors to spend more time focusing on patients, not paperwork. By removing government red tape, DPC creates an environment that fosters patient centered care.

Because of the success of DPC, the number of practices is expanding nationwide. As of this writing, there are 1,200 DPC practices in 48 states, providing care to more than 300,000 Americans.

State lawmakers should seriously consider direct primary care (DPC) programs as a method to lower Medicaid costs. DPC agreements eliminate government regulation and administrative costs that traditional insurance agreements require. By allowing doctors to focus on patients, not paperwork, they are able to provide the highest caliber care at a lower cost. Moving forward, DPC will continue to become more common in the health care marketplace. It would behoove state lawmakers to recognize the benefits of DPC and make it more widely available to Americans. 

in 12 states. 

The following documents examine direct primary care in greater detail.

Policy Diagnosis: Seize the Moment to Reform State Health Care Laws  
In this interview, Michael Hamilton asked Dr. Hal Scherz, board secretary for the Docs4PatientCare Foundation, how the Trump administration is changing the health care regulatory environment and what actions lawmakers should take to improve health care.

Don’t Wait for Congress to Fix Health Care
Heartland Institute Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs, or submit even more ambitious requests for waivers to the Department of Health and Human Services, a suggestion the Trump administration has encouraged.

Research & Commentary: Ten Health Care Reform Options for States–commentary-10-health-care-reform-options-for-states  
Heartland Institute Senior Policy Analyst Matthew Glans outlines 10 steps state legislators should take to improve the cost and availability of health care in their states.

Direct Primary Care: An Innovative Alternative to Conventional Health Insurance
Insurance-based primary care has grown increasingly complex, inefficient, and restrictive, driving frustrated physicians and patients to seek alternatives. Direct primary care is a rapidly growing form of health care which alleviates such frustrations and offers increased access and improved care at an affordable cost. State and federal policymakers can improve access to direct primary care by removing prohibitive laws and enacting laws encouraging this innovative model to flourish. As restrictions are lifted and awareness expands, direct primary care will likely continue to proliferate as a valuable and viable component of the health care system.

Direct Primary Care: Practice Distribution and Cost Across the Nation
Philip M. Eskew and Kathleen Klink describe the direct primary care (DPC) model; identify DPC practices across the United States; distinguish it from other practice arrangements, such as the “concierge” practice; and evaluate data compiled from existing DPC practices across the United States to determine the cost advantages associated with this model. Eskew and Klink confirmed DPC practices’ lower price points and broad distribution, but data about quality are lacking.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus, host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance. If you have any questions or comments, contact the government relations team at [email protected] or 312/377-4000.