Medicaid must be reformed to ensure its long-term survival. Over the past decade, Medicaid rolls have expanded faster than many states can afford. 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, representing 17 percent of total healthcare spending nationwide.
In many states, the increased cost of health care can be traced to overregulation, rising drug and medical device costs, and increased use of long-term and behavioral health services. Even worse, bloated Medicaid programs, even in states that have not expanded, face viability problems. In Missouri, Medicaid costs have risen consistently over the past decade. According to the News Tribune, Medicaid costs have grown from 17 percent of Missouri’s general revenue in 2011 to 24 percent in 2018. In 2018, the Show Me State spent a whopping $10.3 billion on Medicaid.
Unfortunately, Medicaid cost overruns will continue to grow. 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. gross domestic product growth. The Rapid Response Review, a study of Missouri’s Medicaid system that was completed in February predicts Medicaid spending could increase to as much as 30 percent of general revenue by 2023.
One of the lesser-known factors driving skyrocketing health care costs is the lack of primary care physicians. Indeed, many states are experiencing a severe shortage of primary care physicians. According to a 2018 report from United Health Group, 13 percent of American patients live in a county with a shortage of primary care physicians.
In December, Missouri state Rep. Steve Helms (R-Jefferson City) introduced draft legislation that would launch a pilot program that would allow Medicaid enrollees in certain Missouri counties to contract with physicians who practice direct primary care (DPC). Under the proposed bill, HB 1416, physicians in the selected counties would be paid $70 per month to care for Medicaid patients.
DPC removes layers of regulation and bureaucracy and allows physicians to focus more time interacting with patients. Routine tests and procedures are included in most DPC plans. However, lower membership fees are typically charged for programs that do not provide these additional services. According to the Direct Primary Care Frontier, the number of DPC practices has increased from only a few in the early 2000s to nearly 900 as of August 2018.
Under a DPC model, medical practice overhead can be reduced by as much as 40 percent annually, according to the Docs4Patient Care Foundation. DPC reduces costs across the board. 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. The authors found “increased physician interaction is the reason for the lower hospital utilization and ultimately lower healthcare costs.”
Direct primary care, when paired with a catastrophic health insurance plan and a health savings account, provides an affordable and convenient alternative to traditional insurance or Medicaid coverage. DPC agreements empower patients to choose the health care model that best suits their unique needs and circumstances. State lawmakers should remove unnecessary regulatory barriers to DPC, which would help alleviate the nation’s primary care shortage.
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
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.
Restoring the Doctor-Patient Relationship: How Entrepreneurship Is Revolutionizing Health Care in Maine
Liam Sigaud of the Maine Heritage Policy Center analyzes the current direct primary care (DPC) landscape in Maine, evaluates how DPC is benefiting patients, highlights some of the challenges DPC practices face, and offers policy recommendations to promote this type of practice in the future.
Where Obamacare Leaves Questions, Direct Primary Care May Offer Answers
Proponents of the Affordable Care Act (ACA) set out to remake American health care in 2010, but in many respects the ACA didn’t change the health care paradigm at all; it simply doubled down on a broken, decades-old status quo making health insurance “coverage” a national priority, rather than focusing on limiting health care costs and enhancing health care access. Patrick Ishmael of the Show-Me Institute explores in this essay a promising medical practice model, direct primary care, which he says could deliver on the promises made by proponents of the ACA to lower costs and improve access to quality health care.
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.