Direct Care Contracts: Cheap Non-Insurance Plans Could Put Patients at Risk (video)

In the Health and Human Services Committee, we have heard a few different insurance plans that would be cheaper and less comprehensive alternatives to the Affordable Care Act (ACA).

With SB1105, healthcare moves into the gig economy. SB1105 covers direct primary care agreements, a non-insurance alternative to the ACA.  In Arizona, people are already allowed to make one-on-one contracts with a healthcare provider for certain services for a designated mount of money per month.

This bill clarifies existing law and says that these contracts are not insurance and, therefore, not regulated by the Arizona Department of insurance. It also says that you can have contracts with doctors, physicians assistants, nurse practitioners, nurses, dentists, and physical therapists.

If you take this to it’s illogical extreme, you could have multiple contracts with different providers for different menus of services. Unless you are really good at contract law, you could end up having several contracts, paying monthly bills to each of these providers and still not getting the care that you need. Since these plans are not insurance, you would not be able to take your complaints to a bureaucrat at an insurance company or at the Department of Insurance.

Direct current primary care agreements are supposed to fill a niche in the healthcare market. The ACA is too expensive, particularly for sole proprietors. These are business people who are their business. Professional people, consultants, artists and musicians could all be sole proprietors.

My husband is a sole proprietor and under the ACA he had to pay $1000 a month for his health care insurance. Prior to the ACA, since he has a pre-existing condition, he couldn’t get insurance at all. He has received direct mail from doctors proposing direct primary care contracts. A few years ago, Jim considered doing a direct primary care agreement with a doctor, coupled with a cheap catastrophic care agreement with an insurance company. These two contracts would have given him some basic services and coverage for a major car accident or a long hospital stay for a different reason. Since he used to sell insurance, he has the skills to read and negotiate those contracts. Not everyone has those skills.

I voted “yes” on SB1105 in committee— with extreme consumer protection concerns. I do believe that direct primary care agreements will be cheaper per month. My concern is that people buy what they can afford rather than buying the coverage they need. Underinsurance is a current problem in the healthcare marketplace. I think SB1105 could increase medical bankruptcy. Before the ACA, the number one reason Americans filed for bankruptcy is that they couldn’t pay their medical bills. When researchers looked at “Romneycare” (the model for the ACA), they found that Romneycare dramatically increased coverage but didn’t significantly reduce medical bankruptcy.

Also, will consumers understand what they are buying? This is a long-term problem with the insurance companies. We buy insurance thinking that we’re covered, and then when we need it, we’re not. Direct care plans could lead to a false sense of security. I also believe that SB 1105 could spark a multitude of lawsuits.

In addition to leading patients into the wild west of non-insurance care contracts, I also believe that these direct primary care agreements will hurt the overall insurance system. Patients will be encouraged to drop expensive ACA plans with middling coverage, and doctors will be encouraged to go freelance and work out side of the insurance system. Freelance doctors are the face of surprise billing. If you get care for my freelance doctor when you’re in the hospital, you will get a separate “surprise” bill from that doctor because he is out of your insurance network. (I’m actually surprised the insurance companies didn’t fight this bill more.)

I am sick of these ACA work-arounds. The federal government should fix the ACA and make it *affordable* or give up and transition to Medicare for All.

UPDATE: In the end, I voted for direct care contracts. Yes, there is risk. Yes, patients will have to be really careful when they enter into one of these contracts. I voted “yes” because I think direct care contracts could be an affordable choice for sole proprietors and other individuals who don’t fit into the ACA’s pricing scheme. Direct care contracts are better than association health plans, SB 1085.