An Answer to Our Broken Health Insurance – Pacific Research Institute

An Answer to Our Broken Health Insurance


Even though an increasing share of Americans have health insurance, positive health outcomes and access to health services are actually decreasing, as found in a 2021 study by PRI senior fellow Wayne Winegarden. Why?

The insurance model in the United States is deeply broken for many reasons. But it is also fundamentally ill-conceived. Using an insurance model to pay for predictable health services or pre-existing conditions makes little sense and drives up costs, artificially restricting access. Insurance is designed to protect against “once-in-a-lifetime” disasters, such as a house fire – not for ongoing, predictable expenditures. We don’t use insurance to pay for groceries or education. Thus, wrongly conflating health care insurance with health care service worsens health outcomes for everyone.

So, what is to be done?

Enter: the direct primary care model.

Direct primary care is a relatively new innovative health care model that removes insurance from the health care equation entirely. For a low monthly fee, patients can “subscribe” to the services of a primary care physician.

Surprisingly, the fee is usually only anywhere from $20 – $80, a fraction of the cost of traditional insurance.

Because direct primary care doctors no longer rely on insurance and focus exclusively on providing care, physicians can dramatically drive down their costs. As I have written before, many physician-owned practices can no longer afford to own their practices due to the cost of insurance billing.

A direct primary care patient can schedule as many appointments as needed for standard care; no additional payment required. Need vaccines? Covered. Weird rash? Schedule a telehealth appointment! Want to renew a prescription? They’ve got you. Broken arm? She’ll fix it!

Of course, no one should suffer if a health disaster strikes, such as with cancer or a car accident. That is why direct primary care neatly compliments a true disaster health insurance.

The average cost of standard health insurance for the average American is currently $477. But the average cost of disaster health insurance in 2022 is just $173. Thus, pairing disaster insurance ($173) with a direct primary care subscription ($80) would cost around $250 per month, slashing health care costs for the average individual nearly in half. And if more individuals subscribed to true disaster insurance, it would likely further drive down those costs.

The model could also benefit employers. Some direct primary care providers accept contracts with businesses. Through direct primary care, businesses can provide higher quality care to their employees at a lower cost than traditional insurance. Theoretically, employers could then use the savings to grow the business or hire new employees (who would then receive access to care as well!)

Critics of the direct primary care model argue that it could reduce the amount of primary care doctors available to the general population, further exacerbating the current doctor shortage.

However, if the direct primary care model became more prevalent, it seems more likely that it would address doctor burn-out, as doctors would have more power over scheduling and pricing. This could be an especially powerful incentive for doctors who are parents or who need a more flexible schedule.

Perhaps most meaningfully, the model restores the relationship between patient and doctor, as doctors can focus on providing quality care rather than worrying whether an insurance company will pay out.

Despite the benefits that direct primary care offers, only 1,000 health practices have adopted the model nationwide. The growth is hindered by a catch-22: because of a lack of direct primary care providers, there is limited health outcome data. But to get the health data, there needs to be more direct primary care providers.

Montana has recently adopted substantial legislation to encourage the growth of the direct primary care model, so there is hope yet for the growth of the movement. Our broken insurance program burdens families and weakens our nation’s health: direct primary care offers a way out.

McKenzie Richards is a policy associate at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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