Health Care Reform Begins at Your Direct Care Primary Home

One of the health care reform bill reforms that won't start until 2014 is the implementation of "insurance exchanges." Instead of the public option--where the government provides both the pool of customers and provides the health care--with the insurance exchange, the government simply creates the pool of customers. We can go "shopping" in the exchanges for health insurance options.

The idea is that the exchange system will promote more price competition between insurance companies, and since the government regulates the exchange, it can exert downward cost pressure on them, too. Participants will have to demonstrate, for instance, that they're spending the majority of their money on providing health care services, rather than on overhead.

But Seattle may lead the way in cost competition for another reason entirely. HR 3590, the Patient Protection and Affordable Care Act, allows flat-fee direct primary care practices ("medical homes") into the exchanges. Seattle-based Qliance (see my earlier interview with founder Dr. Garrison Bliss) claims that its health care costs up to 50 percent less than traditional insurance, even with the addition of wrap-around coverage to deal with unexpected medical events that fall outside primary care.

Qliance's business model has the potential to be a disruptive technology, when it goes head-to-head against traditional health insurance plans in an exchange. Their level of customer service (open seven days a week, 30- to 60-minute office visits, with no deductibles or co-pays for primary care), combined with a monthly fee that's less than digital cable, tends to stand out compared to HMOs that pressure doctors to keep patient visits under eight minutes.

One of Qliance's newest business customers, Kent's Tri-Tec Manufacturing is already reporting savings of tens of thousands of dollars in Q4 of 2009, and owner Rick Cordray says he expects to save about 20 percent yearly, compared to his old plan.

How? Because the flat fee eliminates all overhead associated with insurance reimbursement processes that would normally apply to each and every service and procedure, no matter how inexpensive or routine. Direct primary care advocates argue that the insurance model itself eats up about 40 cents of every health care dollar. If they're right, this competition won't last long.