Pass the Primary Care Enhancement Act

In the midst of the worst public health crisis in a century, and the sharpest economic downturn in nearly as long, health care and an expedited return to robust economic growth are the focus of the nation. Given that dual focus, bipartisan legislation recently introduced in both the House and Senate should be included in any additional COVID-19 relief legislation.

The Primary Care Enhancement Act would provide more affordable high-quality health care to 23 million Americans – including entrepreneurs, and, therefore, will significantly enhance our nation’s ability to recover from the economic damage inflicted by the COVID-19 emergency.

The legislation was introduced in the House (H.R. 3708) on July 11, 2019 by Reps. Earl Blumenauer (D-Ore.), Devin Nunes (R-Calif.), Bradley Schneider (D-Ill.), and Jason Smith (R-Mo.), and in the Senate (S. 2999) on Dec. 9, 2019 by Sens. Bill Cassidy (R-La.), Doug Jones (D-Ala.), Jerry Moran (R-Kan.), Jeanne Shaheen (D-N.H.), and Cory Gardner (R-Colo.). It would correct an outdated aspect of the U.S. tax code that currently classifies Direct Primary Care (DPC) as insurance rather than medical care, which has prevented millions of Americans with tax-exempt Health Savings Account (HSA)-qualified High Deductible Health Plans (HDHP) from getting high-quality primary care from a doctor of their choice.

DPC is one of the most important value-based reforms to U.S. health care in recent years. First defined in section 1301(a)(3) the Affordable Care Act, DPC practices offer affordable primary care for a low flat monthly fee without co-pays or deductibles. DPC is typically offered by an employer who also provides insurance coverage for health care outside of primary care, and is most often delivered virtually (by phone or online) to encourage less frequent office visits, but more frequent communication with the doctor of one’s choice.

Since 2009, almost 1,300 new DPC practices have developed as many employers, unions and even health plans now rely on DPC doctors to provide better care for their employees. DPC arrangements give patients a personal relationship with a high-quality primary care doctor, and a care team to help manage complex chronic conditions. DPC practices save millions of health care dollars each year by reducing hospitalizations and administrative costs with a flat fee (per member per month payment) model that avoids the misaligned incentives in today’s predominately fee-for-service primary care.

Employers report that the cost of providing health care has declined by as much as 20 percent, and surveys reveal that patients love the personal care they get and that doctors much prefer doing what they were trained to do, rather than filling out insurance forms.  

Unfortunately, current Internal Revenue Service (IRS) rules regard DPC agreements as incompatible with HSAs. In order to be eligible to fund an HSA, current law requires an individual must have an HDHP – and no other health plan or coverage that might include services similar to the HDHP. But, at present, the IRS considers DPC arrangements as a health plan, or other coverage, based on Section 223(c) of the Internal Revenue Code, authorized as a part of the Medicare Modernization Act (P.L. 108–173) in 2003, which pre-dates most DPC agreements as they are known today.

The Primary Care Enhancement Act would create a simple exception to existing IRS rules that define DPCs as a health plans – an exemption that would apply only to DPC arrangements that cost less than $150 per month and that only include primary care services. Procedures that require the use of general anesthesia or laboratory services not typically administered in a primary care context – so-called “concierge” practices – would not be included in the exemption.

DPC practices have emerged as a critical frontline asset in the war against COVID-19. By providing virtual visits with primary care doctors without co-pays and deductibles, DPC practices keep Americans out of crowded emergency rooms, urgent care facilities, and hospitals.

Just as important, the Act will significantly enhance our nation’s ability to recover from the COVID-19 crisis – by supporting and facilitating entrepreneurship. Repeated research has demonstrated that new businesses, or “startups,” are disproportionately responsible for the innovations that drive economic growth and job creation. Thriving entrepreneurship, therefore, is critical to the economy’s capacity to grow and create jobs in the aftermath of the current crisis.

But thriving entrepreneurship requires entrepreneurs willing and able to launch new businesses, as well as the talented employees needed to turn new innovations into reality. Roundtables that my colleagues and I regularly conduct with entrepreneurs across the country have revealed that access to affordable, flexible, high-quality health care is a top “mobility” priority among entrepreneurs – especially women entrepreneurs – enabling them to strike out on their own and to attract and retain the employees they need.

By opening access to affordable, personalized primary care provided by doctors of the patient’s choosing, the Primary Care Enhancement Act will enhance the value, flexibility and appeal of HSA-qualified HDHPs, strengthening American entrepreneurship.

The survival and growth of America’s most innovative and promising new businesses is vital to a strong economic recovery following the COVID-19 emergency. With that reality in mind, Congress should immediately pass the Primary Care Enhancement Act.

John Dearie is the president of the Center for American Entrepreneurship.