Amidst all the chatter about the ongoing government shutdown over extending President Biden’s twice-extended enhanced ObamaCare subsidies, a little-known development out of the Big Beautiful Bill could transform how Americans access primary care and how we think about employer-based health insurance altogether.

One of the most promising shifts comes from the intersection of Direct Primary Care (DPC) and Individual Coverage Health Reimbursement Arrangements (ICHRAs) -- two innovations that together could make high-quality, affordable health care a reality for the millions who rely on employer-based health coverage.

Instead of billing insurance for every visit, test, or procedure, DPC practices operate on a simple membership model. Patients pay an affordable, flat monthly fee, typically much less than what traditional insurance charges. In return, they receive unlimited, accessible, and personalized care.

Because DPC physicians are not burdened by insurance paperwork, they can keep smaller patient panels and spend more time with each patient. The result: better care, deeper relationships, and higher satisfaction for both patients and doctors. This better care was not just felt, but measured as patients who saw DPC doctors had 20 percent lower hospitalization rates than those in conventional health care plans and 40 percent fewer visits to the emergency room.

Unfortunately, DPC patients with insurance plans were paying twice for primary care, once through their primary care benefits their insurance companies were mandated to provide, and again for a membership fee to a DPC.  DPC patients have found the trade-off worth it because the care in DPC has been far superior to the broken primary care model that comes with their health plan.

In 2019, the federal government took an important step toward resolving that double-payment problem with the introduction of ICHRAs. These plans allow employers to give employees pre-tax dollars to buy their own health coverage instead of being locked into a single, one-size-fits-all employer-chosen plan.

Unlike traditional Health Reimbursement Accounts, ICHRAs can be used to pay for insurance premiums and other medical expenses, giving employees true freedom of choice and putting patients, not insurers or employers, in control of their health care dollars.

In effect, ICHRAs bring the power of the free market into a sector long insulated from it. Employers benefit because they can now extract themselves from administering employee health plans and instead focus on their core business.

Unfortunately, the true potential of ICHRA has not been achieved because the Internal Revenue Service would not acknowledge that ICHRAs could be used to pay for DPC.

The reconciliation bill addresses this bureaucratic hurdle. The new law allows patients to use ICHRA funds, as well as  Health Savings Account (HSA) and Health Reimbursement Accounts (HRA), to pay for DPC memberships.

This is a game changer. It means an employee can pair a DPC membership, which provides nearly all their routine and preventive care (studies suggest primary care can handle about 80 percent of medical needs), with a lower-cost insurance plan designed purely for catastrophic coverage while employers retain the tax exclusion for employer-sponsored health care.

Health insurance can now return to what it was meant to be: a financial tool to protect people from rare but high-cost medical events, not a prepaid plan for routine care.

At an average of $35,000 a year, today’s health care premiums could be considered a catastrophic event!

Thanks to the new ways of pairing DPC and HSAs with ICHRAs, we may finally be taking a step toward a more patient-centered, cost-effective health care system -- one that restores care to a health care system long devoid of it.

Chad Savage, M.D. is a Heartland Institute policy advisor, Founder of YourChoice Direct Care, Docs 4 Patient Care Foundation policy fellow, and the president of DPC Action. 

Image: Public Domain Pictures