Abstract

The United States health care system faces escalating costs, access disparities, and significant physician burnout. Direct primary care (DPC) offers a transformative approach by emphasizing patient-centered care, price transparency, and reduced administrative burdens. Yet, federal policy reforms are necessary to scale this model nationally. This article outlines actionable federal policy recommendations, identifying how mechanisms like agency rulemaking and budget reconciliation can be used to drive adoption, expand access, and empower physicians.

Introduction

Health care reform is among the most pressing challenges in the United States. With rising costs and diminishing access, the system has reached a critical inflection point. Direct primary care (DPC), a subscription-based health care model, offers a viable alternative by reducing administrative complexity and focusing on the patient-physician relationship. Despite its potential, systemic barriers, such as restrictive tax policies, insurance regulations, and limited funding for physician training, constrain the scalability of DPC.

To foster innovation in health care, federal policymakers must act decisively. Leveraging legislative processes like budget reconciliation and agency rulemaking can expedite critical reforms, circumventing partisan gridlock to create a more equitable and efficient health care system.

Policy recommendations and implementation pathways

1. Reforming tax policy to support DPC

• Clarify DPC memberships as qualified medical expenses
  The Internal Revenue Service (IRS) should update its definition of qualified medical expenses (QMEs) to explicitly include DPC memberships. This adjustment would allow patients to use health savings accounts (HSAs) and medical savings accounts (MSAs) to cover DPC costs, reflecting modern health care preferences.
• Universal HSA eligibility
  Eliminating the requirement for high-deductible health plans (HDHPs) to access HSAs would enable uninsured individuals or those with alternative coverage to save for health care tax-free. These changes could be enacted through the budget reconciliation process to impact federal revenue.

2. Making all health plan payments tax-deductible

One of the most glaring inequities in the current health care system is the preferential tax treatment businesses receive for providing health coverage. Employers can deduct health insurance premiums as a business expense, while individuals who pay for their own insurance or alternative health plans, such as health-sharing programs, often do not receive similar benefits. To foster fairness and innovation, all health plan payments should be tax-deductible:

• Allow individual deductions for health plan payments
  Extend the same “above-the-line” tax deductibility currently enjoyed by employer-paid premiums to individuals paying for health insurance, health-sharing plans, or DPC memberships. This would end the disparity that disadvantages freelancers, gig workers, and unemployed individuals.

Impact of reform:

• Equalize tax advantages across businesses and individuals.
• Encourage wider adoption of alternative health care models like DPC and health-sharing plans.
• Enable individuals to allocate more resources toward innovative, patient-centered care.

3. Enhancing physician autonomy through regulatory reform

Physicians face significant regulatory barriers when seeking to operate outside traditional insurance frameworks. Key reforms include:

• Simplify Medicare opt-out processes
  Streamline Medicare enrollment rules through CMS rulemaking to allow physicians greater flexibility in offering low-cost care directly to patients.
• Empower states to oversee association health plans (AHPs)
  Delegating regulatory authority over AHPs to states would encourage innovative group insurance models, reducing reliance on employer-sponsored plans.

4. Promoting transparency and consumer choice

The lack of price transparency creates significant barriers for patients and independent providers:

• Mandate public disclosure of insurer-negotiated rates
  HHS could enforce transparency regulations requiring insurers to disclose negotiated prices, leveling the playing field for DPC practices.
• Eliminate minimum essential coverage (MEC) mandates
  Allowing consumers to select alternative insurance products, such as catastrophic plans or health-sharing arrangements, would align policy with consumer preferences. This could be achieved through reconciliation to adjust ACA provisions.

5. Addressing physician workforce shortages

Expanding the physician pipeline is critical to sustaining innovative models like DPC:

• Increase residency funding
  Congress could increase funding for residency slots or incentivize private-sector funding through grants, passed via reconciliation.
• Support loan forgiveness for independent physicians
  Expanding loan forgiveness programs for physicians in rural or underserved areas would encourage more providers to adopt independent practice models like DPC.

6. Innovating Medicaid delivery through DPC

Allow Medicaid beneficiaries to access DPC through voucher programs. HHS could implement this via Section 1115 waivers, enabling states to allocate Medicaid dollars toward DPC memberships. For this to work, a Medicaid recipient must be indistinguishable from a private pay patient, similar to EBT or SNAP benefit programs for food.

Leveraging budget reconciliation and rulemaking

Budget reconciliation

The budget reconciliation process allows Congress to pass changes affecting federal revenue or spending with a simple majority. Reforms such as tax-deductibility for individual health payments, universal HSA eligibility, and increased residency funding fall squarely within this framework, making them achievable even in a divided political climate.

Agency rulemaking

Regulatory bodies like HHS, CMS, and the Treasury Department have broad authority to enact health care reforms. By revising definitions, simplifying enrollment processes, and enforcing transparency, these agencies can implement significant changes without requiring congressional approval.

Conclusion

Direct primary care offers a path forward in transforming health care delivery, but its full potential depends on federal policy alignment. Equalizing tax advantages for individuals, empowering states to innovate, and removing regulatory hurdles are crucial steps toward fostering a more equitable and efficient system. By leveraging reconciliation and agency rulemaking, these reforms are not just feasible—they are imperative.

Federal policies must reflect the diverse needs of patients and providers, enabling innovation to flourish. By creating a level playing field for health plan payments and supporting models like DPC, the United States can lead the way in building a health care system that is affordable, transparent, and centered on the patient-physician relationship.

Christopher Habig is co-founder and CEO, Freedom Healthworks, a company dedicated to scaling the direct primary care (DPC) practice model, putting doctors back in control of patient care. Christopher’s journey into health care innovation was sparked by the frustration of seeing family members struggle among the insurance and hospital-dominated industry. He envisioned a system where health care could be accessible, high-quality, and affordable. This vision led to the inception of Freedom Healthworks, which provides the tools, technology, and support for doctors to run successful DPC practices. Christopher dedicates his time to educating both consumers and health care providers about the benefits of the DPC model through his podcast, Healthcare Americana, leading the Indiana Free Market Medical Association, and being a contributing member of the Indiana Physicians Health Alliance. His goal is to create a future for Americans where health care is synonymous with the caring, individualized attention that was its original hallmark.

He can be reached on Facebook, X @FreedomDPC, LinkedIn, and Instagram @freedomdoccare.