Direct Care Contracts: Cheap Non-Insurance Plans Could Put Patients at Risk (video)

Banner University Medical Center

In the Health and Human Services Committee, we have heard a few different insurance plans that would be cheaper and less comprehensive alternatives to the Affordable Care Act (ACA).

With SB1105, healthcare moves into the gig economy. SB1105 covers direct primary care agreements, a non-insurance alternative to the ACA. In Arizona, people are already allowed to make one-on-one contracts with a healthcare provider for certain services for a designated mount of money per month.

This bill clarifies existing law and says that these contracts are not insurance and, therefore, not regulated by the Arizona Department of insurance. It also says that you can have contracts with doctors, physicians assistants, nurse practitioners, nurses, dentists, and physical therapists.

If you take this to it’s illogical extreme, you could have multiple contracts with different providers for different menus of services. Unless you are really good at contract law, you could end up having several contracts, paying monthly bills to each of these providers and still not getting the care that you need. Since these plans are not insurance, you would not be able to take your complaints to a bureaucrat at an insurance company or at the Department of Insurance.

Direct current primary care agreements are supposed to fill a niche in the healthcare market. The ACA is too expensive, particularly for sole proprietors. These are business people who are their business. Professional people, consultants, artists and musicians could all be sole proprietors. My husband is a sole proprietor and under the ACA he had to pay $1000 a month for his health care insurance. Prior to the ACA, since he has a pre-existing condition, he couldn’t get insurance at all. He has received direct mail from doctors proposing direct primary care contracts. A few years ago, Jim considered doing a direct primary care agreement with a doctor, coupled with a cheap catastrophic care agreement with an insurance company. These two contracts would have given him some basic services and coverage for a major car accident or a long hospital stay for a different reason. Since he used to sell insurance, he has the skills to read and negotiate those contracts. Not everyone has those skills.

I voted “yes” on SB1105 in committee— with extreme consumer protection concerns. I do believe that direct primary care agreements will be cheaper per month. My concern is that people buy what they can afford rather than buying the coverage they need. Underinsurance is a current problem in the healthcare marketplace. I think SB1105 could increase medical bankruptcy. Before the ACA, the number one reason Americans filed for bankruptcy is that they couldn’t pay their medical bills. When researchers looked at “Romneycare” (the model for the ACA), they found that Romneycare dramatically increased coverage but didn’t significantly reduce medical bankruptcy.

Also, will consumers understand what they are buying? This is a long-term problem with the insurance companies. We buy insurance thinking that we’re covered, and then when we need it, we’re not. Direct care plans could lead to a false sense of security. I also believe that SB 1105 could spark a multitude of lawsuits.

In addition to leading patients into the wild west of non-insurance care contracts, I also believe that these direct primary care agreements will hurt the overall insurance system. Patients will be encouraged to drop expensive ACA plans with middling coverage, and doctors will be encouraged to go freelance and work out side of the insurance system. Freelance doctors are the face of surprise billing. If you get care for my freelance doctor when you’re in the hospital, you will get a separate “surprise” bill from that doctor because he is out of your insurance network. (I’m actually surprised the insurance companies didn’t fight this bill more.)

I am sick of these ACA work-arounds. The federal government should fix the ACA and make it *affordable* or give up and transition to Medicare for All.

UPDATE: In the end, I voted for direct care contracts. Yes, there is risk. Yes, patients will have to be really careful when they enter into one of these contracts. I voted “yes” because I think direct care contracts could be an affordable choice for sole proprietors and other individuals who don’t fit into the ACA’s pricing scheme. Direct care contracts are better than association health plans, SB 1085.


  1. It’s not that insurance is bad; people often assume that because DPC’s don’t take insurance they think insurance is bad. Insurance is a tool, and it should be used for the right type of job. Direct primary care makes insuring the routine 80 percent of your health care unnecessary. Charges range from $10 per month for kids, or $50 to $100 per month for adults, based on age. That fee covers a broad range of services: unlimited home, work, or office visits; phone calls; texting; email; and video chat. They have no co-pays, either. Co-pays are a tool devised by insurance companies to get you to spend your money wisely so you spend their money wisely, We want people to have access to as much health care as they need.
    Your ACA plans aren’t just too expensive, most Americans, in order to afford the premium, have elected a 7900 deductible. 50% of Americans spend $276.00 a year in medical claims and 5% spend more than 5000 in medical bills. Insurance is designed to cover catastrophic medical conditions not flat tires and oil changes. The only way for us to rein in costs is to insure less, but the only way we can insure less and still make insurance palatable to patients is if we can point to another solution that makes everything they don’t cover affordable. Socialized medicine is not the solution.

    • “The only way for us to rein in costs is to insure less”

      Right there, clear as day, is the problem.

      It’s a lie. The best way to rein in costs is to eliminate profits and reduce overhead. Insurance companies pay out 70 dollars for every 100 dollars they take in.

      That’s profit and overhead. Social Security and Medicare have overhead that’s under 3%.

      So you’d get back 97 dollars for every 100 given.

      Some things are best socialized, like road, bridges, police, national defense, and healthcare.

      Beware anyone telling you there is only one way to do anything, the “either or” arguments are fake.

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