Should Primary Care Be Covered by Insurance?

 

• David A. Hyman MD, JD, 
• Brian Uhlig BBA & 
• Ge Bai PhD, CPA 
  
  

  Primary care accounts for 30% of the physician workforce, and more than half of all office visits.¹ Access to primary care results in better health outcomes and lower total health spending.² Despite multiple efforts to promote primary care, only 9% of medical school graduates match with a family medicine residency and less than 20% of internal medicine residency graduates pursue a career in primary care.¹ These figures are well below the level needed to replace retiring primary care physicians. Primary pediatric care is subject to similar challenges.

  These dismal figures should not be a surprise. Primary care physicians earn 30% less than other physicians and have the highest rate of burnout among doctors. Dealing with multiple insurance companies and the varying electronic health records requirements for referrals means that primary care physicians face a high “hassle factor.” Emotional challenges also arise from the distinct characteristics of primary care.³ Meanwhile, one in five Americans lives in a federally designated primary care health professional shortage area, and average wait times for new appointments are increasing. The combination of growing patient demand, dwindling physician supply, and high physician burnout makes it clear that changes must be made.

  Various reform proposals have been floated for primary care, such as increasing Medicare payment rates and establishing a spending target.^1,2,4 In this Viewpoint, we argue that eliminating insurance coverage of primary care holds the key to improving primary care practice, patient health outcomes, and physician well-being.

  This approach will sound counterintuitive to most readers, but eliminating insurance coverage could improve primary care and health outcomes. First, insurance creates value by pooling risk (i.e., by shifting, spreading, and diversifying risk). However, inexpensive and frequent expenditures are typically not insurable because the administrative cost of processing these claims outweighs the benefits of pooling the associated risks.⁵ Primary care is both predictable and relatively inexpensive, so using insurance to pay for is likely to lead to welfare losses for patients and plan sponsors.^5,6 The cost of paying for primary care through insurance is non-trivial: insurance generates substantial administrative expenses for processing, adjudicating, and paying each individual claim. Insurance also creates a significant “hassle factor” for primary care physicians who must deal with multiple companies, wasting money, time, and staff hours entering data, managing network contracts, and the like.

  Second, hospitals use primary care as a gateway to lock in referrals and capture patients and revenue within their hospital-owned systems. Patients are less likely to leave a health care system that owns both their primary care and referral services. Hospitals, insurance companies, pharmacy chains, and private equity firms all have an incentive to acquire primary care practices to retain referral services within their own networks, and capture the profit margins generated by referred services. Once insurance coverage is off the table, many of these arrangements will be unwound. Independent physician practices will gain greater autonomy, fostering competition and expanding patient choice.

  Third, although the direct-pay market is small, cash prices are routinely lower than insurer-negotiated prices.^5,6,7 Because insurance companies must be paid to adjudicate claims, removing primary care from insurance could actually benefit patients financially. More importantly, price-sensitive patients directly benefit from lower prices. This price sensitivity, which has driven down prices for healthcare products and services not covered by insurance, could do the same for primary care.⁵

  To address these issues, policymakers should allow plan sponsors to offer beneficiaries the option of catastrophic coverage that excludes primary care and other low-cost routine services and products.⁵ Preventive services could remain covered pre-deductible, while catastrophic coverage will offer protection from major expenses—the actual core function of insurance. To protect patients who choose this option and are seriously ill or financially disadvantaged, policymakers should broaden Health Savings Accounts (HSAs) eligibility and allow HSAs to receive government subsidies and tax-deductible contributions from employers, organizations, or other individuals. The scope of HSAs should also be broadened to include many of the social determinants of health.⁶

  Once insurance is removed from the equation, beneficiaries could select any primary care provider they want without any insurer-imposed network restrictions. They could pay standardized cash prices and benefit from the triple tax advantages of HSAs (i.e., tax-deductible contributions, tax-free investment growth, and tax-free withdrawals). This system could promote price competition, reduce premiums, and expand access to primary care. Competition could motivate physicians to both deliver quality primary care and coordinate necessary special care to satisfy patients and retain their business. Market diversification could cater to patients’ varied tastes and preferences (e.g., “Whole Foods vs Walmart”), delivering value to patients and benefiting physicians.

  Additionally, this reform could lessen paperwork burdens, simplify administrative complexities, and alleviate the burnout currently associated with primary care practice. These changes could make primary care more appealing to residents and medical students, helping to address the shortage of primary care physicians. Removing primary care from insurance will also significantly reduce the number of claims that insurers need to process, allowing them to focus on higher-cost and less-frequent procedures and expenses.

  Excluding primary care from insurance also has the potential to open the door to patient-focused innovation, such as care models that incorporate non-traditional aspects of clinical care (e.g., dietitians and mental health counselors) and “virtual appointment first, in-office second” models for same-day care. Primary care physicians might also partner with independent pharmacists or mail-order pharmacies to deliver common generic drugs to patients’ homes via monthly subscription or on-demand payment. Competing primary care models (i.e., independent vs. system-affiliated) could coexist in the market, alleviating market consolidation and improving patient welfare.

  Patients could benefit from a broader choice of providers competing to meet their needs, leading to better health outcomes. These advantages are especially important for Medicaid and underinsured low-income patients. Despite decades of policy efforts, physician participation in Medicaid remains low, primarily owing to the program’s low payment rates and high administrative burdens. As a result, beneficiaries are often forced to obtain outpatient care from hospitals. This is clinically suboptimal for patients and financially inefficient for taxpayers. Our proposal directly subsidizes HSAs, putting Medicaid beneficiaries on an equal footing with non-Medicaid patients. By making Medicaid beneficiaries more appealing to primary care physicians, this approach could address access disparities and improve health outcomes. For underinsured low-income patients, HSA subsidies could directly support their out-of-pocket needs and mitigate their risk exposure to medical debt.

  Primary care is a vital vehicle to improve health and identify and treat conditions earlier, less intensively, and less expensively. Certain existing regulations make primary care a fixture of insurance coverage. However, previous reforms have not delivered the hoped for outcomes. It is long past time to recognize the detrimental effects of insurance on primary care. We should take steps to allow primary care physicians to decide how to best serve their patients. Removing insurance from the equation could relieve administrative burdens, promote physician well-being, stimulate patient-centered innovation in care delivery, expand patient access to primary care, and improve population health.
  
  https://link.springer.com/article/10.1007/s11606-025-09541-3