High Deductibles and Living Paycheck-to-Paycheck: A Loan-Based Model for Primary Care Coverage

Abstract

To date, healthcare funding models have been limited to insurance, savings programs, and unreimbursed care, with insurance being the dominant model. However, many modern insurance panels include deductibles which are fundamentally incompatible with the reality that many Americans live paycheck-to-paycheck. By reexamining old assumptions of how healthcare should be funded, in the context of a modern society with ubiquitous information technology, a new model could alleviate a common source of frustration for voters while preserving recent policy advancements. This paper outlines a proposal which could bridge the coverage gap created by high deductible levels, which are common in both ACA exchange plans and many employer provided plans today, using a loan-based approach. Such an approach would seem to greatly reduce the rather substantial transaction costs in healthcare by simplifying most transactions and provide a more patient-centered approach for common transactions up to a deductible limit. A specific proposal of how to implement such a proposal, using existing systems, is presented and payment scenarios are also presented. On the provider-side, debit card processing systems, which are widely used to process health savings account (HSA) payments, could be combined with something like the federal student loan program for loan repayment. The federal student loan program provides substantial funding with highly flexible repayment terms in a manner which is currently slightly profitable to taxpayers. Combining these two existing systems could provide much needed relief to patients in a way which is more patient-centered, reduces cost, expands coverage, and at minimal cost to taxpayers. Additionally, we show how the current health savings account framework could facilitate this if IRS regulations we modified to: 1) allow accounts to carry negative balances and 2) make interest expense related to medical care an allowable expense.