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How 2 Hardly Noticed Provisions of Obamacare Can Have Serious Effect on Health Insurers

How 2 Hardly Noticed Provisions of Obamacare Can Have Serious Effect on Health Insurers

Author and health care consultant David Chase, in an article written for, wrote that there are two underplayed components of Obamacare that offer incredible cost savings and can give a black eye to health insurers.



Two portions of the Health legislation have received little attention yet will have a huge effect on bending the cost curve: 1. Medical Loss Ratio (MLR); 2. Direct Primary Care (aka “Medical Homes”).

MLR requires that insurance companies spend at least 80 to 85 percent of their collected premiums on medical services, while the Direct Primary Care provision will offer an affordable alternative that by-passes insurance companies altogether. Taken together, these two provisions could have a long term effect that is likely to be devastating to traditional health insurance companies.


Under direct primary care, patients are allowed to access a set of prearranged healthcare services which can include same and next-day appointments, unhurried office visits, at a very affordable fixed monthly fee.

Direct primary care can lower costs by 40% or more

Allowing for Direct Primary Care in the new law is the only element that I believe can actually bend the cost curve, as it removes 40+% of the cost out of the equation. Previously, that has gone to insurance overhead and profits. A relatively little-known provision in the law creates an affordable new choice for individuals and businesses by allowing flat-fee direct primary care practices to compete within the state-based insurance exchanges. This is where many Americans and small businesses will be able to shop for health coverage beginning in 2014 although there’s no need to wait until then from a consumer perspective.

Direct primary care practices do not deal with insurance payment. DPC provides access to a health savings account (HAS) and a high deductible health plan (HDHP) which gets rid of the annoyances of dealing with health insurers.


When faced with a 50% increase in premium costs for a model they aren’t particularly satisfied with, it’s not hard to imagine individuals and employers moving en masse to a model that not only costs less but delivers a dramatically higher level of service. As a result, the MLR combined with Direct Primary Care is likely to blow a gigantic hole in insurance companies’ business.

To understand more on direct primary care, be sure to visit for more information.



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