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

To date, healthcare funding models have been limited to insurance, savings programs,and unreimbursed care, with insurance being the dominant model. However, many moderninsurance panels include deductibles which are fundamentally incompatible with the reality thatmany Americans live paycheck-to-paycheck. By reexamining old assumptions of how healthcareshould be funded, in the context of a modern society with ubiquitous information technology, anew model could alleviate a common source of frustration for voters while preserving recent policyadvancements. This paper outlines a proposal which could bridge the coverage gap created byhigh deductible levels, which are common in both ACA exchange plans and many employerprovided plans today, using a loan-based approach. Such an approach would seem to greatlyreduce the rather substantial transaction costs in healthcare by simplifying most transactionsand provide a more patient-centered approach for common transactions up to a deductiblelimit. 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 cardprocessing systems, which are widely used to process health savings account (HSA)payments, could be combined with something like the federal student loan program for loanrepayment. The federal student loan program provides substantial funding with highlyflexible 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 waywhich 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 ifIRS regulations we modified to: 1) allow accounts to carry negative balances and 2) make interestexpense related to medical care an allowable expense