Direct-to-patient care has been gaining momentum. Rachel Cohrs Zhang at Bloomberg reported that officials from the U.S. Department of Health and Human Services met with Walmart and Amazon to streamline direct-to-patient drug purchases, bypassing insurance companies. President Trump’s executive order mandated that most-favored-nation pricing be made available for direct-to-patient prescription drug transactions.
Moreover, both the House and Senate versions of the One Big Beautiful Bill include provisions to expand access to direct primary care, in which patients pay a flat monthly fee directly to primary care practices for unlimited visits and office-based procedures.
In contrast to the pre-tax premium payments made by workers through employer-sponsored health plans, cash payments in direct-to-patient transactions are typically post-tax, unless routed through Health Savings Accounts (HSAs) or similar pre-tax arrangements.
Direct-to-patient transactions possess unique features that conventional insurance-based models lack. First, by combining the payer and the recipient of care, they allow patients to personally and directly benefit from lower prices and better quality, aligning incentives across the delivery system.
Second, the absence of insurance between patients and providers eliminates network restrictions and pre-authorizations. These tools, commonly used by insurance companies to manage healthcare utilization, create access barriers for patients.
Third, direct-to-patient transactions remove access barriers tied to insurance type. Currently, many providers decline to treat patients covered by insurance plans with low reimbursement rates, such as Medicaid, limiting these patients’ options. In direct-to-patient arrangements, all patients pay the same price—except for certain group discounts, as is common in other markets.
Once providers’ doors are open to all patients, regardless of insurance type, non-discriminatory pricing becomes a reality. In a study published in Radiology, my colleagues and I found that commercial prices paid to the same hospital for the same service can vary by more than threefold within the same insurance company across different plans.
Fourth, direct-to-patient transactions relieve clinicians of the administrative burdens and burnout associated with insurance, while shortening their revenue collection cycle. In fact, many clinicians have voluntarily migrated to direct-to-patient care models, such as direct primary care and direct specialty care, for these very reasons. Notably, one-third of private practice psychotherapists do not accept insurance.
Fifth, without patients being steered through insurance networks, direct-to-patient providers must compete for business by offering attractive pricing and high-quality care. They voluntarily disclose price and quality information in a patient-friendly manner, offer convenient service bundles to facilitate straightforward, transparent transactions, and continuously innovate to enhance the patient experience.
These benefits of direct-to-patient care cannot fully accrue to patients unless they have access to HSAs or similar pre-tax arrangements. Currently, only patients enrolled in high-deductible health plans are eligible for HSAs, a privilege unavailable to low-income population enrolled in Medicare, Medicaid, or Marketplace plans. However, the tax benefits and protection against medical debt provided by HSAs would be especially valuable to these patients.
Simply expanding eligibility to a broader population would not fully realize HSAs’ potential to broaden access to care. They should serve as a primary channel for delivering taxpayer subsidies to vulnerable populations. As MIT professor Amy Finkelstein has found, cash transfers provide greater value for low-income individuals. Rather than indirectly subsidizing insurance companies or providers, directly depositing funds into patients’ HSAs could be the most effective way to correct the misaligned incentives embedded in today’s complex systems, broaden access to care, and truly benefit patients.
Numerous regulatory barriers stand in the way of direct-to-patient care. Yet explosive technological advancement demands structural flexibility that the conventional system cannot offer, driving more providers and patients toward direct-to-patient care. Relaxing HSA restrictions would accelerate this shift.