👩‍⚕️ The Two Products Inside Your Health Plan

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Somewhere between last November and this February, several million Americans opened a health insurance renewal notice, maybe did some quick math, and walked away.

They skewed young and healthy. Most of them will tell you they made a sensible financial decision, and on the numbers they ran, a lot of them were right.

The problem is which numbers they ran.

What you’re actually paying for

Think about the last time your insurance did anything for you. A physical, maybe some bloodwork, a copay at urgent care. Small stuff, and stuff you could roughly price on your own.Now think about what you'd owe if a truck hit you tomorrow. You can't price that. It isn't a number so much as a range, and the top of the range is everything you own.

Those are two completely different products, and your health plan sells them to you in the same envelope.

The first one is basically a discount card. It gets you in the door, covers the routine visits, and knocks your labs down from the fictional list price nobody should actually pay. You use it a few times a year, so you have a decent feel for whether it's worth the money. 

The second one is a parachute. It sits there doing nothing, year after year, until the day it's the only thing standing between you and a bill that ends your financial life. You have no feel at all for whether that one is worth the money, because it only pays off in the worst week you'll ever have.

For about 15 years, those two things came bundled at a subsidized price low enough that nobody had to think about which half they were buying.

Then the subsidies expired.

What broke

The enhanced premium tax credits that had propped up the marketplace since 2021 ran out at the end of 2025, and the bill came due fast. Average deductibles jumped 37%, up $1,027 per person to a record $3,786. People fled the mid-tier silver plans, which fell from 57% of the market to 43%, and piled into bare-bones bronze, up from 30% to 40%.

Then they started leaving altogether. February enrollment came in at 19.2 million, down from 21.8 million a year earlier. It may drop to somewhere between 16.5 and 17.5 million by the end of the year as more people fall behind on payments.

The exits weren't random. Sign-ups among 18-to-34-year-olds fell by 542,000, which is 46% of the entire decline all by itself. The Urban Institute and the Commonwealth Fund expect around five million people to end up with no coverage at all rather than finding it somewhere else, and roughly half of that increase is under 35.

The healthiest customers went first. Insurers said this would happen in their rate filings a year ago. It's what you'd expect the moment a price stops being hidden.

Where they went

They didn't stop seeing doctors. A lot of them just rebuilt the discount card from parts.

Direct primary care is the anchor. You pay a doctor a flat monthly fee, usually $50 to $150, and get unlimited visits, their actual phone number, and cheap labs and imaging. Nothing to submit, nothing to be denied. There are more than 2,300 of these practices now. The rest fills in around it: independent labs and imaging centers charging a fraction of hospital rates, telemedicine at $40 to $75 a visit, and health care sharing ministries, which pool member contributions to cover bigger bills and count something like 1.7 million members. 

Put it together and you get something cheaper than a bronze plan that works better for anything routine. If you're 29 and healthy, it isn't a close call.

Worth knowing that this build-out started well before the subsidies expired, and not entirely for the reasons you'd assume. Researchers at Johns Hopkins, Harvard, and OHSU found that concierge and direct primary care sites grew 83% between 2018 and 2023, from 1,658 to 3,036. But most of those are concierge practices, where affluent patients pay a retainer on top of the insurance they already have, which is the opposite of what's happening now. The other shift was in who owns them. Independently owned practices fell from 84% of the market to 60% as corporate-affiliated ones grew 576%. The exit ramp is being built by capital, not just by doctors who want out.

The government is holding the door open

The One Big Beautiful Bill Act, the same law behind much of this disruption, made direct primary care memberships compatible with health savings accounts. You can now pay for one with pre-tax dollars, up to $150 a month for an individual and $300 for a family.

So federal tax policy is now quietly subsidizing the alternative to insurance, in the same year federal policy made insurance more expensive. Whatever you think of politics, the incentive points in one direction.

Nobody is rebuilding the parachute

Everything above replaces the discount card. None of it replaces the other thing.

Direct primary care explicitly stops at the hospital door. Health care sharing ministries aren't insurance. No federal guarantee your claim gets paid, no requirement to cover essential benefits, and no regulator to call if the organization folds. Members tend to be delighted right up until the year they're expensive.

The trap isn't limited to people who left, either. If you're holding a bronze plan with a $3,786 deductible, you're also paying cash for your routine care. You and your uninsured friend are having nearly identical years. The difference between you two won't show up until one of you has a very bad day.

Why this gets worse before it gets better

Your premium isn't being saved up somewhere with your name on it. It's being spent this year, on somebody else. A stranger's chemo. A stranger's kid in the NICU.

In any given year, most people in a health plan cost far less than they pay in, and a small handful cost enormously more. The money moves from the first group to the second, continuously. So what you're buying isn't really coverage. It's a membership. You pay in while you're the healthy one, and that buys you the right to draw from the pot when you aren't.

Which is exactly why it matters who walks out.

When the healthiest members leave, they take their payments with them and leave the expensive claims behind. Everyone still in the pot is sicker on average, so the average cost per person climbs, so next year's price climbs with it. That increase pushes out whoever is now the healthiest group remaining, and the cycle runs again. Actuaries call this a death spiral. Insurers have already started pulling back from some marketplaces.

Where you live matters more than most people realize. States running their own marketplaces saw enrollment drop about 6%. States on the federal marketplace saw 15%. Several state exchanges quietly backfilled the lost federal subsidies with their own money. Your ZIP code is doing a lot of work.

Why you should care

If you're young and healthy and staring at a premium that feels insane relative to what you use, your instinct isn't wrong. You probably are overpaying for the discount card.

But run it as two questions instead of one. What's worth spending on the care you actually use, and what's standing behind you if something goes badly wrong? Direct primary care paired with nothing answers the first and bets your net worth on the second.

Pair it with a catastrophic or high-deductible plan instead. A lousy discount card, but a functional parachute, which is the only job you're asking it to do. (Real catastrophic plans are mostly limited to people under 30, and the rules on who else qualifies are in flux, so check before you count on it.)

The mistake happening at scale right now isn't that people are leaving the marketplace. It's that they're cancelling two things while only pricing one of them.

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