It’s a quandary. As a nation, it is well-recognized that primary care is essential to a well-functioning, efficient, effective patient-centered healthcare system. Over time, primary care moderates increases in healthcare trend and improves patient outcomes (Starfield, 2005). In fact, a classic 2004 analysis by Baicker and Chandra demonstrated a linear decrease in Medicare spending along with an increase in the supply of primary care physicians in addition to better quality of care.
Paradoxically, though, nationally, and in Michigan, though primary care is desirable, we spend the least on it of any component of medical spending. Although primary care receives at least 35% of all office visits (National Center on Health Statistics, 2025, the share of the healthcare dollar that goes to primary care services is estimated at only 5% of total medical expenditures. Other developed countries with better health outcomes and lower overall health expenditures spend a much larger portion, from 12 to 15% of healthcare spending on primary care.
Primary care is overlooked as a lever to obtain better value for our health care dollars. It is the underpinning of our system and the first point of contact for many patients, but we have chronically underfunded it and have overburdened it with excessive administrative expectations. It is time to change course and redistribute spending so that primary care is better positioned to function effectively in this important role.
The National Academy of Science, Engineering, and Medicine’s (NASEM’s) Implementing High Quality Primary Care report underscored the importance of resourcing primary care. Its recommendations feature a minimum spend threshold for primary care, calling for more states and the federal government to increase investment to 10%-12% of total health care spend. It is a national imperative and as the nation ages and the population grows sicker, it is more important than ever to make progress toward reaching the goal of increased investment in primary care.
One way of doing this is to mandate that insurers spend a larger share of total medical spending on primary care. Setting a minimum percentage of total healthcare spending that should be spent on primary care does not increase insurance or healthcare costs. Instead, it underscores the importance of primary care and provides important resources to support practices to fund practice teams to support their patient panels.
There are a number of states that have already taken action to increase investment in primary care as they work to make healthcare more affordable and people healthier. Some states have paired with affordability or health cost growth containment efforts. Eleven states have passed legislation or taken state action to increase spending on primary care as a portion of total medical costs. Among them:
- California:
- A goal of increasing primary care investment to 15% of overall medical spending by 2034 has been set by the California Office of Health Care Affordability. Their expectation is that spending on primary care as a share of total medical expenses increases each year in the interim by .5 to 1%. In addition, the state’s Medicaid program, Medi-Cal, increased rates for primary care providers to 87.5% of Medicare rates, effective January 1, 2024.
- Delaware
- Delaware has set a primary care target of 11.5% of total medical spending by 2025 for private insurers and a requirement to match Medicare reimbursement rates for primary care.
- Oregon
- Oregon requires both Medicaid Coordinated Care Organizations (CCOs) and state plans to spend at least 12% of total medical expenditures on primary care. The state also has public-facing dashboards that have demonstrated success in reaching their targets. Their 2023 report showed a commercial plan average spend of 13.3% of total medical expenditures.
- Oklahoma
- Oklahoma requires reporting of the percentage of health care expenses by each contracted entity on primary care services, with 11% devoted to primary care no later than the fourth year of a contract with the Medicaid program.
- Rhode Island
- Rhode Island was the first state to establish a target requirement for commercial insurers to invest at least 10.7% of their total medical expenses in primary care.
- Washington
- The state of Washington charges the state’s Health Care Cost Transparency Board with measuring and reporting on primary care expenditures and progress toward increasing primary care spending to 12% of total healthcare expenditures.
- Connecticut
- Connecticut requires progressively increased spending on primary care to reach a target of 10% by 2025.
In addition to these state legislative efforts, the Center for Medicare and Medicaid Innovation (CMMI) is operating a total cost of care demonstration model called AHEAD (Achieving Healthcare Efficiency through Accountable Design) with several state partners. The AHEAD model features increased investment in primary care, hospital global budgets, geographic ACO entities, multi-payer alignment and shared cost and quality targets to stabilize funding, expand primary care services, and improve population health. The AHEAD model requires a set of hospital partners willing to participate as well as the participation of Medicaid in the applying state as well as a set of primary care practices and at least one additional payer. It has not to date been a fit for Michigan but is operational in six other states.
Together we face many tough tradeoffs, but strengthening primary care should not be one of them. To stem the erosion of primary care in Michigan we must both pay primary care providers more and pay primary care services differently as emphasized in the NASEM Implementing High Quality Care report.
Michigan Multipayer Initiatives 