Author Archives

Jonathan Halvorson

Only Alternative Facts Can Support the Protecting Access to Care Act

May 23, 2017• 5

By CHARLES SILVER and DAVID HYMAN

In late March of this year, JAMAInternal Medicine published a study finding that the “the overall rate of [malpractice] claims paid on behalf of physicians decreased by 55.7% from 1992 to 2014.” The finding wasn’t new. In 2013, the Journal of Empirical Legal Studies published a study co-authored by one of us (Hyman) which found that “the per-physician rate of paid med mal claims has been dropping for 20 years and in 2012 was less than half the 1992 level.” In fact, peer-reviewed journals in law and medicine have published lots of studies with similar results. It is (or should be) common knowledge that claims of an ongoing liability crisis are phony.

But inconvenient facts have never stopped interest groups or politicians from making false claims about med mal litigation. Since 1991, when Dan Quayle struck gold by asserting that the U.S. had too many lawyers, Americans have heard non-stop about “jackpot justice” in which patients who weren’t even injured win millions; about the flood of frivolous lawsuits in which doctors are sued even though they didn’t make any mistakes; about jury verdicts skyrocketing out of control; and about doctors working all their lives only to have their savings wiped out by a single malpractice suit. All of these charges are false—you can find the evidence here, here, here, and here. But in politics, it’s staying on message that counts; it doesn’t seem to matter whether the message is true.Continue reading…

Reform & Improve

Apr 20, 2017• 2

By JON KINGSDALE

With the failure of the Republican’s American Health Care Act (AHCA), what’s next? Congressional Republicans face the ugly choice of admitting defeat and funding the Affordable Care Act (ACA), including the cost-sharing reductions (CSRs) that they have tied up in federal court, de-funding the ACA and likely being blamed for its demise, or compromising with Democrats to improve it. In all likelihood, the next set of moves will focus on avoiding/shifting blame for the imminent crisis of health plan withdrawals that failure to fund CSRs would precipitate.

But the long-term problems with the ACA should be addressed: How to sustain health plan competition? How to simplify a nearly incomprehensible medical financing scheme? How to cover more of the uninsured? How to win enough moderate Republican support to de-escalate partisan wars over the ACA? Sooner or later, Congress needs to consider serious compromise proposals for improving the ACA.

So, what might they consider?

Were a bargain on improving the ACA to be struck, Democrats would insist that it ensure full federal funding and maintain goals related to covering most Americans. Taxes will be the “sticking point” for many Republicans, but not all: Senators Cassidy & Collins’ Patient Freedom Act (PFA) retains 95% of current funding.) On the other hand, the price of support from moderate Republicans probably includes making substantial changes that borrow heavily from the best ideas in the AHCA and the PFA. The approach proposed below does both.

I propose three goals for a bipartisan effort to “reform and improve” the ACA:

Who’s to Blame For the Shortage of Doctors? Doctors and Politicians

Apr 12, 2017• 10

By CHARLES SILVER and DAVID HYMAN

After missing an appointment with a physician recently, one of us was tongue-lashed by a medical assistant who explained that the practice has a months-long waiting list for new patients. The dressing-down included a threat. Another no-show and the miscreant would be discharged from the doctor’s practice and have all medications cut off.

Wondering if patients really wait months to see this doctor, the delinquent called back, pretended to be a new patient, and asked how quickly he could get in. The first available appointment at the closest location was, in fact, 2 months out. (The wait could have been cut in half by driving to an office that was farther away.)

Two months is a long time to wait to see a doctor. If your auto mechanic or air conditioner repairman told you that it would take a week to fit you in, you’d find someone else to take care of the problem and you’d never go back to the person who told you to wait. Given the transcendent importance of health, why do patients who need medical assistance routinely wait far longer? And if patients with good insurance wait for two months, how long is the queue for those who rely on Medicaid or who have no insurance at all?Continue reading…

The Vanishing Hospital: ASCs Follow the Consumer

Mar 14, 2017• 43

by JOHN MORROW

Call it what you want, disruption or evolution, but when two of the largest for-profit hospital chains, HCA Healthcare and Tenet Healthcare, and one of the largest insurance intermediary services companies, Optum (part of UnitedHealth Group), invest billions of dollars in capital for building new care settings, everyone should take notice. From freestanding ambulatory surgery centers (ASCs), to urgent care centers, to retail pharmacy-sponsored clinics and employer co-located clinics, the disruption of care delivery is all around us.

How does General Community Hospital compete with Walmart, CVS and Walgreens (retail clinics)? How does it compete with Urgent Care Centers? How will it compete with freestanding ASCs? How does a hospital stop consumers’ desire for savings and convenience? How does it stop physicians’ own desire for convenience and efficiency? This is the disintermediation of hospitals in a very big way! General Community Hospitals can zero base care, but they need to have answers more in line with a consumer retail operation than those of a charity. How many product lines does a focused factory operate?

Healthcare Insurance: America’s Collective Action Nightmare

Mar 7, 2017• 6

By CHARLES SILVER

Across the country, ugly confrontations are occurring between Republican lawmakers who pledged to repeal Obamacare and Americans who are afraid of losing their healthcare coverage. The protesters’ fears are understandable. The cost of medical services can be devastating. The chief selling point for Obamacare was that, between the guarantee of coverage on the exchanges and the expansion of Medicaid, the vast majority of Americans would be protected. And the main difficulty that Republicans face in repealing Obamacare is the widespread concern that tens of millions of people might be tossed off the rolls.

The confrontations are the unavoidable consequence of a collective action dilemma. The dilemma is this: To achieve good collective outcomes, government must often prevent people from doing what they think is best for themselves. Individually, I might like to be free to dump trash in the most convenient place, to pollute the waterways and skies, to fish and hunt without limit, to drink and drive, or to use other people’s property and possessions without their permission. Millions of other people might want these liberties too. But collectively, we’re all vastly better off when everyone’s freedom to do these things is constrained. One of the benefits of government is that it can prevent people from acting in ways that are individually rational but that, when practiced widely, make us collectively worse off.

In healthcare, the collective action dilemma stems from the fact that comprehensive coverage—by which I mean all forms of third-party payment, including Medicare and Medicaid, as well as private insurance—is the main driver of the healthcare cost spiral that gone unchecked since the mid-1900s.

The problem is a vicious circle.

JP Morgan Week: Lessons For Investors From the Theranos Story

Jan 10, 2017• 3

By PAUL KECKLEY

screen-shot-2017-01-09-at-8-25-47-pm

Theranos raised $900 million from investors and achieved a market capitalization of nearly $9 billion. Today, its investors may have lost most of their money and the company is pursuing a new strategy. It’s a familiar story to lenders and investors and likely to be hallway chatter today as the 35th Annual J. P. Morgan Healthcare Conference convenes in San Francisco.

Theranos targeted the lucrative blood testing market offering a new technology that allowed labs to do 30 blood tests almost instantly with a single drop of blood. The company began its operations in 2003 with a $5.8 million investment from Draper, Fisher, Jurvetson and other venture funds. By 2010, it had raised $83.4 million more in three follow-on rounds and then scored a reported $633 million investment in 2014 increasing its market value to $9 billion. In those 11 years, the company operated in relative secrecy: its 60-plus patent filings gave clues about its activities while its CEO, Stanford drop-out Elizabeth Holmes, shunned the spotlight.Continue reading…

Medicaid, Meet Indiana

Dec 2, 2016• 17

By JONATHAN HALVORSON

We will soon have a Vice President and a head of CMS who hail from the great state of Indiana, and are proud of what they’ve done with Medicaid there through the Healthy Indiana Plan. Seema Verma, the proposed CMS Administrator, is credited with being the architect of Healthy Indiana, and Mike Pence, the Vice President-elect, presents Healthy Indiana as one of the signature achievements of his term as governor of that state.

It is too early to tell if the program will be enough to raise Indiana up the ranks on health and healthcare from the bottom quintile (1, 2). However, since Republicans have run the table with Congress, the White House and soon the Supreme Court, we can reasonably conclude that the future of Medicaid in America is going to look more like Indiana.

That doesn’t mean that income-based Medicaid eligibility will dramatically change. Pence was one of the few Republican governors who took advantage of the opportunity to expand Medicaid eligibility up to 138% of poverty, and President-elect Trump has promised, in his emphatic way, that people will not be denied healthcare coverage in his administration. Some Republicans in Congress have different ideas, however, and the outcome is not at all clear yet.

Risk Adjustment Gone Wrong

Aug 7, 2016• 17

By JONATHAN HALVORSON

The Affordable Care Act was intended to usher in a new era of competition and choice in health insurance, and at first it succeeded. But increasingly, provisions in the law are undermining competition and wiping out start-up after start-up. If something isn’t done soon, the vast majority of new insurers formed in the wake of the ACA will fail, and many old-line insurers that took the opportunity to expand and compete in the new markets will leave. It’s a classic story of unintended consequences and the difficulties of regulation.

Flush with optimism after the ACA passed, dozens of new insurers formed to take advantage of the environment created by the law. Twenty three of these were co-ops given start-up funding by the ACA. In most states the new plans only grabbed a small share of the market, but enough to put pricing pressure on larger incumbent plans. In a few states, like New York, the start-ups and other new entrants grabbed over half of the business on the exchanges.

To the surprise of many, price increases in health insurance remained low by US historical standards even as the recovery continued and people who had been without insurance were finally able to get it. How much of that modest cost trend is due to an improved competitive marketplace on the exchanges is speculation, but what is clear is that the doomsayers about the ACA were wrong. Costs did not explode, and even with higher 2016 rate increases we are not back to the bad old days (yet).

Pokemon Go: A Look into the Future of Health and Wellness Apps

Jul 18, 2016• 5

BY JONATHAN HALVORSON

Screen Shot 2016-07-18 at 8.39.33 AM

On July 16, 2016, Pokemon Go had been in release for 10 days and it was already more popular than Twitter and Tinder on mobile devices. Those with the app spent more time on it than on Facebook. It became the most downloaded mobile game in U.S. history. So what does this have to do with health? Pokemon Go is a game, but it is also a health and wellness app. And it’s making people move, a lot. Because unlike the thousands of “gamified” health and wellness apps created over the last decade, Pokemon Go is a healthified game. The game comes first. That turns out to be the smarter path to actually engage large numbers of people to be active, and it is showing a world of possibility. Self-reports and early data from tracking devices reveal a massive jump in walking, almost certainly tens of billions of additional steps in just one week. Over the course of the game, trillions of steps could be walked that would not have been otherwise. What can we learn from this?

Another Look at Health Insurance Exchanges

Apr 11, 2012• 23

By JONATHAN HALVORSON

Of all the provisions of the ACA, probably none has received greater attention from health insurers than the exchanges. Though the exchanges are expected to be the conduit for just a small fraction of all the insured at their start in 2014, they will be where most of the growth in health insurance lies. Given the rule that the individual exchanges must be integrated with Medicaid, their role will be critical for any insurer that wants to compete and grow in the individual or Medicaid markets. The dominance of the exchanges for growth in the small group and even the Medicare markets may not be not far behind. It should be no surprise if, eventually, all fully-insured business goes through the exchanges, leaving only self-insured plans outside.

So getting it right matters. Now is the time to think hard about getting it right, before the exchanges are created and inertia sets in. And, as some have argued, getting it right means that we think about the exchanges as places for people to choose their health care, not just their health insurance. So how should we do that?

Here is what we should not do: make it easy to choose care without considering both the quality and the cost of care delivered by the care system. It would be an enormous lost opportunity to improve consumer attitudes towards health care if we built the exchanges to make it easy for people to reason: “I like doctor A. Doctor A accepts insurance products X, Y and Z. Of these three, insurance product X seems to have the lowest cost, so I’ll choose product X.”