It’s great news to read headlines that the average health insurance premium will drop by 4% next year in the 38 states using federal Obamacare exchanges. As millions of Americans entered open enrollment this year to choose their health insurance plans, it is important to remember that premiums are only one of the ways that we pay for our medical coverage.
many plans lower premiums (paid by everyone) often mean a higher deductible —
or paying more out-of-pocket before insurance coverage kicks in. This burden is
paid only by those who use medical care services.
Deductibles are rising, and so is the number of Americans enrolled in so-called high-deductible health plans (HDHPs). Thus, more people with health insurance are being asked to pay full price for all their care, regardless of its clinical value. Although it may be better for many people with significant medical needs (and less disposable income) to avoid plans with high deductibles, more and more people who receive health insurance through their employer no longer have a choice except to choose a plan with a hefty costs in addition to premiums.
The Blunt Instrument
Nearly half 43 percent of adults who get health insurance
through their jobs have a high-deductible plan, which requires them to spend
between $1,300 (individual) and $2,600 (for a family) before their insurance
starts covering their care.
These numbers should raise concern,
considering 40% of Americans would struggle with an unexpected bill of
$400. Given this simple math, it’s easy to see why Americans with health
insurance increasingly forego the care they need.
Rob Coppedge and Bryony Winn wrote an interesting article in Xconomy yesterday. I told Rob (& the world) on Twitter yesterday that it was good but wrong. Why was it wrong? Well it encompasses something I’m going to call the Lynne Chou O’Keefe Fallacy. And yes, I’ll get to that in a minute. But first. What did Rob and Bryony say?
Having walked the halls and corridors and been deafened by the DJs at HLTH, Rob & Bryony determined why many digital health companies have failed (or will fail) and a few have succeeded. They’ve dubbed the winners “Digital Health Survivors.” And they go on to say that many of the failures have been backed by VCs who don’t know health care while the companies they’ve invested in have “product-market fit problems, sales traction hiccups, or lack of credible proof points.”
What did the ” Survivors” do? They have:
“hired health care experts, partnered effectively, and have even co-developed their models alongside legacy players. Many raised venture capital from strategic corporate investors who have helped them refine their product, accelerate channel access, and get past the risk of “death by pilot.”
Now it won’t totally shock you to discover that Rob heads Echo Health Ventures, the joint VC fund from Cambia Heath Solutions (Blues of Oregon) & BCBS of N. Carolina, and Bryony runs innovation at BCBS of N. Carolina. So they may be a tad biased towards the strategic venture = success model. But they do have a point. Many but not all of their portfolio are selling tools and services to the incumbents in health care, which mostly includes health plans, hospitals and pharma.
And now we get to the Lynne Chou O’Keefe fallacy. (You might argue that fallacy is the wrong term, but bear with me).
When Samuel Morse left his New Haven home to paint a portrait of the
Maquis du Lafayette in Washington DC, it was the last time he would see his
pregnant wife. Shortly after his arrival in Washington, his wife developed
complications during childbirth. A messenger took several days on horseback to
relay the message to Mr Morse. Because the trip back to New Haven took several
more, his wife had died by the time he arrived at their home. So moved was he by the tragedy of lost time
that he dedicated the majority of the rest of his life to make sure that this
would never happen to anyone again. His subsequent work on the telegraph and in
particular the mechanism of communication for the telegraph resulted in Morse
code – the first instantaneous messaging system in the world.
Mr Morse’s pain is not foreign to us in the 21st century. We feel the loss of new mothers so deeply that, when earlier this year new statistics on the rate of maternal death were released and suggested that American women died at three times the rate of other developed countries during child birth, doctors, patient advocates, and even Congress seemed willing to move heaven and earth to fix the problem. As someone who cares for expectant mothers at high risk for cardiovascular complications, I too was moved. But beyond the certainty of the headlines lay the nuance of the data, which seemed to tell a murkier story.
First at issue was the presentation of the data. Certainly, as a rate
per live births, it would seem that the United States lagged behind other OECD
countries – our maternal mortality rate was between 17.2 and 26.4 deaths per
100,000 live births, compared to 6.6 in the UK or 3.7 in Spain. But this
translated to approximately 700 maternal deaths per year across the United
States (among approximately 2.7 million annual births). While we would all agree
that one avoidable maternal death is one too many, the low incidence means that
small rates of error could have weighty implications on the reported results.
For instance, an error rate of 0.01% would put the United States in line with
other developed countries.
Surely, the error rate could not account for half the reported
deaths, right? Unfortunately, it is difficult to estimate how close to reality
the CDC reported data is, primarily because the main source data for maternal
mortality is a single question asked on the application for death certificates.
The question asks whether the deceased was pregnant at the time of death,
within 42 days of death, or in the 43 to 365 days prior to death. While
pregnancy at the time of death may be easy to assess, the latter two categories
are subject to significantly more error.
No one likes getting bills. But there is something that stinks particularly spectacularly about bills for healthcare that arrive despite carrying health insurance. Patients pay frequently expensive monthly premiums with the expectation that their insurance company will be there for them when illness befalls them.
But the problem being experienced by an
increasing number of patients is going to a covered (in-network) facility for
medical care, and being seen by an out-of-network physician. This happens because
not all physicians working in hospitals serve the same master, and thus may not
all have agreed to the in-network rate offered by an insurance company.
This is a common occurrence in medicine. At any given time, your local tax-exempt non-profit hospital is out of network of some low paying Medicaid plan or the other.
In this complex dance involving patients, insurers and doctors, Patients want their medical bills paid through premiums that they hope to be as low as possible, Insurers seek to pay out as little of the premium dollars collected as possible, and Doctors want to be paid a wage they feel is commensurate to their training and accumulated debt.
Insurers act as proxies for patients when
negotiating with the people that actually deliver healthcare – doctors.
Largely, the system works to funnel patients to ‘covered’ doctors and
hospitals. Patients that walk into an uncovered facility are quickly
redirected. But breakdowns happen during emergencies.
There are no choices to make for patients arriving unconscious or in distress to an emergency room. It suddenly becomes very possible to be seen by an out of network physician, and depending on the fine print of the insurance plans selected, some or none of these charges may be covered.
A seasoned health policy expert, his article cross-references the opinions and work of a range of health commentators including Atul Gawande, Steven Brill, Sarah Kliff, Elizabeth Rosenthal, Zack Cooper, and Canadian health economist Robert Evans. But his major companion is Princeton health economist, Uwe Reinhardt, whose posthumous book, Priced Out: The Economic and Ethical Costs of American Health Care, was recently published by Princeton University Press.
Gaffney’s affection for Reinhardt is evident as he recounts his desperate upbringing in post-war Germany, challenged by poor living conditions, but made whole by access to health care. Quoting a 1992 JAMA interview, Reinhardt states, “When we needed medical care, we got it at the local hospital, no questions asked. When you were sick, society was there for you.”
That acknowledgment is not only personal but historically significant, as I outline in my recent book, Code Blue: Inside the Medical Industrial Complex. The services Reinhardt received were part of a new national health care system funded fully by American taxpayers as part of the Marshall Plan. At the very same time, American citizens were denied a national health plan of their own as Truman was effectively branded a supporter of “socialized medicine” by the AMA and a cabal of corporate partners.
The Cure for healthcare isn’t Medicare for All, it’s establishing organizations with complete responsibility for the total care, costs, quality and outcomes for a person.
Discussions of Medicare for All substitute structure for substance. They engender a debate about the trappings of care delivery, administration, and cost, but don’t address the fundamental issue, which is how to provide genuinely better care for people of all ages and economic circumstances.
The premise of Medicare for All is that a single payer will provide better and more cost effective care. But what is really needed is single entity accountability. Whether there are one or many, whether they are public or private, is not as important as that one organization and its people become responsible for the total health and care of an individual and the costs associated with that care. With incentives for doing it well, and penalties for doing it poorly. And an ease of transition for people to move from an entity that doesn’t serve them well to one that does, to maintain the benefits of competition and varied approaches based on differing conditions.
Focusing on Medicare for All promulgate a systemic flaw baked into our health insurance and provider systems. High costs and lower quality can’t just be fixed by a single payer negotiating lower drug prices, nor would providing fewer services mean better care at lower costs. The core problem is exemplified by the invidious arbitrary split in public health insurance between Medicaid and Medicare, with each providing different services spread out among many providers, none of whom have sole responsibility for the complete health of the person.
BetterCare for All need not be a win-lose proposition, of Medicare for All or nothing. The feasibility near term of a one payer system is low, whereas the feasibility of building on existing systems and frameworks to create single system accountability is much higher.
Google’s semi-secret deal with Ascension is testing the limits of HIPAA as society grapples with the future impact of machine learning and artificial intelligence.
Glenn Cohen points out that HIPAA may not be keeping up with our methods of consent by patients and society on the ways personal data is used. Is prior consent, particularly consent from vulnerable patients seeking care, a good way to regulate secret commercial deals with their caregivers? The answer to a question is strongly influenced by how you ask the questions.
Here’s a short review of this current and related scandals. It also links to a recent deal between Mayo and Google, also semi-secret. A scholarly investigative journalism report of the Google AI scandal with London NHS Foundation Trust in 2016 might be summarized as: the core issue is not consent; it is a conflict of interest at the very foundation of the information governance process. The foxes are guarding the patient data henhouse. When the secrecy of a deal is broken, a scandal ensues.
The parts of the Google-Ascension deal that are secret are likely designed to misdirect attention away from the intellectual property value of the business relationship.
Say the word “shortage” to a healthcare professional and chances are the first thing that will come to mind is drug shortages. With good reason, too – there are more than 100 drugs currently at risk or not readily available for U.S. hospitals, according to the Food and Drug Administration’s (FDA) drug shortage list.
Shortages don’t just apply to drugs, however, and as 2019 has shown, healthcare providers must become more focused on shortages of the medical device variety. The shutdown of multiple medical device sterilization facilities in 2019 is poised to jeopardize the availability of devices that are critical to routine patient care. On Nov. 6, the FDA is hosting a panel to hear from stakeholders, including hospital epidemiologists and healthcare supply chain experts, on the risks associated with facility shutdowns and potential action steps.
The industry as a whole is in need of meaningful solutions. As taxpayers, patients and key stakeholders in healthcare, we must collaborate to eliminate interruptions to our healthcare supply chain. For those invested in improving healthcare from the inside, this means working across competitive boundaries and borrowing best practices from sister industries as we work to identify the root cause of these issues and provide meaningful and preventative solutions.
The Oct. 22 announcement starts with: “U.S. Sens. Mark R. Warner (D-VA), Josh Hawley (R-MO) and Richard Blumenthal (D-CT) will introduce the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, bipartisan legislation that will encourage market-based competition to dominant social media platforms by requiring the largest companies to make user data portable – and their services interoperable – with other platforms, and to allow users to designate a trusted third-party service to manage their privacy and account settings, if they so choose.”
Although the scope of this bill is limited to the largest of the data brokers (messaging, multimedia sharing, and social networking) that currently mediate between us as individuals, it contains groundbreaking provisions for delegation by users that is a road map to privacy regulations in general for the 21st Century.
The bill’s Section 5: Delegation describes a new right for us as data subjects at the mercy of the institutions we are effectively forced to use. This is the right to choose and delegate authority to a third-party agent that can manage interactions with the institutions on our behalf. The third-party agent can be anyone we choose subject to their registration with the Federal Trade Commission. This right to digital representation by an entity of our choice with access to the full range of our direct control capabilities is unprecedented, as far as I know.
In a previous post, I described how some features of the Affordable
Care Act, despite the best intentions, have made it harder or even impossible
for many plans to compete against dominant players in the individual and small
employer markets. This has undermined aspects of the ACA designed to improve
competition, like the insurance exchanges, and exacerbated a long
term trend toward consolidation and reduced choice, and there is evidence it
is resulting in higher costs. I focused on the ACA’s risk adjustment program
and its impact on the small group market where the damage has been greatest.
The goal of risk adjustment is commendable: to create
stability and fairness by removing the ability of plans to profit by “cherry
picking” healthier enrollees, so that plans instead compete on innovative
services, disease management, administrative efficiency, and customer support.
But in the attempt to find stability, the playing field was tilted in favor of
plans with long-tenured enrollment and sophisticated operations to identify all
scorable health risks. The next generation of risk adjustment should truly even
out the playing field by retaining the current program’s elimination of an
incentive to avoid the sick, while also eliminating its bias towards incumbency
and other unintended effects.
One important distinction concerns when to use risk
adjustment to balance out differences that arise from consumer preferences. For
example, high deductible plans tend to attract healthier enrollees, and without
risk adjustment these plans would become even cheaper than they already are,
while more comprehensive plans that attract sicker members would get
disproportionately more expensive, setting off a race to the bottom that pushes
more and more people into the plans that have the least benefits, while the
sickest stay behind in more generous plans whose premium cost spirals upward. Using
risk adjustment to counteract this effect has been widely beneficial in the
individual market, along with other features like community rating and
However, in other cases where risk levels between plans differ
due to consumer preferences it may not be helpful. For example, it has been
documented that older and sicker members have a greater aversion to change (changing
plans to something less familiar) and to constraints intended to lower cost
even if they do not undermine benefit levels or quality of care, like narrow networks.
These aversions tend to make newer plans and small network plans score as
healthier. Risk adjustment would then force those plans to pay a penalty that in
turn forces enrollees in the plans to pay for the preferences of others.