ACA permits people to sign up even if they are already sick. Real insurance cannot work that way.
Imagine an Accountable Fire Insurance Act that required insurers to sell you fire insurance after your home had burned. Homeowner insurance rates would skyrocket. Anyone who carefully read the ACA would see that coming.
The big insurers knew this would happen but played along in the beginning to avoid attracting political fire.
When 75% of Americans get a taxpayer subsidy under ACA, it isn’t really insurance but more of an income redistribution mechanism…for better for worse.
There it is, 97 words.
The New England Journal of Medicine carried an excellent article by David Casarette, MD, on the topic of health care illusions and medical appropriateness. Click here to read the full article. Hats off to Bob Stauble for a heads up on this article.
Casarette observes that humans have a tendency to see success in what they do, even if in truth there is none. Casarette writes, “Psychologists call this phenomenon, which is based on our tendency to infer causality where none exists, the ‘illusion of control’.” This illusion applies in all walks of life, especially in politics and parenting, and it includes medical care as well.
In medical care, the phenomenon has been referred to as “therapeutic illusion“, and it impacts both doctors and patients. Undoubtedly, therapeutic illusion is why placebos can so effective.
As you think about claims data, the information is capturing the services provided to a patient by a healthcare provider for preventive care or for the diagnosis or the treatment of a condition.
This information can be grouped by different cohorts—those getting preventive exams, those examining categories of care, or those that seeing specific physicians and/or hospitals for conditions. These data, for example, can be grouped by diagnoses, called a diagnosis related group, involving a hospital stay.
However, all claims data is just a collection of medical bills. Medical bills do not contain a complete look at the patient, such as important information as a patient’s prognosis. That’s a gap. Thus, it is important to set appropriate expectations on the use of the data.
Did you ever hear the old joke where the boss says floggings will continue until morale improves? Torturing the data until results improve…or the data confesses…is not uncommon. Which is a pity.
In my career I’ve worked with companies with over 100k covered lives the claim costs of which could swing widely, from year to year, all because of a few extra transplants, big neonatal ICU cases, ventricular assist cases, etc.
Here are just a few of the huge single case claims I’ve observed in recent years:
- $3.5M cancer case
- $6M neonatal intensive care
- $8M hemophilia case
- $1.4M organ transplant
- $1M ventricular assist device
This is not a complaint. After all this is what health insurance should be about, huge unbudgetable health events.
All plans have one organ transplant every 10k life years or so, most of which will cost about $1M over 6 years. A plan with 1k covered lives will have such an expense on the average of every 10 years. Of course the company may have none for 15 years and two in the 16th year. The same goes for $500k+ ventricular assist device surgeries.
Over the last few years, the latest buzz in the healthcare industry has been Accountable Care Organizations (ACOs), and the next wave will be the promotion of “value-based contracting”. These are similar approaches, different words.
Generally, an ACO is formed around a physician group or a hospital linked to physicians. The basic concept is for the provider system to be accountable for patients, and the providers are financially motivated to impact their patient population’s overall costs. Makes sense, right?
For the past 25 or so years, physicians have been linked to Independent Practice Associations, Medical Groups, and Management Services Organizations. Many of these provider organizations have had financial incentives tied to performance. Data have been available to assess physician performance. So what’s different now?
Today the Feds are re-emphasizing performance in their physician contracting under the new Medicare Access and CHIP Reauthorization (MACRA), which replaces the current reimbursement formula.
In the era in which wellness vendors were still claiming an ROI on wellness (and more and more are not), I asked a number of them how they calculated the ROI. Not one calculated the ROI in a way that a steely-eyed CFO would endorse.
Below is a partial list of costs wellness vendors should be considering, but rarely if ever do consider. If you have a wellness program and want to look for an ROI please start with this list:
- Investments in materials (i.e. Fitbit) and facilities (i.e. onsite fitness centers)
- The cost of biometric tests and health assessments
Here’s the executive summary: Most disease and health spending is age-related. As we age we get infirmities ranging from dementia to cancer to vascular disease. Nothing can prevent aging. Period. For millennia mankind has been been on a futile search to prevent aging.
Search for the Elusive Elixir of Life
For 3500 or more years mankind has been searching for the mythological Elixir of Life, the fountain of youth, the philosophers stone, pool of nectar, etc, that will defeat aging and extend life, if not achieve immortality.
According to Wiki, “The elixir of life, also known as the elixir of immortality and sometimes equated with the philosopher’s stone, is a mythical potion that, when drunk from a certain cup at a certain time, supposedly grants the drinker eternal life and/or eternal youth.”
All around the globe from 400 BCE alchemists, from India to China to Europe, were seeking the elixir of life. Many thought gold was an essential ingredient of such an elixir.
The Fountain of Youth, also known as the water of life, was part of the search for the elixir of life. That search was in full throttle during the crusades, and was carried to the New World by Spanish explorers, the most famous of whom was Ponce De Leon in the 1500’s. Even the Mayans had legends about waters of eternal youth.
Last week, we were amongst the very first opinion leaders to speak out against the new cholesterol guidelines from the American Heart Association (AHA) and the American College of Cardiology (ACC).
Our error was not going far enough.
Monday’s New York Times carried a devastating portrait of the development of the guidelines, leaving readers with the unmistakable impression that this absurd attempt to make people into patients was not just poor policy it was a hubristic, avoidable policy folly, sort of like the bridge to nowhere and federal housing policy pre-2008.
Trust is an interesting thing; once broken it almost resists reconstruction. Public trust in the AHA and ACC is crumbling as we write and deservedly so, as what should have been clear becomes more confusing and conflicted by the minute.
Instead of giving generally healthy middle aged American adults (like the three of us) the safe haven of a cardiovascular disease (CVD) prevention framework that is understandable, sensible and actionable, we got a cholesterol gulag. Only here in the land of the free, it’s not a government gulag imprisoning the political opposition.
No, in a phenomenon unique to the US, it’s a health gulag intended to take people who need advice, support, and guidance and give them a pill, which is the first step in an intentional ensnarement in the medical care system. It’s the Hospital California…on steroids, and you can’t even checkout because that would be against this addled medical advice.
To clarify: we have zero objection to providing statins, especially low-cost generic ones, to people under age 75 with current CVD, diabetes, or extremely high cholesterol levels. The drugs may very well save their lives.
Our beef is with the cockamamie reduction in the ‘risk-to-treat’ threshold from 10% risk of heart attack or stroke in the next 10 years to 7.5% for people with none of the above noted problems.
At our first meeting years ago, Tom Emerick, Walmart’s then VP of Global Benefits, told me,
“No industry can grow indefinitely at a multiple of general inflation. It will eventually become so expensive that purchasers will simply abandon it.”
He said it casually, as though it was obvious and indisputable.
Health care is playing out this way. From 1999 to 2011, health care premium inflation grew steadily at 4 times the general inflation rate. During that same period, the percentage of non-elderly Americans with employer-sponsored health coverage fell from 69.2 to 58.6 percent, a 15.3 percent erosion rate.
Health care’s boosters like to argue that it has buttressed the economy, and that it means more jobs and economic prosperity within a community. A February 2011 Altarum Institute report estimated that private sector health care jobs now account for nearly 11 percent of total employment. Since the recession began in December 2007, health care employment has risen by 6.3 percent while employment in other industry sectors fell by 6.8 percent.
But there’s a darker side. Health care’s ever-increasing revenue growth has come at the expense of individuals and firms that pay its bills, directly through health plan premiums, and through taxes, often instead of buying other goods and services. It transfers wealth to health care from everyone else. Like the finance services industry, health care has become a disproportionate “taker” industry, sapping economic vitality from America’s communities.