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Disruptive Innovation and the Affordable Care Act

Sep 26, 2013• 19

By Ben Wanamaker

This post highlights the findings of a paper released today by the Clayton Christensen Institute, “Seize the ACA: The Innovator’s Guide to the Affordable Care Act.”

Since its passage in 2010, the Patient Protection and Affordable Care Act (ACA) has been analyzed by experts from nearly every political, economic, and health policy angle possible. Yet in the noisy debate about whether the legislation is good or bad and whether to implement or repeal it, we think there’s something missing: a rigorous but practical discussion of the innovation opportunities created by the legislation and the barriers to innovation it imposes.

To facilitate that goal, we analyzed the ACA through the lens of the theory of disruptive innovation. First articulated by Harvard professor Clayton M. Christensen, disruptive innovation theory explains how innovations that decrease cost and increase accessibility transform entire industries.

As existing products increase in performance and begin to exceed customer needs (think of next year’s biggest Cadillac model), low-cost, lower-performance alternatives created by new entrants take root in the low end of the market (think of next year’s smallest Kia model).

These new products are initially inferior in comparison to established products, but they become better and better until they “disrupt” and eventually topple larger incumbent competitors.

So how does the ACA affect the pace of disruptive innovation in health care? What opportunities does it create for innovators? What barriers does it inadvertently erect? Here are a few thoughts from our recent paper.

Exponential Health Technology Bringing Personal “Check Engine Lights”

Sep 25, 2013• 8

By Daniel Kraft

Daniel Kraft is the Exec. Director of FutureMed and on the scientific Advisory Board for the Nokia Sensing XCHALLENGE which will be judged and have its award ceremony at the Health 2.0 Annual Fall Conference next Wednesday, October 2nd.

It sometimes seems that the world is speeding up, and it’s often hard to remember how quickly things are changing in our everyday lives. The relatively slow, expensive technologies of the 1970s and 80s are now essentially ‘free’ features that have dissolved into our exponentially more powerful devices. GPS with navigation directions, video and still cameras, online encyclopedias and the like would have separately cost over $500K 20-30 years ago. As inventor, futurist and Singularity University co-founder Ray Kurzweil likes to point out, a kid in Africa with a smartphone today has more access to information than the U.S. president did 15 years ago.

I recently found (via Twitter) this delightful and insightful story about a couple, both born in 1986, who have two young children. The couple, inspired by their son’s propensity to play on an iPad instead of outside on a nice day, have chosen to revert their life to 1986 levels of technology. No cell phones, no Google, no email, no tweets, no SMS…. So now they read books, develop rolls of film, and look things up in Encyclopedia Britannica. Watching this family, we might wonder how we got through the day and communicated and coordinated with our friends and family.

What Your Employer Is Secretly Thinking As Obamacare Goes Live

Sep 25, 2013• 18

By Kip Piper

Employers face a multitude of challenges under the Affordable Care Act (ACA). The ACA fundamentally changes the landscape for employer sponsored health insurance, forcing businesses to understand, navigate, and adapt to a quickly changing, highly complex, and still uncertain marketplace for health benefits. To illustrate this, here are 10 pain points employers face in dealing with Obamacare:

1. Explaining ACA to Employees, Dependents, and Retirees:
Effective internal communications is a strong indicator of a firm’s financial performance. Indeed, internal communications is an essential ingredient for an engaged, productive workforce with low turnover. This is all the more important under the dynamics and complexities of the ACA.

Every employer must be prepared to explain the ACA. Like it or not, employees will look to their employer to explain the Affordable Care Act, even if the employer is not changing benefits. Employees have friends and family who will need help understanding Obamacare. The airwaves, mail boxes, and street corners will be packed with messaging from all angles and interests – some pro, some con, some partisan, some factually wrong, some even fraudulent, much of it confusing, and all of it mind numbingly complex.

This is an enormous new opportunity for employers to beef up their internal communications, demonstrate leadership, and support employees and their families. This will also serve to boost a company’s external reputation since the help and information provided to employees and retirees will be shared by them with a much wider audience – their parents, children, spouses, siblings, friends, and neighbors.

However, when communicating and educating, given the dynamics and contentious nature of Obamacare, employers must also take into consideration the political leanings of most employees and other key stakeholders, such as the board of directors and state and local leaders. This is not a factor in most employer benefit issues but the ACA is entirely different.

2. Making Tough Decisions on Coverage and Benefits:
While making tough decisions on benefits is nothing new for employers, the ACA presents a new set of decision points. Every business has their own starting point – what, if anything, they were already offering, who they were covering, and how much they were contributing financially to the cost of coverage.

For those employers that were not providing full-time workers with health coverage before, the ACA creates a new pay-or-play decision for those with more than 50 full-time workers. For every employer, the ACA creates a strong financial incentive to either drop coverage, dial-down employer contributions, or move to defined contribution.

Moving Beyond the Quantified Self

Sep 25, 2013• 2

By Kim Krueger & Sophie Park

In a world where big data plays an important role of monitoring individual health care and wellness, Health 2.0’s CEO and Co-Founder Indu Subaiya had an exclusive interview with Christine Robbins, CEO of BodyMedia on the future of health care in the marketplace as well as the role of big data. As we all know, BodyMedia was recently acquired by Jawbone – and we’re excited to have Christine joining us on the famous “3 CEOs” panel at the Health 2.0 Annual Fall Conference next week to tell us more about it.

Here’s a preview of what you should be looking forward to.

Indu Subaiya: We’re really excited for the Health 2.0 7^th Annual Fall Conference and of course, I’ve been following news about you and BodyMedia over the last two months, which is really exciting. Congratulations on the acquisition.

Christine Robbins: Thank you. We’re on to the next chapter.

IS: That’s just amazing to me because BodyMedia in and of itself has had so many chapters and we’ve followed you almost from the very beginning. But what would be great is [if you could give] us an overview of the last year. When we saw you at Health 2.0 last — what you were beginning to present at the earliest stages, I believe, were data that BodyMedia had collected that could then be used in partnership with health plans and larger healthcare organizations.

Did We Get It Right? A Behind the Scenes Look at California’s Healthcare Strategy

Sep 25, 2013• 5

By Dan Diamond

Back in 2010 — before two elections, before the Supreme Court ruled, before the word “crisis” stopped following the words “California budget” — Kim Belshé settled on a guiding principle: “2014 is tomorrow.”

And now, it almost is.

The Affordable Care Act’s individual mandate takes effect in less than 100 days. The nation’s health insurance exchanges go live next week.

And for nearly a year, Belshé — secretary of the Health and Human Services Agency under former Gov. Arnold Schwarzenegger — was at the center of California’s efforts to begin implementing those Obamacare provisions and many others.

I interviewed Belshé, Schwarzenegger, and nearly a dozen other ex-officials and experts about whether California’s quest to lead the nation on ACA implementation actually paid off — and what it brought the state.

Why California? Why Not?

Every expert suggested that the ACA’s rapid implementation in California could be traced back to Schwarzenegger’s efforts in 2007 and 2008 to enact universal health care.

(And in some cases, even older efforts at reform. “We learned a lot from the 1990s,” says Belshé, noting that failed attempts to create purchasing cooperatives in California helped set the foundation for designing insurance exchanges more than a decade later.)

Although the Schwarzenegger plan ultimately failed, many of its components — from big elements like the exchanges to smaller pieces like guaranteed issue — ended up in the ACA. And because state leaders had already done much of the foundational work, they were better positioned to speedily roll out the national law.

Daniel Zingale, senior vice president of the California Endowment, says that Schwarzenegger’s efforts were a preview of the national ACA battle to come — which meant that many stakeholders in California had already made peace with the law’s key provisions by 2010.

“We’d had our big fights over the individual mandate here” in 2007 and 2008, says Zingale, a former health care aide to Schwarzenegger. “Democrats and labor groups had been through it [and] were ok with it.”

“But the nation hadn’t been through that yet.”

Still, California’s support for Obamacare was hardly assured. As late as January 2010, Schwarzenegger wavered on the ACA — but by April that year, he was the first Republican governor (and one of the first governors in the nation) to throw his support behind the law and begin crafting a framework for implementation.

“It gave us a bit of a head start,” Belshé acknowledges.

What the SNAP Cuts Actually Mean

Sep 25, 2013

By Lua Wilkinson

Last week House Republicans voted to cut benefits to the Supplemental Nutrition Assistance Program, or SNAP, slashing $39 billion in benefits over the next ten years in a vote of 217 to 210. All members of the Democratic caucus voted against the bill, which would affect 4 million people.

In June, fiscal conservatives squashed the Farm Bill that would have cut spending by $20 billion over ten years after determining the decrease was too meager. This new bill is their response to that. If successful, half of the cuts will put a stop to food aid after three months to people between 18 and 50 with no minors living with them if they are unable to find work, a move that makes little sense.

Poverty and health are inextricably linked, and food security plays a central role in this. Not only does poverty affect a family’s ability to buy food, it prevents them from buying healthy food. In the United States, lower income individuals are more likely to be obese, putting a strain on the healthcare system. Currently, beneficiaries of SNAP are eligible for SNAP-Ed, a nutrition education program designed to promote healthy eating on a limited budget. It is unclear how these cuts will affect SNAP-Ed.

African-Americans, no strangers to health inequalities, will be disproportionately affected by this change if successful. A new study shows that 90 percent of African-Americans benefitted from food stamps at one point or another in their lives. One in four African-American households faces food insecurity, and make up about 23% of all SNAP recipients.

Who Will Solve Healthcare For Our Parents And Grandparents? Probably Not Google.

Sep 25, 2013• 13

By Leslie Kernisan, MD

I assume by now that you’ve heard the news: Google wants to tackle aging. Specifically, they announced this week the launch of Calico, “a new company that will focus on health and well-being, in particular the challenge of aging and associated diseases.”

Because, says Larry Page, with some “moonshot thinking around healthcare and biotechnology, I believe we can improve millions of lives.”

“Can Google Solve DEATH?” shrieks a TIME cover.

Google’s goal, it seems is to find ways to extend human lifespan and essentially stave off aging.

Coincidentally, on the same day Physician’s First Watch directed me towards this NEJM editorial, announcing that NEJM and the Harvard Business Review are teaming up on a project on Leading Health Care Innovation.

Here is the paragraph that particularly caught my eye:

“The health care community and the business community today share a fundamental interest in finding ways to achieve higher value in health care. The ultimate objective for both communities is to keep people healthy, prevent the chronic illnesses that consume a large fraction of our health care dollars, use medical interventions appropriately and only when needed, and create an economically sustainable approach to the delivery of health care. While we want to foster innovation and novel therapies against disease, we also recognize that, whenever possible, prevention of disease before it is established is the better solution.” [Emphasis mine.]

And therein lies the rub. Whether it’s Google or a high-powered partnership between NEJM & HBR, everyone is enamored of prevention and innovative cures.

Let’s prevent those pesky chronic diseases! Let’s cure aging!

Ah, spare me.

New Interventions Needed to Halt the Growth of “Superbugs”

Sep 24, 2013• 4

By Brad Spellberg, MD

How do you tell the family members of a critically ill patient that their loved one is going to die because there are no antibiotics left to treat the patient’s infection? In the 21^st century, doctors are not supposed to have to say things like this to patients or their families.

Ever since the discovery of penicillin in 1940, patients have expected a pill or an intravenous injection to cure their infections. But our hubris as a society with respect to antibiotics has been exposed by the rise of antibiotic-resistant “superbugs.”

The Centers for Disease Control and Prevention (CDC) recently issued a new study, entitled “Antibiotic resistance threats in the United States, 2013,” reporting that at least 2 million people become infected with bacteria that are highly resistant to antibiotics and at least 23,000 people die each year as a direct result of these infections. These estimates are highly conservative. Many more people die from other conditions that were complicated by an antibiotic-resistant infection.

Meantime, we have ever-decreasing new weapons to wage the war against such infections because the availability of new antibiotics is down by more than 90% since 1983.

Interventions are needed to encourage investment in new antibiotics, to prevent the infections in the first place, to slow the spread of resistance and to discover new ways to attack microbes without driving resistance.

A major reason for the “market failure” of antibiotics is that they are taken for short periods of time, so they have a lower return on investment than drugs that are taken for years (such as cholesterol-lowering drugs). The Food and Drug Administration can help reverse the market failure by adopting new regulatory approaches to encourage development of critically needed new antibiotics.

Seriously? Are We Really Going to Re-Legislate Healthcare Reform?

Sep 24, 2013• 6

By Christopher Robertson

A minority of the Members of Congress are threatening to cause the United States government to default on its debts, unless the majority members agree to repeal or defund the Affordable Care Act, which Congress passed just a few years ago. There will presumably be some sort of negotiated solution. I worry that the negotiation range is being defined in a skewed way, between one pole and a moderate status quo, which is already the result of a prior negotiation. Seems like we have a one-way ratchet here.

My thought: perhaps the negotiations should go both ways, so that the end-result is more balanced. What if the Democrats made symmetric threats to cause default, unless:

Medicare is expanded to cover all the poor who do not qualify for Medicaid (filling the gap the Supreme Court created in its “coercion” opinion),
The Federal government creates a public health insurance option, to compete along with the corporate insurers (which was killed in final negotiations to pass the ACA),
The Federal government gets explicit authority to provide insurance subsidies in the health insurance exchanges it sets up for states that have refused, oh and, as a kicker,
Ronald Reagan International Airport (DCA) is re-named Jimmy Carter International Airport.

Ok, that last one is silly, but it might make for a fun bargaining chip, since it symbolizes the strategic game that is now being played, as we re-legislate settled questions. Positional bargaining is not pretty or enlightened, but if these chips can be traded, we might end up in the fallback position of keeping the Affordable Care Act as the negotiated compromise that it already is. Of course, the ACA is also the default rule, which has a nice double meaning in this context.

Christopher Robertson, JD, PhD is a visiting professor at Harvard Law School, an associate professor at the James E. Rogers College of Law, University of Arizona, and a research associate with the Edmond J. Safra Center for Ethics at Harvard Law School. He blogs at the Petrie-Flom Center’s Bill of Health, where this post originally appeared.

Repealing Laws By Defunding Them

Sep 24, 2013• 6

By Robert Reich

Sunday morning on ABC’s “This Week,” Newt Gingrich and I debated whether House Republicans in should be able to repeal a law — in this case, the Affordable Care Act — by de-funding it. Here’s the essence:

GINGRICH: Under our constitutional system, going all the way back to Magna Carta in 1215, the people’s house is allowed to say to the king we ain’t giving you money.

REICH: Sorry, under our constitutional system you’re not allowed to risk the entire system of government to get your way.

Had we had more time I would have explained to the former Speaker something he surely already knows: The Affordable Care Act was duly enacted by a majority of both houses of Congress, signed into law by the President, and even upheld by the Supreme Court.

The Constitution of the United States does not allow a majority of the House of Representatives to repeal the law of the land by de-funding it (and threatening to close the entire government, or default on the nation’s full faith and credit, if the Senate and the President don’t come around).

If that were permissible, no law on the books would be safe. A majority of the House could get rid of unemployment insurance, federal aid to education, Social Security, Medicare, or any other law they didn’t like merely by deciding not to fund them.