Should We Bail Out Hospitals' Bad Debt?

A previous blog entry tried to shed some light on the phenomenon of hospital charges that are out of control, such as $500 for a single stitch.

Well, the hospitals have their challenges, too. They increasingly have to worry about collecting money directly from patients, instead of insurers, according to recent articles.

In fact, hospitals’ struggle to get payments from patients, which are legally due, puts them in the same boat as millions of others in our society, from free-lance writers to general contractors, to anyone who sells anything on credit. They will have to develop the same skills in customer service as have providers in other sectors.

More importantly, the hospitals’ pain is necessary to bring about price transparency, which is very important in a consumer-driven health system. If hospitals are unable to tell patients what they owe before a scheduled service, they are going to continue to struggle to get paid.

Politicians must not interfere with this painful change, or price transparency will never come to health care.

Read the entire article at John Goodman's Health Policy Blog or the Independent Institute's Beacon blog.

Top Health Trend for 2014: Telehealth to Grow 50%. What Role for Regulation?

For many years, telehealth advocates have accused payers of being unwilling to reimburse for proven telehealth interventions, which can significantly reduce medical costs.

Well, we have crossed that chasm, and telehealth is about to experience explosive growth. RNCOS Business Consultancy Services has just released a report predicting 18.5 percent annual growth in telehealth worldwide through 2018. The U.S. will outpace the rest of the world. Another market research firm, IHS, predicts that the U.S. telehealth market will grow to $1.9 billion in 2018 from $240 million today, an annual growth rate of 56 percent.

This is explosive, and it has led to increased political activity.

Read the entire article at Forbes.com: The Apothecary.

Oh No! The Republicans Are Going to Tax Your Health Benefits!

If even The Wall Street Journal covers reforming the tax code to allow individuals to own their own health insurance as “Republicans Shy Away From Their Own Health Plan” (and it does), we have a big hill to climb before we can eliminate the discrimination against individually owned health insurance.

According to the WSJ, Congressional Republicans are more gun-shy than ever of a reform that would give households tax credits to buy health insurance, instead of biasing the tax code in favor of employer-based benefits.

Read the entire article at The Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

"Job Lock" From Employer-Based Benefits: What Should Government Do?

Back in 1993, the economists Jonathan Gruber and Brigitte C. Madrian highlighted the problem of “job lock”, a consequence of employer-based health benefits. Gruber and Madrian figured if people with a serious health problem left their jobs, they would be subject to medical underwriting and be charged high premiums or perhaps be denied coverage altogether if they entered the individual market. So they stay in their jobs to buy the insurance their employers provide.

However, the problem was reduced by HIPAA, a 1996 federal law which required employers to offer benefits to new employees on the same term as incumbent employees, without medical underwriting, if the new employees had previous long-term coverage without a significant lapse.

Yet, one justification for ObamaCare is that it will end this (perhaps non-existent) job lock. There is a better way.

Read the entire article at John Goodman's Health Policy Blog or the Independent Institute's Beacon blog.

New Venture Funding Announced at mHealth Summit

Yesterday, the mHealth Summit at National Harbor in Maryland saw two venture funding announcements worthy of note: Practice Fusion and HealthLoop.

Read my entire article at Forbes.com the Apothecary.

Obamacare Risk Adjustment: Moving the Goalposts

The Administration has ways of partially immunizing health insurers from losing money in ObamaCare’s exchanges. The Administration is searching for ways to increase this without Congressional approval.

By the end of November, the U.S. Department of Health & Human Services (HHS) released its proposed rule for payment parameters for 2015. However, as well as proposing the parameters for reinsurance, risk adjustment, and risk corridors for the second year of the ObamaCare exchanges, the proposed rule sketched out some of the adjustments it plans to make to the previously finalized rule for 2014.

HHS asserts that it lowered the attachment point because there will be fewer extraordinary claims than originally anticipated: “…Updated information, including the actual premiums for reinsurance-eligible plans, as well as recent policy changes,  suggest that our prior estimates of the payment parameters may overestimate the total covered claims costs of individuals enrolled in reinsurance-eligible plans in 2014″ (italics mine).

This is a remarkable claim: I do not believe that any public expert who has been observing enrollment in the ObamaCare exchanges since October 1 has come to this conclusion. Quite the contrary, we believe that the exchanges are attracting older and sicker applicants than originally anticipated.

Read the entire article at the Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

United States Is The Third Lowest Spender on Health Care in Eleven Developed Countries

The Commonwealth Fund’s latest survey of eleven developed countries, which questions thousands of residents about their health costs and access to health care, has once again been spun with headlines such as: “We pay more, wait longer than other countries“.

In the United States, health spending accounted for almost 18 percent of GDP in 2011. The Netherlands comes next, at just under 12 percent. In dollar figures, the U.S. spent $8,508 per capita, versus only $5,669 in Norway, the runner-up. This certainly invites us to question whether we are getting our money’s worth.

However, it’s not clear that relatively high U.S. health spending is a burden on the nation.

Read the entire article at either John Goodman's Health Policy Blog or the Independent Institute's Beacon blog.

Will Obamacare Finally Cause Seniors to Turn Against Government Health Care?

Most Americans are now aware of the disastrous rollout of ObamaCare health-insurance exchanges for privately insured people. However, this has sidelined discussion of the pain that ObamaCare is inflicting on Medicare beneficiaries.

On November 16, the Wall Street Journal reported that UnitedHealth Group has dropped thousands of doctors in at least ten states from its Medicare Advantage networks. This is a consequence of the federal government’s cutting payments to Medicare Advantage plans ― by $156 billion over ten years ― to fund ObamaCare.

Earlier this month, Evan Gahr of the Daily Caller wrote an article describing how plans nationwide are shrinking, and citing a report by consultants at Avalere which projected reduction in Medicare Advantage plans, especially in rural areas.

Read the entire article at The Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

Can President Obama Bail Out the Health Insurers?

The Administration has moved the goalposts for subsidies to insurers in the exchanges. Will this rescue them?

Read the entire article at John Goodman's Health Policy Blog or the Independent Institute's The Beacon blog.

Please note that, since this article was written, the Administration released details of how it plans to increase the immunization of the health plans from losses. Namely, it is lowering the attachment point for the risk corridors from $60,000 to $45,000.

The Median Voter, The Marginal Patient, and Obamacare: Why No Politician Competes for the Votes of Cancer Patients

On October 30, President Obama gave a now infamous speech celebrating the going out of business of so-called “bad apple” insurers.

According to the President, “before the Affordable Care Act, these bad apple insurers had free rein every single year to limit the care that you received or used minor pre-existing conditions to jack up your premiums or bill you into bankruptcy.”

Only a few days later, Edie Sundby of San Diego wrote a heartbreaking op-ed in The Wall Street Journal describing how ObamaCare had forced her health insurer to cancel her policy, which had already spent $1.2 million on her treatment for a rare cancer. She may well go into 2014 without health insurance.

Much has been written about Ms. Sundby’s tragedy. This article will attempt to explain the political science behind the crisis.

Read the entire article at the Independent Institute's Beacon blog or John Goodman's Health Policy Blog.

Can You Hear Me Now? The Market for Hearing Aids Works - With Direct Pay

Hearing aids have been expensive — until now.

An interesting story in the New York Times a little over a year ago relayed the journey of a woman who had broken the shell of one of her hearing aids. Shocked at the price of hearing aids from private audiologists — at least $2,000 for a set, and usually $3,000, she sought another solution. Learning that about 70 percent of this price is retail mark up,  the woman searched online and found hearing aids available at reputable online stores — such as Audicis or Costco — for as little as $399. Searching a little more, she found an audiologist who offered to repair the shell of her old hearing aid for $100. So, that’s the choice she made.

But it gets even better. Only one year later, new technology has allowed entrepreneurs to develop hearing aids that they plan to sell for $300, and that have better sound quality than ever, according to neutral reporters.

Why is this happening? Most hearing aids are paid directly by the patients.

Read the entire article at John Goodman's Health Policy Blog or Independent Institute's The Beacon blog.

Risk Adjustment, Risk Corridors, and Reinsurance: Understanding the Death Spiral in Obamacare's Exchanges

One month after the worst product launch in modern history (yes, worse than “New Coke”), the big question is: Will the federal government be able to rescue health insurers who will lose lots of money in the ObamaCare exchanges?

The Wall Street Journal reported on November 4th that young people are avoiding the exchanges in droves. Priority Health, a Michigan insurer, reported that the average age of new applicants is 51, versus 41 in the previous individual market.

It certainly looks like health insurers’ ObamaCare exchange adventure will be very expensive. By 2015, they will likely be asking the federal government for a bail out. The Administration has no flexibility in this regard. Finally, the initiative will fall to the House of Representatives, which has pledged to repeal ObamaCare. It will be an interesting negotiation.

Read this entire article at John Goodman's Health Policy Blog  or at the Independent Institute's Beacon Blog.

The "Deep State" in American Health Care

In a recent blog entry, The Wall Street Journal‘s Peggy Noonan suggested the existence of a “deep state” within the national-security apparatus of the U.S. government.

She meant that the national-security bureaucracies are so deeply embedded in the American state that it is not possible for the political branches to control them. They do their own thing.

Fair enough. But I’d like to nominate another branch of the national bureaucracy as the “deep state”: The U.S. Department of Health & Human Services and its related agencies.

Read more at John Goodman's Health Policy Blog.

Mobile Health Apps: Blackburn's SOFTWARE Act Would Limit FDA's Powers, Ensure Regulatory Restraint

One of the most exciting areas of medical innovation today is mobile health -  "mHealth". Of course, innovation breeds regulation, and the Food and Drug Administration (FDA) has stepped in to this emerging market. In September, the FDA released its final guidance on mobile medical apps.

The idea of the FDA regulating iPhone apps is pretty alarming: The FDA adds precious years and dollars to the costs of developing new medical devices. Led by Representative Marsha Blackburn (R-TN), a bipartisan group of lawmakers wants to eliminate the risk of that happening to mHealth apps.

Read the entire article at Forbes.com's The Apothecary.

A Beacon in the Bleak Landscape of Health Reform? With A Five-Year Term, Aetna's Retiree Plus Plan Takes the Long View

One of the reasons that Obamacare remains unpopular is that it raids Medicare to pay for Obamacare. It especially targets the popular Medicare Advantage program, which allows seniors to chose their benefits from private insurers (which bid competitively for contracts) instead of going to providers who are reimbursed via traditional Medicare’s obsolete, government-dictated, fee schedules.

Despite the negative outlook for private insurers’ continuing participation in Medicare Advantage, carriers continue to innovate. I recently interviewed Dr. Randall Krakauer, MD, Aetna's National Medical Director, about Aetna’s new Retiree Care Plus plan for Medicare beneficiaries whose former employers pay for their Medicare premiums as a retiree benefit. The key advantage of Retiree Care Plus is that the contract lasts for five years.  The five-year term allows Aetna to better manage beneficiaries' chronic illnesses.

Read the entire article at Forbes.com's The Apothecary.

From The Archives: Medicare Means Testing - Test the Deductible, Not the Premiums

Many conservatives believe that increasing means testing for Medicare would be a good solution. Some would even go so far as to eliminate Medicare benefits for very rich people (like Warren Buffett).

But this is not consistent with principles of limited government. I have recently dug up an article I wrote on the issue from 2008. While the figures are out of date, the argument remains the same.

Read it here.

From the Archives: Heart Transplants to Hairpieces - The Questionable Benefit of State Benefit Mandates

This is a long study I wrote in 2008, which addresses the costs and benefits of state benefit mandates. At the time, a movement to mandate coverage of a controversial therapy for autism was sweeping through the states.

In it, I concluded that an additional mandated benefit increased the number of uninsured residents of a state by about one quarter of one percent. However, I was very tentative in this conclusion. This is why you don't find me in the conservative chorus calling for selling health insurance "across state lines" (whatever that means) to escape mandated benefits.

I had not posted it here previously because I could not find it on the Internet. Well, we have it now! The link is here.

The $35 Billion Windfall From Delaying Obamacare's Individual Mandate By One Year Could Restore National Institutes of Health Funding For A Decade

Delaying Obamacare's individual mandate by just one year would reduce the federal deficit by over $35 billion, according to the Congressional Budget Office (CBO). Freed from fear of the individual mandate, Americans would be less likely to buy expensive health insurance on the Obamacare exchanges (which have suffered embarrassing glitches during their first week of operation). This would stop the hemorrhaging of about $28 billion of subsidies through the exchanges. Further, because Americans would keep more of their wages as taxable income, income and payroll tax receipts would increase by about $8 billion.

If more Americans appreciated this fiscal windfall, the mandate would surely become even more unpopular. Although many Americans would like to reduce the deficit, others might prefer to spend the revenue on other government activities. If House Republicans were willing to pass a new version of the CR that spent some of this revenue, it would surely increase the odds of passage in the Senate.

Read the rest of this article at Forbes.com, The Apothecary.

The Medicare "Doc Fix" Will Never Get Fixed Like This

Earlier this month, the Congressional Budget Office (CBO) scored the cost of a Republican-led bill to permanently “fix” the Medicare fee schedule for physicians. The cost to taxpayers? $175 billion over ten years. To put that in perspective, according to the Congressional Budget Office’s bishopx-largeMay 2013 budget outlook, the ObamaCare’s effect on health spending is that it will cost $1.8 trillion over ten years. So, this so-called permanent doc fix would cost almost one tenth the entire cost of ObamaCare.

How can anyone possibly call that a “fix?

Read and comment on the rest of this article at John Goodman's Health Policy Blog.

Obamacare's Medical-Device Excise Tax: Early Evidence Suggests Significant Harm

The medical-device industry’s primary lobbying goal this year is to repeal Obamacare’s 2.3 percent excise tax on medical devices. Device makers have been collecting and remitting this new tax since the beginning of 2013.

Now that we are in the second half of 2013, we can inquire whether the early evidence confirms these predictions. Preliminary research on the financial results for the first half of the year suggests that the excise tax is causing significant harm.

Read this entire article at Forbes.com's The Apothecary here.

Health Technology Forum Launches a Branch in Washington, DC: Kick Off September 19

Before moving to DC in August 2012, I was involved in the Health Technology Forum. The Forum started about three years ago, meeting about once a month in either San Francisco or Silicon Valley.

According to the vision statement, "Health Technology Forum promotes the intersection of health care and technology by connecting people worldwide who have common interest in making health care better, more accessible and affordable for everyone." What it looks like in practice is networking events after work, attended by about one hundred people, where three or so entrepreneurs present their businesses. Sometimes, government officials (from, e.g. FDA or ONC HIT) will present.

For example, one of the San Francisco events I attended featured a presentation by PillJogger, a software solution for medication adherence, which was founded by an MD trained at Johns Hopkins and Stanford. I (and everyone else) was able to engage the entrepreneurs close up. It's a rare and great experience.

In the last couple of years, chapters have been founded in many North American cities. The community has decided to found a chapter in the DC area, and the kick off event will be on September 19 at Troutman Sanders, 401 9th St, NW, Washington, DC.

So far we have two speakers confirmed:

• Damon Sanders, Director of the Health Data Initiative at the Office of the Chief Technology Officer at U.S. Department of Health & Human Services
• Nancy Hall, Chief Information Officer of MedAmerica, a leading medical-practice management service provider.

For more information and registration, please see this Meet Up page. The more the merrier, so please forward this invitation to anyone you think might be interested in the Health Technology Forum. I hope to see you there.

How Congress Encourages Shortages of Cancer Drugs

2011 and 2012 saw a quickening of interest in the deadly problem of acute shortages of injected drugs, especially those targeting cancer. Drugs defined as being in “short supply” by the Food and Drug Administration (FDA) increased from 61 in 2005 to more than 250 in 2011. Since reforms passed Congress thirteen months ago, the problem has gotten 20 percent worse.

The fundamental reason for Congress' failure is that it increased the power of the FDA, when it should have decreased it.

Read the entire article at Forbes.com The Apothecary.

Medtronic Is Changing Its Business. Will The System Let It?

Earlier this month, Forbes contributor David Shaywitz asked a necessary question: “Are Medical Product Companies Finally Serious About Business Model Evolution?” This was in response to medical-device giant Medtronic MDT -1.16%‘s (NYSE:MDT) friendly acquisition of Cardiocom, a patient-monitoring firm. CEO Omar Ishrak’s comments at last Thursday’s annual meeting suggest that the answer to Mr. Shaywitz’ question is “yes”. In his remarks, Mr. Ishrak noted that “the U.S. is wisely moving to a fee-per-value approach which incentivizes value over volume and outcomes over inputs.”

Read the entire article at Forbes' The Apothecary.

Preparing for 2014: Questions for Obamacare's Opponents

This was not really an article that I wanted to write. Nevertheless, as we continue to successfully oppose Obamacare, I fear that some of the tactics used by its opponents will have unintended consequences.

Read the entire article at John Goodman's Health Policy Blog, here.

GAO Confirms Obamacare Insurance Rating Rules Increase Premiums for Young People

In a recently published (but under-reported) brief, the Government Accountability Office (GAO) confirmed that states which prevent actuarially accurate pricing of health-insurance premiums impose higher premiums on young people.

The GAO has used data from the U.S. Department of Health & Human Services' own website. This is the department which tells us ceaselessly how beneficial Obamacare is for young people.

Read the entire article at John Goodman's Health Care Blog.

n an under-reported brief published last week, the Government Accountability Office confirmed that states which prevent accurate underwriting of health-insurance premiums by age impose higher premiums on young people. There has been no shortage of actuarial analysis of ObamaCare’s coming “rate shock” for young adults, but the GAO has used data from the U.S. Department of Health & Human Services’ own website. This is the department which tells us ceaselessly how beneficial ObamaCare is for young people. - See more at: http://healthblog.ncpa.org/government-accountability-office-confirms-health-insurance-rating-rules-hike-premiums-for-young-people/#sthash.hP7AI9mf.dpuf

n an under-reported brief published last week, the Government Accountability Office confirmed that states which prevent accurate underwriting of health-insurance premiums by age impose higher premiums on young people. There has been no shortage of actuarial analysis of ObamaCare’s coming “rate shock” for young adults, but the GAO has used data from the U.S. Department of Health & Human Services’ own website. This is the department which tells us ceaselessly how beneficial ObamaCare is for young people. - See more at: http://healthblog.ncpa.org/government-accountability-office-confirms-health-insurance-rating-rules-hike-premiums-for-young-people/#sthash.hP7AI9mf.dpuf

n an under-reported brief published last week, the Government Accountability Office confirmed that states which prevent accurate underwriting of health-insurance premiums by age impose higher premiums on young people. There has been no shortage of actuarial analysis of ObamaCare’s coming “rate shock” for young adults, but the GAO has used data from the U.S. Department of Health & Human Services’ own website. This is the department which tells us ceaselessly how beneficial ObamaCare is for young people. - See more at: http://healthblog.ncpa.org/government-accountability-office-confirms-health-insurance-rating-rules-hike-premiums-for-young-people/#sthash.hP7AI9mf.dpuf

Executive Nullification: Why Obama Won't Allow Congress to Legalize His Changes to PPACA

Another day, another executive nullification of a painful piece of Obamacare.
This time, it has to do with health benefits for staffers on Capitol Hill. This is the second incident in as many weeks.

The President has a reason for preventing Congress from legalizing his changes to PPACA. Read the entire column at Forbes.com's The Apothecary here.

Obamacare's Employer-Mandate Delay is A Headache, Not A Relief

On July 2, 2013, the U.S. Treasury Department announced that it would delay collecting taxes due to Obamacare’s employer-mandate by one year. Although greeted as a relief by many, the move actually raises two significant problems for businesses and taxpayers during Obamacare’s roll-out.

First, the delay implies that Congressional Budget Office (CBO) scores of government health spending will become even less realistic than they currently are. Second, employers who take advantage of the delay will be on very shaky legal grounds.

Read the entire column at Forbes, here.

Prospects for Repealing PPACA's Taxes on Medical Devices and Health Insurance

On July 2, the Treasury Department unilaterally decided not to enforce PPACA’s employer mandate. Failure to enforce the employer mandate effectively nullifies the individual mandate, too. This toughens the challenge of repealing the medical-device excise tax and the health-insurance premium tax, both of which are priorities for those industries.

Read my entire column at Forbes' The Apothecary here.

Research Update: Thanks For Your Patience!

Colleagues & Supporters,

As you know, I stepped away from research last summer, and took a position at a Washington, DC trade association.

In less than a year, much has changed: Although PPACA remains the law of the land, its consequences remain extremely uncertain. Investors, businesses, and the people at large are anxious for the future of U.S. health care.

Because my skills lie in defining, designing, directing, researching, writing, editing, and communicating the results of health-policy research, as well as financial analysis, I have decided to return to a role where I can bring these skills to bear.

I have the privilege of resuming two Senior Fellowships in health-policy research, one at the National Center for Policy Analysis in Dallas, TX, and the other at The Fraser Institute in Canada. I will also return to writing for The Apothecary blog at Forbes.com, in the company of scholars including Professor Chris Conover of Duke University. I will continue to live and work in Arlington, VA, for the time being.

These research skills would also be usefully employed in a corporate, consulting, or investment environment, and I will be seeking opportunities in these fields while executing my research functions at NCPA and The Fraser Institute.

The blog has been renamed, in order to reflect an greater emphasis on financial and economic analysis. Also, there is a new Facebook page, which I invite you to like.

Thank you for your patience during my absence from the public view. Stay tuned for new research soon!

Research Archive Update

As previously noted, it is very difficult to find my archived articles at the PRI website. I have updated the links to some of the articles at my LinkedIn profile.