Wednesday, November 27, 2013

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.

Friday, November 22, 2013

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.

Thursday, November 21, 2013

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.

Wednesday, November 13, 2013

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.

Monday, November 11, 2013

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.

Saturday, November 9, 2013

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's The Apothecary.

Friday, November 1, 2013

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's The Apothecary.