Dan Munro

Writer

U.S. Healthcare: ‘This is Nuts’

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Frustration with our Casino Healthcare is becoming increasingly common and it often percolates into both social and mainstream media.

Earlier in the week, Vox published another balanced billing story of an ER visit that resulted in a $5,700 bill — to a patient who had health insurance.

As Dave suggested in his tweet, it absolutely does ‘feel’ nuts. But as a system, it’s actually working exactly as designed. In fact, it’s really just a reflection of a system that we’ve built through decades of tax legislation. Through that legislative lens, this is the car we’ve built.

Ugliness aside, it’s nearly impossible to drive — which we learn quickly when we get behind the wheel as consumers.

A major reason for the increasing angst is that High Deductible Health Plans expose patients to more direct financial risk. We’ve euphamistically referenced this as putting more ‘skin in the game’ as if being a patient wasn’t enough skin. This relatively new design feature had a number of opaque intentions, but the primary purpose was to assign retail or consumer product attributes to healthcare. Despite the numerous attempts to force feed this “consumerism,” healthcare never was — and never will be — a consumer product or service.

Dave’s tweet is a good lens into unrealistic ‘consumer’ expectations tied to having more ‘more skin in the game.’ Like most consumers, he basically expected an ‘out-of-network’ provider (OneMedical) to be able to give him specific (and custom) pricing for services delivered by a separate provider. The reality of the system we’ve built is that secondary providers (labs, radiologists, etc…) can’t really quote a price without knowing Dave’s custom coverage tier. In effect, and as designed, there’s no way to know Dave’s up-front price without processing a billable claim — in advance. The technical term for this is claim adjudication — and the new consumer expectation is for the system to be able to pre-adjudicate an insurance claim for an exact price before service delivery.

Now, maybe the system should be able to do this, but it can’t (or won’t) today. For one thing, the cost to do pre-claim adjudication — while technically feasible — is a major design feature and there’s no real ROI for payers or providers to do this today. Another reason is historic. For products and services that are paid for by a 3rd party payer (the health insurer), why should patients care what the price is? Until the evolution (and growing prevalence) of high-deductible health plans, there’s been no real need for patients to know their (highly variable) price. Our system of opaque and tiered coverage is designed to support tiered and inelastic pricing.

A second order problem is even more fundamental. Even if the system could deliver real-time pricing by coverage tier — so what? That wouldn’t change the coverage tier or the highly variable price. You would get to see the price — but not influence it. The only choice would be to agree to the out-of-pocket expense or not to follow-up with the clinical recommendation.

In the end, single-payer healthcare isn’t the only solution to end tiered coverage. Single-payer works, of course, but the real leverage isn’t the payment model — it’s the price. We can certainly end highly custom and tiered pricing. We should end it, but that’s a model based on single-pricing and there’s only one coverage model that supports that — Universal Health Coverage (UHC). Single-payer healthcare isn’t necessary, but single-pricing is (and why every other industrialized country has adopted UHC).

Sorry Dave, our system isn’t nuts at all. It’s just been designed to support tiered coverage — as the way to maximize revenue and profits — and we just need a different system design. Our current design has a simple reply to your question of price. How much you got?

 

Top 10 Reasons to Delete Facebook

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There’s a compelling and growing list of reasons to delete your Facebook account. Here are the top 10 that are prompting me to delete (and not just disable) mine.

  1. With the announced departure of Alex Stamos (Facebook’s Chief Security Officer), it’s clear that the internal revenue v. privacy battle happened — and privacy lost.
  2. Cambridge Analytica was just the tip of the iceberg. There’s an entire ecosystem of companies that have been exploiting this exact same loophol for years — and Facebook knew it.
  3. Facebook has also been collecting call and text message data from Android users — also for years.
  4. The Facebook UI/UX is brutally ugly and never matured beyond it’s original design. It has the same look and feel of earlier ‘walled gardens’ like ‘You’ve Got Mail’ AOL. Like AOL — there’s never any real change — just migration, decline and atrophy.
  5. Facebook isn’t the only option for sharing and communicating online. Sure, it has over 2 billion users worldwide (and it is the internet in other countries), but here in the U.S. that 2 billion number is meaningless — unless, of course, you’re an advertiser.
  6. Full page apology ads in major newspapers is really just a form of mea-culpa marketing hope. It most certainly isn’t any accountability for the damage done.
  7. The FTC has confirmed an open, non-public investigation into Facebook’s privacy practices. I’m not waiting for their results.
  8. Real trust is earned and not simply the product of stealing and then applying phrases like ‘Time Well Spent’ for hours logged into Facebook.
  9. In fact, it’s a complete rip-off of a phrase that Tristan Harris used to argue against the intentionally addictive and destructive properties of social media ‘platforms’ generally — and Facebook specifically.
  10. Other early Facebook executives were well aware of the enormous damage being done by their creation — and are openly admiting to their culpability — and real regret.

And that means that we need to sort of give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever. It’s a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology. The inventors, creators — it’s me, it’s Mark [Zuckerberg], it’s Kevin Systrom on Instagram, it’s all of these people — understood this consciously. And we did it anyway. Sean Parker — Former Facebook President

I feel tremendous guilt. It literally is [at] a point now, where we have created tools that are ripping apart the social fabric of how society works. That is literally where we are. The short-term, dopamine-driven feedback loops that we have created are destroying how society works. No civil discourse. No cooperation. Misinformation. Mistruth. And it’s not an American problem. It’s not about Russian ads. This is a global problem. Chamath Palihapitiya — Former Facebook VP of User Growth

There’s an argument here that Facebook (and other social media ‘platforms’) can and ultimately will change. I don’t believe that’s true because they all rely on addicitive human properties like outrage that are easy to convert into enormous revenue engines. Making the platforms more civilized (with less outrage) will result in massive hits to those exact revenue engines.

I tried for two and half years inside of Google to change it. There is no way to change these things from the inside. Tristan Harris — Former Google Design Ethicist

The only way to change it is to leave it — which is exactly what I’m doing. In order to gracefully exit Facebook with existing friends and connections, I’m staging my account deletion for this Friday (3/30) and here’s the step-by-step guide I’ll be using.

Update: Effective 3/30 — my account has been deleted.

Are State-run Single-Payer Healthcare Systems Viable?

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In a word — no. The latest attempt is Senate Bill 562 in California (the Healthy California Act), but there have been others before it. The first challenge is always the same — overcoming all the big financial obstacles. There have been several recent studies for CA, but raising taxes is both a critical and fundamental requirement. The legislative analysis suggests that the cost for SB-562 would be about $400 billion per year. Here’s a chart from the L.A. Times:

According to a report in the Wall Street Journal, the California State Appropriations Committee is looking at a 15% payroll tax on earned income as one idea — which mirrors recent attempts by Vermont and Colorado.

  • Amendment 69 in Colorado would have increased payroll taxes by 10%
  • Vermont would have increased payroll taxes 11% and income taxes 9%

Colorado is more of a swing state — so it was thought to be a better test for other states. It’s also larger than Vermont by almost 9X. In the end, voters overwhelming rejected the measure (~80%) so it wasn’t just defeated, it was crushed. Vermont’s governor (Peter Shumlin) calculated the fiscal hurdle as too high and simply abandoned the initiative before it got to the ballot.

Recent polling in California by the Public Policy Institute of California summarized their finding this way:

As the state legislature considers Senate Bill 562, which would establish a single-payer state health insurance program, 65 percent of all adults and 56 percent of likely voters say they favor such a plan. But support falls to 42 percent of adults and 43 percent of likely voters if the plan would raise taxes. Overall, strong majorities of Democrats (75%) and independents (64%) favor a single-payer plan, while a strong majority of Republicans (66%) are opposed.

This polling is eerily (but not surprisingly) like some of the early Obamacare polls.

Basically, 11 of the 12 Obamacare provisions polled positively (and 7 of the 11 polled near or above 70%). The 12th provision that polled with a big negative? The individual mandate (66% against).

The larger narrative here has not changed since Obamacare was passed. Everyone likes getting healthcare services, but the vast majority of people don’t want to actually pay for them. It’s juvenile, but that’s the reality and that debate doesn’t magically change by moving it to the state level.

Also, like Colorado, the opposition to a single-payer system by industry stakeholders would be likely and significant.

Amendment 69 [in Colorado] brushed up against a powerful lobbying campaign by major health insurers like Anthem, Kaiser Permanente, and UnitedHealthcare, which raised more than $4 million to defeat it, as the Denver Post reports. Fortune – November 8, 2016

There are additional, ongoing challenges as well. Here are 3 big ones:

  1. Assuming a state managed to cross the fiscal Rubicon with voter support, there’s an even bigger systemic challenge to maintaining the actual system. With higher income (and payroll) taxes, at least some wealthy individuals and businesses would be incentivized to move out — and certainly some citizens of other states who wanted (and needed) healthcare would move in, so the cycle of adverse selection begins — just in a different way.
  2. One of the benefits of a single-payer system is, of course, single-pricing, but in order to support that, states would likely need to cut what doctors and hospitals charge — which would create another exodus — doctors and graduating medical students who could easily relocate to other states for better rates.
  3. Also, unlike the federal government, individual states have to actually balance their state budgets so the spiral generated by opposing forces (tax revenue leaving the state and the sick arriving in need of healthcare) would, over time, create a “death-spiral.” Tax increases would likely be annual so it’s more than just a one-time tax hit.

Given all the variables — especially the fiscal ones — I see no viable path forward for state-based “single-payer” healthcare. The sentiment is there — and that will help drive the national debate — but the size and scope of a single-payer healthcare system is so large and fundamentally different, that running it entirely at the state level quickly devolves into a fiscal non-starter.

Some Democrats felt the bill was rushed and undeveloped. Sen. Ben Hueso (D-San Diego) withheld his vote on the bill on grounds it does not provide enough detail of what a single-payer system would look like. “This is the Senate kicking the can down the road to the Assembly and asking the Assembly to fill in all of the blanks,” Hueso said. “That’s not going to happen this year.” L.A. Times — June 1, 2017

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