About Steve

Steve is the CEO of Health Tactics, a health care consulting firm. He has been active in the health care industry for over 25 years, having run a California based IPA, been a hospital administrator, worked for several health insurance companies and consulted for medical groups, hospitals, pharmacy benefit managers and clinics. From this breadth of experience, Steve has developed a point of view on what it will take to fix our health care industry. Central to this point of view is the opinion that the individual, i.e. the consumer, must become as self sufficient as possible.

More ideas for addressing the Affordable Care Act…

In my last post, I recommended a series of ideas for reducing the costs of care. What we hear discussed in the daily media are legislative techniques for shifting costs to other parties- rarely do we see recommendations for actually reducing costs.

We have accepted the goal of “bending the cost curve”, which means slowing the rate of annual increase. This is not nearly enough. We must strive to actually reduce the costs of care, so that they begin to resemble costs in other large, diverse, developed countries. Presently we run about 30% higher than these other developed countries.

To put the costs of our health care system in perspective, our President’s recent military proposals have been estimated to cost $54 Billion, and this number is causing many to pause and wonder how we will pay for it. Guess what? Our health care industry spends $54 Billion every 6 days!

What follows are more recommendations for actually reducing costs, as a follow on to my last post:

Place limits on, or require justification for many commonly overprescribed tests which have not demonstrated real value. Among these are annual EKGs, many imaging tests including PET scans, annual PAP exams, some bone density tests, some colonoscopies and believe it or not, the annual physical. Source: AARP Bulletin, March 2014. (Read their full article to understand the limits of what they are saying).

Fraud and Financial Review
Conduct more frequent and more aggressive fraud audits. Invest in advanced technologies to assist in identifying fraud. The ROI on these investments is quite high.

Similarly, conduct more contract audits. These do not identify fraud as such, but cases of exorbitant pricing that may not technically be fraud.

Create and publish a national database of list prices for common procedures, by zip code. As recommended in my last post, providers should also be required to publish their list prices for common procedures and items.

Create a national network of urgent care centers that will provide a range of services at published prices and that will accept all certified plans. These centers should be able to interpret and read tests performed by others, and to prescribe and deliver follow-up care. The intent is to supplement the network of HRSA funded Community Health Centers already in place.

End of Life Care
Allow and encourage advance planning and advance directives.

Remove the requirement for “doctor’s orders” to purchase most supplies (not drugs) that are non-invasive and do not expose the patient to radiation or toxic elements.

Eliminate provider markups and/ or stocking charges in excess of 5-10% for inventoried drugs, supplies, and items ordered directly for the patient, e.g. crutches.

It will be difficult to link these recommendations directly to a budget line item. This is why legislators do not come up with these types of suggestions. But with higher and higher deductibles, these are the types of recommendations that will translate directly into patient savings.

Remember- it is providing health care that is the privilege, and receiving it that is the right.

21 Ideas for Addressing the Affordable Care Act

The future of the Affordable Care Act is at the top of the news. Frequently, it is said that there are no credible proposals on the table for an effective replacement. This writer feels it is time to focus on costs, as I have stated in the past.

What follows is a series of detailed suggestions, with some commentary, with the goal of reducing costs. Some promote increased competition, some suggest increased regulation in markets that are too thin to support competition.

There are 2 broad philosophies behind these points- first, that health care is a right (with some exceptions), but PROVIDING health care is the privilege. I feel we have it backwards in this country, where providers of all types have the right to provide services, and we are lucky if we have the privilege of seeing them.

Second, I feel that all parties are to blame. By this I mean that we should not gang up on one sector, such as insurers or doctors. All parties are misbehaving, including hospitals, physicians, pharmaceutical companies, insurers and yes, consumers.

What follows is a series of recommendations, by category, for finally controlling costs:

Require full transparency on prices. Hospitals should publicly post “list” prices for common procedures or bundles of procedures. What is included in the bundle should also be posted. The requirement to post prices should not be clouded by the statement that “hospitals are actually reimbursed different amounts by different insurers”. While this is a true statement, it is a distraction and list prices should still be posted.

Crack down on sham Joint Ventures. These are the joint ventures where a hospital purchases a physician’s practice. They then designate the physician’s office to be an “outpatient satellite of the hospital”. They then receive increased reimbursements from insurers and the government because services are reimbursed more generously when provided in a hospital setting versus a physician’s office. Notice, nothing has changed except the sign on the door, that now says “part of the University Hospital Network” or something similar. Literally nothing has changed except the sign on the door and the reimbursement, which has increased dramatically. In some cases the increased prices are justified on the basis of “rolling the new practice into the Electronic Medical Record of the hospital”. EMRs were supposed to reduce costs. Weren’t they?

Limit “empire building”, where every hospital in a community feels they need to provide all things to all people- this results in “a cath lab on every corner”, low utilization for all, and increased prices to cover high fixed costs.

Broaden the scope of practice for physician assistants, nurse practitioners and similar professionals, known as “physician extenders”. This means that these extenders are allowed to do more, which allows costs to decline. A concrete example would be for the Minute Clinics at CVS to be able to provide a broader range of services.

Implement a mandate for providers of all types to accept government plans. (Philosophically, this is where we need to understand that it is PROVIDING health care that is the privilege). Physicians, hospitals and other providers should not be able to pick and choose whom they see based on finances- a government plan should be sufficient. Providers who decline should not be eligible for government grants, tax subsidies, meaningful use payments or other government programs.

Create a national provider network. This will become important when insurance can be purchased across state lines. The challenge here is not the selling of insurance, but the delivery. If Blue Cross of Ohio sells a policy to someone who lives in Kentucky, but has no provider network in Kentucky, the person who bought the policy would need to go to Ohio for all of their care. A national provider network would address this. In practice, this is no more complicated than accepting Medicare, though I am not suggesting we combine the ACA with Medicare.

Pharmaceutical Companies
Implement price controls for very expensive drugs. In general, I am talking about “Specialty Pharmacy”, where we see drugs of $1000 per dose or $100,000 per year or more. Frequently the number of patients on a particular drug, or the patent protection held by the manufacturer, does not allow for a competitive market to exist. This is one of the rare cases where I support direct regulation.

Device Manufacturers and other suppliers
Similar to Pharma, above, some level of regulation is appropriate here to prevent price gouging, particularly for new devices and technologies that are protected.

Allow the sale of policies across state lines (see comment on National Provider Network under Physicians above).

Maintain limitations on exclusions for pre-existing conditions.

Maintain MLR requirements (Medical Loss Ratio) for insurers. Currently, insurers are required to spend 85% to 90% of revenues on actual medical expenses, as opposed to marketing and administrative costs. If and when medical costs decline, as this ratio is preserved, the costs of the actual policy must decline too, instead of increasing profits.

Allow walk-in testing without a physician order.

Allow (require) a-la-carte pricing

Dialysis, Chemotherapy, Surgery and Imaging Centers
Require price transparency at the point of service.

Use government purchasing power to negotiate these prices downward.

Require consumers to take more responsibility. Smokers should pay increased rates.

The Federal and State Governments
Allow government payors to negotiate with pharmaceutical companies.

Create a public option to provide insurance competition in all markets.

Plan Design
Reduce the breadth of services required for minimum plans.

-Offer catastrophic only coverage.

-Offer maternity and pediatric coverage as a rider, directed towards those planning families. This is generally, though not always a planned event. Today, it is treated as an “unforeseen illness”, which it is not. This might be one area where government subsidies are helpful, as the pool of people purchasing this coverage will be smaller than 100% of the population.

Increase funding for expansion of Community Health Centers, funded through the Health Resources and Services Admistration (HRSA).

Expand the infrastructure for Remote Medicine. The vision here is diabetics testing themselves and corresponding with professionals remotely, e.g. email; or a patient with Congestive Heart Failure using a digital scale to remotely transmit their daily weight to professionals. This vision is less geared towards telemedicine, which envisions a specialist having a real-time discussion with a patient using expensive video technology and other devices.

These recommendations are designed to reduce the actual costs in the system, as well as to increase the cost effectiveness of the system (e.g. Community Health Centers).

Bending the so-called cost curve is simply not enough. Traditional cost shifting is not enough. We need to reduce actual costs significantly below the level of where they are today.

The time is now!

Health care is a right. Providing health care is the privilege. We have it backwards in America!

You will frequently hear the question “Is health care a right or a privilege”? I believe that health care is a right (yes, with some limitations to prevent fraud). It is providing health care that is the privilege. We seem to behave as if providers have the right to set up shop, and that seeing them is a privilege. We have the whole thing backwards!

First, a definition:
Providers are hospitals, physicians, rehab facilities and therapists, pharmaceutical companies, pharmacy retailers, device manufacturers, laboratories, surgicenters, imaging centers, dialysis and cancer clinics, ambulances, long term care facilities and product suppliers. In short, anyone who sells a product or service into the system.

It is a privilege to sell their services into this great market, but somehow we have to beg this sector to take our money! All $3 Trillion a year!

-Hospitals get tax breaks, physicians get educational assistance, pharmaceutical companies get tax breaks, many have some access to public grant and research funding, yet, everyone is allowed to pursue extreme profit.

-When physicians get into trouble, such as substance abuse, it is they and their careers who are protected, not the public.

-Americans spend far more than in other developed countries, yet we die younger. The dying part is a complex discussion, but the spending part is very clear. We are simply overtreated and overpriced, and we allow it to happen.

How do we straighten this out?

First and foremost, regarding the Affordable Care Act (Obamacare), if there is to be a government mandate, that mandate should fall on providers to accept all patients, not on citizens to purchase a set menu of benefits.

Specifically, providers, as defined above, should not have the right to refuse patients with Medicare, Medicaid, Obamacare, Tricare/ VA, ERISA plans or certified commercial plans, and they must accept the contracted rate as payment in full (plus contracted co-payments). If they do refuse, they should not have access to any government or commercial subsidies, incentives, research grants, performance bonuses, tax breaks or public institutional affiliations.

Second, providers should publish all prices and a standardized list of “performance metrics”.

Third, providers of products, including drugs, devices and supplies should be subject to price limitations (not strict controls) to prevent gouging.

It is only by changing this top-level dynamic- just who is it who has the privilege- that we can address the core problems with our health care system.

There’s more- lot’s more, but let’s start here.

What do you think?

Should the health care discussion be re-framed as stated: that health care is a right- providing health care is the privilege.

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Announcing the Launch of The Health Tactics Social Network

Today our team is launching the Health Tactics Social Network.

The Affordable Care Act, popularly known as Obamacare, has been in place now for several years and it has withstood a number of challenges, including at the Supreme Court.

Even within this structure, however, prices have begun to rise, significantly for some. And we are beginning to see news reports about local exchanges failing financially and large insurers questioning their continued participation.

We at Health Tactics do not take a political stand. Instead, we believe that whichever path our health system takes, much will continue to fall on the individual and those who love and support them. Not just the measurable costs that appear on a bill, but things like rides, meals, errands, simple love and emotional support. And yes, items that cost money and are not covered. Sometimes lots of money.

This is where the Health Tactics Social Network comes in.

We are not here to complain, or to be an advocacy organization. We accept that “it is what it is”, even if we want more. What we are here for is to help people find each other, care for each other and deal with reality. And by doing this, we can help those in need put their lives back together.


    Several people with the same condition have more collective knowledge about that condition than all but the most specialized physicians. Pool that knowledge.

    Much of what it takes to fully care for yourself or someone else actually falls outside of the structured medical system- everything from exercises to nutrition to a good nights sleep. And this is where people helping people will succeed in cases where the for-profit system has either failed us or abandoned us when the approved visits run out.

    And many times, there are those special, wonderful doctors and hospitals, and the rest of us need to know who and where they are. And not because we saw their advertisement, but because someone we trust who was in a similar situation told us about them. The true message gets lost in all of the marketing noise.

People helping people- that is what the Health Tactics Social Network is all about.

How does it work?
Almost everyone is in Facebook. And when you have professional networking needs, most people think of Linked-In. Beginning today and in the future, when you have personal health care needs, think of The Health Tactics Social Network.

A group in our network is designed solely to support the health care needs of the member. You can use a group differently, but this design is what makes us unique.

In the illustration below, 12 people join Mary’s Care Group. The sole purpose of the group is to care for Mary.


Members of the group can upload documents or images for other group members to see. Mary, for example, might upload a list of her medications so others in the group have that information.

Mary could also create two groups, and have her private medical information available to one group, and other things like a food shopping list or a list of important phone numbers available to the other group. Her spouse might want to be in both groups.

The Health Tactics Social Network will also work well for athletes. Paul is a runner on his school team. In this illustration, 11 people join Paul’s Training Group. The sole purpose of the group is to support Paul’s training.

As before, members can upload documents, such as a schedule, or images, such as a map of a running trail.


How do you set it up?
This is a very easy, three step process:

First, as in any social network, everyone involved must join The Health Tactics Social Network.

Second, as in any social network, people who want to engage on any significant level must be “friends”.

Third and finally, you must create your group (easy!) and invite those friends that you want to join it.

That’s it! Group members can immediately begin providing support to their friend or loved one.

Some tips:
When creating your group, you will have some choices, as below:


We strongly suggest that new users select “by invitation only” and “group creator only”.

Otherwise, friends will be able to join your group at will (and since this is your health, not all of your friends should see everything), and participants will be able to invite other people (same issue).

These choices are available because some people create groups that they want to grow large and without their effort, such as a general membership discussion group. Members are certainly free to do this, but there are other social networks that support general membership discussion groups if that is the true goal.

Important note on HIPAA regulations and patient privacy: The Health Tactics Social Network and the entire Health Tactics site are built and designed around the core principle of consumer (patient) control of their own situation, which includes their own information. When patients choose to disclose their own information, HIPAA concerns have been met. However, when patient information is stored or handled by people or institutions other than the owner (patient), HIPAA concerns can and do arise.

For this reason, our user agreement contains language not found in most social networks. Users are strongly encouraged to read this language and understand it, as it discusses your disclosure of your own health information. It includes a disclaimer that specifically states neither Health Tactics nor The Health Tactics Social Network will bear any responsibility for personal health information that is initially disclosed by you, regardless of what members of your group or others may subsequently do with that information.

And finally…

Expert Scenario:
Pam is a Discharge Planner at a community hospital. She joins the Health Tactics Social Network and begins to “friend” patients she is working with in her professional capacity at the hospital. As people leave the hospital and recover they “move out of her view”, and as more patients enter the hospital, they “enter her view”, so Pam is constantly “unfriending” those who have been discharged and who have recovered, and “friending” new patients who will soon require discharge.

Pam encourages these patients to create a care group, make friends with her- either party can initiate the friend request- and invite her to join. Patients are free to decline Pam’s recommendation. This is all up to the consumer (patient). And of course, Pam, as a professional, should obtain written consent from the patient.

If the member agrees, Pam and the hospital benefit from this wealth of individual care and home related information that is stored in one place- the individual patient groups, and which they have obtained consent to access.

The members of The Health Tactics Social Network- Pam’s patients- benefit from a smoother, higher quality hospital discharge and an improved transition to home care and recovery. The member’s family will better understand what is needed, and know where to find the key information they will need in caring for their loved one.

How to get going:
Visit www.healthtactics.com.

At the main site, select “Network” and you will be taken to The Health Tactics Social Network sign in page. Signing up is easy. After you have signed up, find friends and create your groups as described above.

The rest of the site:
The main Health Tactics site has eight sections, clearly visible on the navigation menu:

These eight sections are:

Home, where you can find the home page (pictured) and a description of the company;


Network, which allows you to link directly to The Health Tactics Social Network;


MediPilot, our own secure, private online personal health record.


Surveys, an embedded survey tool where we implement surveys and polls;

Blog, where we will post helpful tips about using the Network, posts from guest health care experts and other interesting content. You are at the Blog page now;


Forum; our online discussion forum where users can talk to each other;

Links, where we organize a wealth of health care related resources; and

Store, where we make available high quality health and lifestyle related products from 3d party vendors. This is what allows us to operate the rest of the site for free.

Everything at the site is absolutely free, except products purchased through the store. You will not see any ads or solicitations of any kind outside of the store. And we do not track, sell, monitor or mine your personal information in any way.

We hope that you enjoy and make valuable use of the site, and The Health Tactics Social Network!

What will the next 4-8 years look like for health care?

With a presidential election coming, it might pay to get ready for the next “era” in health care. Regardless of whether our next president is a Democrat or Republican, I believe a strong focus on cost control will be an effective strategy. Here’s why:

If Republicans win the white house, one stated goal is to repeal Obamacare. Rather than dig in and fight for another cycle, Democrats should consider embracing a strong cost control approach as a way to blunt the attack. If Republicans see a pathway to budgetary control even with Obamacare structurally in place, the more moderate elements in the party might accept a future of market based reforms instead of legislative reforms. If Democrats ignore the need to control costs, they can look forward to attack after attack on the legal foundations of the law itself. And yes, continued escalation of costs does indeed threaten the entire economy.

Now if Democrats win the white house, they will have an opportunity to embed key features of Obamacare deeper into the fabric of our society. In doing so, they will either do something that is great in the long term, or ruinous. If they ignore the need to control costs, and instead allow an entitlement to spread wider and wider, while not reining in the providers of these services, other important national needs will be squeezed out- or our taxes will rise to punishing levels- or our debt will increase accordingly. A Democratic administration will need to ensure that the law works economically- not just socially.

So regardless of who wins the next election, the next 4-8 years in health care should focus very closely, and aggressively, on costs.

Medical Tourism- A Growing Industry

One indicator of how expensive our health system has become is the rapid growth of the medical tourism industry. Patients Beyond Borders estimates the market is between $38 Billion and $55 Billion , and growing between 15 and 25% annually.

Depending on the specific procedures you need, it may be possible for you and a companion to fly to your destination, see the sights, stay in 5 star hotels, dine at 5 star restaurants, receive your medical services at a world class hospital, by doctors who, frequently , are American trained and board certified, and fly back to the US, all for less than the procedure alone costs in the US.

And, close by, Cuba shows signs of becoming a future destination for medical tourism. An interesting article in the New York Times on Medical Tourism discusses Cuba’s potential.

Something interesting to learn about…

February, 2015

Patient access to their own health information- it’s yours! Control it! #health

One of the best ways for someone to become self-sufficient is to engage, not just read. A useful way to engage is through blogs, which allow you to comment and even discuss online your questions and opinions on various subjects.

We have presented our links in a structured format, such that they help someone proceed down the path to independence. And the first section we feature is “Patient Access to Information on Themselves”. At the end of this post, we provide a link to a very useful blog post in this area, which may serve as a gateway for the reader- you- to reach out and become engaged. Our full list of links can be found at www.healthtactics.com/LinkIndex.html.

The health care industry has long regarded patient files as “their” information. True, it is the providers that do the work- x-rays, lab tests, and other procedures that make up the medical record. But the information is about us, and much of it we give to the provider during a check-up, interview or on a form. So whose information is it?

The pendulum is shifting towards a view that it is the patient’s information. Yes, the provider should be compensated for copying costs or other administrative costs required to prepare that information for you, but you should definitely receive the information. And in the era of electronic patient records, it is easier than ever to request a copy or printout for the patient. So why is it so hard to get your health care information? Part of the answer, no doubt, is that information is power. And in this case, control of your record means the ability to continue to treat you and bill for those services.

We encourage you to read and become informed on this subject. Take charge of your health. Reach out and interact with the authors or other contributors to the blogs we recommend. Over time, we will mention blogs in each of the areas in our links section, designed to increase independence.

The first such link is to the Project Health Design blog, and can be found at http://projecthealthdesign.typepad.com/project_health_design/2013/02/index.html

While the Project Health Design blog is a wealth of information on a number of subjects, this post is specific to patient access to health information. Please enjoy, and we hope you return here for future recommendations on becoming more independent in managing your health.

Becoming More Health-System Independent

This blog has been quiet for a while, and for a reason. We will undergo a bit of a repurposing.

Our major focus in the recent past was the implementation of Obamacare, with commentary on the major developments as they occurred. Going forward, however we will become more focused on our core message: People should become more independent in managing their health.

We are not suggesting that people stop seeing their doctor. We are saying “be informed, take control, know you rights”.

In that vein, we have published an expanded set of useful health care links, built around a theme:

To increase your level of independence, become informed in these nine general areas:

1) Understand your personal situation
2) Understand who is treating you
3) Understand the finances- yours
4) Understand the finances- theirs
5) Understand your alternatives
6) Explore online tools to help yourself
7) Understand your rights
8) Plan for the future
9) Know where to get help

Within this framework, we share over 100 links to governmental organizations, insurers, foundations, associations, news articles, databases and additional high quality sources as we become aware of them.

And as additional functionality becomes available on our site (today you will find this blog, a discussion forum, health community resource sections and an online health record), we will share that information here. The new, expanded links can be found at Health Tactics Resource Links

We hope you find them to be useful.

Make the shell smaller, please!

So, Obamacare has passed, been legally upheld by the Supreme Court and appears to have met its enrollment goals.  So how far have we really come?  Not that far.  Let’s look at the statements and actions of some of those who actually run a portion of the system:

We need look no farther than The New York Times, May 26, 2014 for two separate indicators:

First, in an article titled “Hospitals Look to Health Law, Cutting Charity”, the author describes how some large hospital systems are reducing the level of charity care they provide, encouraging patients to sign up for Obamacare instead.  Or perhaps Medicaid.  Or if the patient doesn’t qualify for coverage, bill them directly.  One big shell game, as long as the hospital doesn’t have to eat the costs.  (The author didn’t say all of this- the author just stated the facts behind the cost shifting).

Then, in the editorial section, same date, we see responses to an earlier article that blamed the pay of insurance executives for the high costs of care, and attempted to shift the spotlight away from physicians.  It was the responses (letters to the editor) that interested me.

No less than three physicians wanted us to know it wasn’t the doctor’s fault.  Not to be outdone, a hospital association executive pointed out that it wasn’t the hospital’s fault.  Finally a nurse wrote in saying guess what?  If we only paid them more… (actually I do think nurses are the “good guys”).

So it’s one big shell game, and it’s not the doctors, hospitals or nurses at fault.

Here’s the news, all of you experts- we know it’s one big shell game.  Just make the shell (costs) smaller!  So the part that falls on us is tolerable.

With all of your expertise and training, you must be able to conceive of a solution to the problems of the health system that is more sophisticated than simple cost shifting!  Two children can do that (“make him pay…no, no, make him pay!).

So now that Obamacare has passed, been upheld and met the enrollment goals, do we all now get to sit back?

No.  It’s time to focus on costs.  Aggressively.  Now.

#Obamacare- The focus needs to be on Costs.

Now that an estimated 6 million + people have signed up for Obamacare, how have we done?  Is 6 million enough? Is the mix of young and old the right mix? Did enough previously uninsured people sign up?

Long term success will hinge not on any of the above questions, but on what we do about costs.

I am not talking about the cost of the insurance premium.  After all, if you insure something expensive, the insurance policy will be expensive.  Rather, I am talking about the costs of the underlying products and services- physicians, hospitals, pharmaceuticals, devices and supplies.

Here are several steps we can take that will decrease the costs of care:

-Allow Medicare to use its purchasing power to negotiate with pharmaceutical companies

-Implement tort reform

-Expand the scope of practice of physician extenders

-Open more retail clinics

-Allow, and reimburse more at-home care

-Encourage, and reimburse, more remote home monitoring

-Allow the sale of insurance policies across state lines

-Encourage more price transparency.  Increase the publication of prices.

Every one of these suggestions is either not done today or is limited in order to protect the finances of a particular interest group, be it physicians, hospitals, pharmaceutical companies, insurers or attorneys.  And in all cases, it is the consumer who suffers, either through lack of access, higher prices or higher taxes.

Don’t misunderstand me- I support Obamacare.  I am glad to see it happening.  But we need to focus on costs. Aggressively.  Now.

Obamacare- So where have we landed?

Over the past few months, we have been bombarded with conflicting opinions about a number of issues related to Obamacare:

1)     The rollout.

2)     The “fix”, and the new rate of enrollments.

3)     Reduced hours for some.

4)     Some no longer feel the need to work, because insurance can be obtained through the exchanges.

5)     Higher costs for some, lower costs for others.

6)     An apparent slowdown in health care cost increases.

So is it working?

Regardless of the individual cases where a person’s premium might have gone up or down, we have begun the process of ensuring coverage for all.  We are not there yet, but the discussion has changed.

There are many who landed in a good position under the “old model”, where only some received coverage.  When restructuring our system so everyone can be covered, yes, some may have a little less.  But it is simply not morally correct to preserve the positions of those who were privileged enough to have health coverage at the expense of those who still need it.  Is it?  What do you think?

Is it acceptable that those who have health insurance receive “a little less” or pay “a little more” in order to extend health insurance coverage to a large number of additional people? Granted, “a little less” and “a little more” are relative terms.

Is it acceptable that those who have health insurance receive “a little less” or pay “a little more” in order to extend health insurance coverage to a large number of additional people?

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The only reasonable end-game is full transparency and significant downward pressure on prices.

As more and more people sign up for Obamacare, early indications are that there will be some adverse selection- more middle aged and older people, fewer young and healthy people.  This creates the “downward spiral” as those healthy people who signed up eventually drop out because prices are too high.  This worsens the risk pool and increases prices for those who remain.  Then more drop out.

This will accelerate as states and corporations discontinue coverage for some because they can now purchase coverage through Obamacare.  The people affected by this will mostly be retirees who are older and less healthy- more costs will be run through the exchanges.

If we don’t do something about the core issue of prices, this is not sustainable.

Whether the issue is people who only want catastrophic coverage but can no longer find it, or people who are forced to by coverage that cannot possibly apply to them (think 60 year olds purchasing maternity coverage), or part time workers whose hours are cut even further, there are many people who the market is presently ignoring, at great cost to the system as a whole and to those of us who participate in it.  And I am not talking about the price of insurance.  I am talking about the costs covered by the insurance- hospitals, physicians, drugs and devices.

We need to:

-force the publication of prices.  There have been several articles over the past year detailing how hospital and physician prices vary widely.  They seem unable to estimate prices until after you have received the service, then they are suddenly quite certain what you owe- and it’s a lot.

-broaden the scope of services for “physician extenders”, such as PAs and Nurse Practitioners.  If there is a “physician shortage”, the simple rule of supply and demand will ensure that they are in the “power position” in each and every discussion.  Allow more extenders, fix the shortage, reduce physician bargaining power and change the entire dynamic of the discussion with physicians.

-levy punishing fines, not token fines, when organizations are shown to have schemed the system, as one Florida hospital organization was recently shown to have done (driving up admissions and penalizing doctors who resisted).

-and yes- allow the market to provide products that are aligned with people’s needs.  If some want a catastrophic policy, they should be able to find one.  If a 60 year old couple does not want to buy maternity coverage, they should not have to.

I am not in favor of unfettered market freedom- after all, it is the market that gave us slavery and sexual trafficking.  I do believe, however, that a proper mix of regulation and market freedoms will provide the best answer.  Right now, we have swung too far in the direction of regulation, where attractive market options are forbidden by law.  We need to move back to a place where the market and regulations are in proper balance.  And if we provide transparency and allow the market to work, with some regulatory oversight, then prices will surely decline.

Is “Bending the Health Care Cost Curve” enough, or do we need to do more?

In an opinion in yesterday’s New York Times (November 29, 2013), Paul Krugman shares some optimistic thoughts about the slowing down of the rate of increase in health care inflation.

Let’s look at that sentence more carefully:  slowing- down- the- rate- of- increase.  In my opinion, this does not go nearly far enough.  Every other industry has experienced dramatic change over the past several years.  People have seen their home lose 30% or more of its value.  The replacement cycle on cars and heavy equipment has become dramatically longer.  Deep discounting has become the norm throughout the retail industry.

But all health care can do is slow down the rate of increase?

What concerns me most is that we are about to “bake this number in” to the national budget, permanently, with no end in sight.

While I am a strong supporter of Obamacare, and some number must be budgeted and planned for, what concerns me is the size of the number we are now prepared to take for granted.

It is widely known that the US spends more per-capita on health care than any other country.  By a wide margin.  In fact, the US spends 50% more than the second most expensive country (Switzerland) and two and a half times  what the average OECD country spends.  And we die younger.

So simply “bending the cost curve” is not enough.  We need to radically reduce the overall costs of care by a substantial number.  Like 30%.

If we reduced our per-capita costs by 30%, we would still have the most expensive system in the world.  And we would still die younger.   But maybe the rest of the country would be allowed to move forward as health costs no longer crowded out education, infrastructure and a host of other social programs.

If we reduced our costs by 30%, we would still be 80% more expensive than the OECD average. And we would still die younger.

Now, is 30% the right number?  I cannot say, as no one else can, exactly what the right number is.  But the point I am trying to make is that we need a drastically different dialogue, with a target drastically different than the status quo.  Bending the cost curve is playing around at the edges.  We need a radical fix, a radical reduction in costs, and the will to build and implement such a health care system.

What do you think?

Is “Bending the Health Care Cost Curve” enough, or should we reduce costs more dramatically?

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What should we do about Obamacare?

It has been painfully obvious during October that the HealthCare.gov site is not ready to serve large numbers of applicants.  One common response from supporters is that “Obamacare is more than a website”, which is true.  Getting past the panic and emotional arguments, let’s divide our thinking on the subject into two areas:

  1. How do we get people registered and signed up?
    1. Will the young and healthy sign up?  Why are some plans being cancelled?
  2. How will this all work out long-term?
    1. What happens when there is only 1 insurer in town?
    2. What about networks with restricted choice?

First, how do we get people registered and signed up?

This is actually the smaller question.  The site, along with other, lower tech means of registering (e.g. call centers), will eventually get fixed and people will be able to register through one method or another.  There may be some required policy fixes, such as a delay in imposing penalties, but over time, people will be able to register.  Compared to decades of a system where many had no hope of coverage, ever, even if it takes 1-2 years to get large numbers enrolled, we will land in a better place.

Please do not misunderstand- I am not saying “so what” to the problems, and I am not brushing them aside.  I am simply taking a longer view.

The more interesting question is, how will this work out long-term?”  I am focusing on two issues here, which have the potential to become, or already are serious structural problems within the industry.  These issues are:

  1. What happens when there are only 1 or 2 insurers in town, and prices have remained high?
  2. What about patient choice and the fact that many emerging networks are narrower, leaving out many popular hospitals and physicians?

Let’s discuss each of these in turn:

How do we get people registered and signed up? Will the young and healthy sign up?  And why are some health plans being cancelled?

The phrase “young and healthy” invites us to look at the young and healthy as one monolithic group with similar needs and issues.  The current dialogue masks, however, a major issue- one that half of this group feels very acutely- the prices for policies sold to young men will increase dramatically.  This is due primarily to the fact that men are now required to buy maternity coverage.  Let’s not discuss that men don’t have babies.  The present law has been crafted in a way that defines as “gender discrimination” any scenario other than men being required to buy maternity coverage.

I am not trying to start or continue a gender debate.  I am simply pointing out that asking young men to accept a large price increase because “it is good for everyone else” is asking a lot.  Please do not be surprised when young men decline to accept this dramatic price increase.

A related issue is the cancelling of policies presently in force because they do not meet the “Obamacare Standards”.  Same issue- a policy sold in the past to a young man, and which does not include maternity coverage, is no longer allowed to be sold.

So, taking away their present policy, offering only policies that include maternity coverage at much greater cost, and criminalizing those who do not buy these new policies, is a long term issue that will continue to weigh on the potential success of Obamacare.


What happens when there are only 1 (or 2) insurer(s) in town, and prices have remained high?

This is where the market takes over, and this will take time. Annual cycles.  When health plans in some states see that the neighboring state, or county, has only 1 or 2 health plans, and that prices are high, they will want to enter that market.  In an unrestricted market, large price differences will be evened out through competition.  This is exactly why we have such high prices now- competition has been stifled throughout the industry.

So my belief is that long term, new entrants will cause prices to drop in these areas where there is presently little competition.


What about patient choice and the fact that many emerging networks are narrower, leaving out many popular hospitals and physicians?

This is what will cause the large, “elite” institutions and networks to reduce their prices. 

When we have a situation where “you can go wherever you want, and somebody else will pay”, guess what?  Not only do consumers want to go the hospital of their choice, but that hospital is now incentivized to stand back, saying “that’s not enough money”, and to maintain that position until the payer, whether an insurer or the government, gives in and agrees to the higher prices.

In fact, we see a trend where hospitals are buying up competitors in order to reduce local competition, so the payers have nowhere else to turn, and are forced to pay the higher price. (By the way, these hospitals run very touching ads about how much they care about patients- all while selling the receivables to very aggressive collectors).

Anyway, leaving these hospitals and medical groups out of the network, and making it stick, eventually causes the “elite” institution to reconsider and arrive at a more reasonable price.

Short term, expect much complaining about “limited choice”.  Long term, if we do not give in, we will see prices decline- after all, a hospital cannot survive if they won’t accept patients from Medicare and the major local insurers.

I can’t resist ending with a thought question on this point- If we got to eat wherever we wanted, and somebody else paid, where would we eat?  And what would happen to the prices at those restaurants over time?



For Obamacare to work long term, we must have sensible answers to these structural issues, namely:

-Requiring young men to purchase maternity coverage will prevent many of them from enrolling, and turning them into criminals is not an efficient or effective answer.

-Markets with a small number of insurers must be made accessible to a larger number of insurers in order to create real competition.

-Limited networks must be allowed to remain.  If we bow to political pressure and let the “elite” hospitals and medical groups continue to charge much higher prices, the cost of health care will never become more reasonable.


There’s a lot here- what do you think?


Should men be required to buy maternity coverage?

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What should happen to people who do not buy health insurance as mandated by Obamacare?

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What should we do in markets where there is only one insurer and prices are high?

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What should we do about networks that exclude providers because their prices are too high (limited consumer choice)?

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It is time to break the provider “monopoly” in health care.

Many of us believe the health care discussion is actually about money, masquerading as “quality”.  We see a number of versions of this:

1) The wave of hospital mergers.  They are presented to the public as “improving quality”, but a recent article (AARP bulletin, June 2013) cites cost increases of up to 40% following a merger.

2) Network restrictions imposed by insurers.  Large health systems whose prices are rejected during contract negotiations generally claim that to eliminate them from a network will “compromise quality”.  Pressure is then put on the insurer to include the prestigious hospital system in the network at a typically higher cost.

We also see some promising developments:

1) A recent New York Times article (“Lessons in Maryland for costs at Hospitals”, August 28, 2013) describes some results of using hospital price controls and encouraging patients to receive care outside of the traditional hospital (lower costs, better quality statistics, more satisfied patients, and yes, more profitable institutions).

2)     An increase in the number of retail clinics, and an increase in the range of services they are able to provide.

There are some commonalities here:  when we, the patients, are no longer considered “captive” by the local providers, and instead have alternatives where we can go to receive our care, interesting things happen- costs tend to go down.  Quality tends to go up.

So what then, are the benefits of granting local monopolies to select groups of health care providers?  There is an interesting lesson now playing out in New York City:

A hospital in lower Manhattan, St. Vincent’s recently closed.  Prior to the closure, providers predicted a drop in “the quality of care provided to local residents”.  Politicians predicted a disaster.  And what happened?  Nothing!  Death rates have not soared, the community has not suffered- in fact, many urgent care centers opened up to fill the void.

Some may argue that access in the neighborhood has improved- minor conditions can now be seen efficiently and at low cost, as opposed to lengthy waits in an emergency room that is also serving those with contagious conditions.

I hope this trend not only continues, but accelerates.  A provider “monopoly” tends to benefit only the providers.  It is time for the consumer to be at the center of this system!

Health Care Reform- the Path Forward

We are moving towards a new equilibrium in Health Care- it won’t be perfect, but it will, hopefully, be an improvement over our present system.

There will be many adjustments required- some painful- on our way to this new equilibrium as all parties try to protect “the devil they know”.

In short, we are moving away from a system  a) with many uninsured, b) where employers provide insurance for some, c) where providers make hundreds of billions annually while delivering questionable quality, and d) where states must balance health costs against other priorities, such as infrastructure and education.

We are, hopefully, moving towards a system a) with far fewer uninsured, b) where employers provide insurance for most if not all employees, c) where providers incomes are more aligned with results, and d) where the balancing act faced by the states becomes somewhat easier to manage.

Now for the bumps in the road- some examples:

  1. Some states are avoiding or preventing an expansion of Medicaid and reducing benefits and eligibility as they try to protect state budgets.

  2. Providers are consolidating to increase their market power and negotiating leverage.  This is a powerful force designed to increase costs (which are provider’s revenues).

  3. Employers, as they try to protect profit margins, are reducing the hours of employees under a threshold so they will not be required to provide insurance for them.

  4. Young, healthy males are not signing up, largely because their costs, alone among all demographic groups, are expected to skyrocket.

My hope is that we, as a country will stay the course and see this through.  Early indications are that the individual market will see dramatic price reductions (notably New York and California).

Some states are taking a second look at the role of Medicaid- keep your eye on Arizona.

Medicare is looking at the “gaming” of provider reimbursement, where hospitals acquire physician practices for the sole purpose of billing for the same procedures under a new number (the hospital’s billing number), and getting paid more without doing anything  differently.  This bears watching as well.

But we need to do more- we need to provide products with a range of benefit options aimed specifically at the employees whose hours have been cut.  It does little to offer a “bronze” plan which only transfers risk to the insured (by covering 60% of costs)- why not offer a product where the insured can decline some coverage types- why should a childless person be forced to buy pediatric coverage?

We also need to offer products aimed at healthy young males.  It will be tough to get someone to accept a near doubling  of rates simply because it is good for everyone else.

As health care reform rolls out and gains traction, my hope is that “profiteering” behaviors will be limited and that products will be allowed to emerge that will address, in a market driven manner, the present shortcomings in the system-  specifically, we need an expansion of Medicaid, we need to stop the provider consolidations done solely to increase reimbursement, and we need insurance products aimed at part-time employees and healthy young males- not products that lock in a major subsidy for other demographic groups.

What should we do to encourage young, healthy males to enroll in Obamacare?

As Obamacare is implemented, there are predictions of significant cost increases for some.  This is driven by several issues, including the enrollment of millions of new insureds, many with conditions that haven’t been treated in a long time (pent-up demand), and the apparent reluctance of young, healthy males to enroll.

Regarding this second point, just what did we expect?

Young, healthy males are effectively being asked to fund a “triple subsidy”:  The healthy subsidize the sick, the young subsidize the old, and according to Kathleen Sebelius, “men will see costs go up, women will see costs go down”.  This is because the policies are being priced without regard to gender.

So is it hard to see why young, healthy males are not attracted to the plan(s)?  They are expected to pay significantly into a system that is designed, and priced, for the benefit of others.

Personally, I do not think that criminalizing them or bankrupting them is the answer.  Before you say “make them pay anyway!”, ask yourself:

1) if you are older, would you be attracted to a product that is designed and priced to cover serious sports injuries? (not golf injuries, but football injuries).

2) if you are sick, would you be attracted to a product designed for the healthy- say, one that charged very high co-pays and co-insurance for surgery?

3) if you are a woman, would you be attracted to a product designed around the needs of men- say, one that did not cover breast cancer?

So what should we do to encourage young, healthy men to enroll?  We might try offering some products that have their needs in mind, such as catastrophic coverage only, or products where maternity and pediatric coverage are optional riders.  Having them in the system at some level is preferable to not having them in the system at all.  And history is full of plans that failed because only the sick enrolled, which drives up the cost.  Do we want a repeat of that?

I am not saying that anyone is good or bad- I am simply saying that we should not be surprised that young, healthy males are rejecting a product that is designed and priced with the needs of others in mind.

What do you think?  If you have another idea, please leave a comment and tell us about it!

What should we do to encourage young, healthy males to enroll in Obamacare?

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Is it time to restrict consumer choice again?

In a recent New York Times article, (“A Health Provider Finds Success in Keeping Hospital Beds Empty”, April 24, 2013), the author discusses an Illinois based Accountable Care Organization that appears to be having some success in reducing health care costs.

The article goes on to describe several methods the ACO is using, such as care coordination and physician report cards.  But the article also questions the sustainability of savings and points to issues outside of the hospital’s or physician’s control.   These challenges include patients seeing “out of network” providers, who may not have an incentive to control costs at all.  In fact, these other providers may still be practicing under the unrestrained fee-for-service model, where providers have many incentives to increase the volume of services provided.  This increased volume, and related increased costs, will be counted against the Accountable Care Organization’s performance numbers and may affect negatively any reward or bonus the ACO may have otherwise earned.

Now this point is not unfair.  Yes, maybe the patient goes out-of-network because the ACO physicians don’t keep convenient hours, or maybe the quality is perceived to be better elsewhere.  But maybe the patient wants to go to the doctor they know, or the one who is closest.  Should the ACO be penalized for this?

So what should we do about this?  Should patient convenience trump other concerns?  Should all of us pay, through increased premiums, so someone else can visit whichever doctor or hospital they want, regardless of costs?  What should we do as a society?

Here are some thoughts:

a)      Should insurers ban out-of-network visits, meaning no coverage for them?

b)      Should out-of-network visits be made financially unattractive, by reducing coverage to something like 50%?

c)       Is it possible to exempt the ACO from the costs of out-of-network care (and if we did that, are we rewarding the ACO whose service is poor or whose hours are inconvenient)?

d)      Is there some other option?

What do you think?

How should the system treat visits to out-of-network providers that threaten the financial performance of Accountable Care Organizations?

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A Comment on the “Time” Article

A recent article in Time Magazine (“Bitter Pill-Why Medical Bills Are Killing Us”, by Steven Brill), did a fine job of thrusting into the spotlight the profiteering behavior of some providers in our health care system.  While the article covered a lot of ground, his discussion of the behavior exhibited by hospitals and hospital systems was particularly interesting.  That is where I will focus.

To summarize, hospitals are wildly inconsistent in what they charge for specific services and service packages.  By packages, I mean the room, the procedure(s), the doctors, and the drugs required to treat you.  The costs are frequently hidden, and if pressed, hospitals will quote from a greatly inflated “charge master”.  One result is “non-profit” institutions that are incredibly profitable, while their patients experience financial devastation.

It almost seems as if the behavior is somewhat predatory (my words).  So what should we do?

Let’s start here- hospitals should be required to post conspicuously a price list for the 100 most common services or service packages.

If you are considering a hospital for an uncomplicated childbirth or a knee arthroscopy or a hernia repair, you should be able to look at a list and see what it costs.  The price should include all services, tests, supplies, labs and doctors expected to be involved. If the hospital chooses to post it’s charge master, fine (as opposed to an insurance rate, which may be prohibited by their contract).  Posting the charge master will allow consumers to compare prices.  Even if you wind up in the hospital because of an emergency, you can transfer to a more reasonably priced facility once the immediate crisis has passed.

Just this would prevent, or at least lessen, some of the financial horror stories described in the article.

So what do you think?

Should hospitals be required to post a price list for the most common service packages?

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Large Premium Increases?

A recent article describes large, double digit premium increases being requested by health insurers, and allowed, in some cases, without objection by regulators in the various states.  Now just what did we expect?

Insurers will soon be required to cover all applicants, without the ability to deny coverage for pre-existing conditions.  Many people will now enter the insured population who have been uninsured, and sick, for years.  Socially, this is a very good thing.  Financially, it is very expensive.

Do we expect insurers to just absorb these costs?  No, we should expect these costs to be built into future premiums.  Consider- would State Farm sell you a homeowners policy while your home is burning?  Of course not.  And if we required them to, that policy would be very, very expensive.  And if we forced them to average the cost of the burning house- many actually, over all policies, the price for all policies would increase dramatically.

And so it is with health care.  Accepting patients who are already ill, while socially positive, is very expensive.

Now I am not a defender of insurance companies.  But I do understand their role, and the simple reality is that if what you are insuring costs more, the insurance policy will cost more.  So as our health care system continues to evolve, we need to focus on costs– the cost of going to the doctor, the cost of staying in the hospital, of paying for drugs and of paying for devices and equipment.

If costs continue to rise, insuring those costs will only rise as well.