Price-fixing in the U.S. healthcare system, by the numbers

A bill arrived for a (routine and negative) medical test today. Due to the artificially restricted supply, the provider attempted to fix the price at $150 (ask a physician who #resists Trump and welcomes migrants if European doctors should be able to come to the U.S. and start offering medical services!). Via the miracle of monopsony, however, Blue Cross dictated to them a price of $47.08 (why the .08?) and thus a paper-in-the-mail process was initiated to collect the cost of a local restaurant meal (annual deductible not yet met so this $47.08 has to be paid on top of the $10,000-ish cost of the policy).

My favorite thing about Bernie Sanders is that he is the only politician with the courage to say “this is dumb; we should try something else.”

Sanders seems to have done well in Iowa (though not as well as the politician that I thought, six months ago, should be #1 among the Democrats). Maybe the enthusiasm for Sanders is partly driven by consumer rage on receiving explicit disclosures like this of how the U.S. health care system is not representative of an ordinary market (you can’t buy food insurance and get 2/3rds off your next McDonald’s bill; McDonald’s doesn’t make that much profit at its headline prices).

I wonder if Sanders’s opponents from all parties (Socialist, Green, Libertarian, Democrat, and Republican) would be wise to start their fight against Sanders by proposing a law that forbids providers to charge a higher price to individuals than to insurers.

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Colds will become less prevalent due to cashless economy?

From a Mexican’s point of view, American counter-service restaurants and ice cream stands do something completely unsanitary: the person handling the cash is also the person handling food.

At least in the Shanghai region, I noticed that the Chinese usually separate food-handling from customer-handling (not really “cash handling” since WeChat is the typical method of payment.)

I’m wondering if Americans will get fewer colds as we transition to a cashless economy. If everyone who goes to a counter pays by inserting a credit card into a machine or waving a phone, shouldn’t there be less chance of an infection being passed from customer-to-clerk-to-customer?

I couldn’t find good research on this subject. China would be an interesting case study since they have gone mostly cashless in a short period of time. Anecdotally, it was rare to see someone (Shanghai in November) suffering from a cold and I never got any hint of food poisoning.

But maybe this isn’t interesting because the effect will be small and swamped by increased transmission of disease due to increasing population density (from (a) population growth, (b) migration and urbanization).

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Air pollution has an insignificant effect on life expectancy?

It seems obvious that people who breathe filthy air would die young. Yet people in Shanghai live 13 years longer than those in poor provinces (source), which are presumably less densely populated and therefore might have cleaner air (but maybe they are breathing indoor smoke from coal used to heat?).

Another possibility is that people in Shanghai are being slowly killed by air pollution, but they’re so smart that their high IQ gives them a longer life expectancy to begin with. (Scientific American) Without the massive welfare state that the U.S. operates, it is tough for a person without a high IQ to move to Shanghai and thrive there (apartments are comparable in price to the most expensive U.S. cities; see Forbes).

There is supposedly a five-year difference in life expectancy in north versus south China due to worse air pollution from heating with coal in the north (source). But, again, how to square that with the 13-year boost in life expectancy in Shanghai, a city that is spectacularly polluted.

Mist or filth?

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Hospital price lists are a good idea, but let’s wait until 2021?

“Hospitals Sue Trump to Keep Negotiated Prices Secret” (nytimes):

The nation’s hospital groups sued the Trump administration on Wednesday over a new federal rule that would require them to disclose the discounted prices they give insurers for all sorts of procedures.

The administration wanted the disclosure rule, which would go into effect in 2021, to allow patients to better shop for deals on a range of services, from M.R.I.s to hip replacements.

It is the 2021 part that fascinates me. There is enough time between now and 2021 for China to build an entire Manhattan worth of office and residential space within each of a few of their larger cities, to open another 2,000 miles of high-speed rail, to add some metro lines in their secondary cities, etc.

If hospitals have all of these prices in their computer systems (funded by tax dollars) and this is a good idea, why wouldn’t the regulation be for them to push them out onto their web sites within a few months?

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Is ingesting plastic actually fine for our health?

“Those fancy tea bags? Microplastics in them are macro offenders” (Guardian) says that excessively rich and/or pretentious people who drink tree from nylon bags are ingesting a lot of plastic (bonus: they’re also trashing the environment by consuming way more in energy and materials than folks who drink tea made from paper tea bags).

One local source for ingestible plastic is Tea Forté. Customers of this high-cost brand have been getting massive doses of plastic, far above what the turbine-powered helicopter moms fear kids might get from eating food cooked in a Teflon pan (example paranoia: “I do like to back up my points with scientific studies, but often it takes many years for a complete and acceptable study to make useful conclusions. With something like Teflon cookware, there are lots of vested interests so it could be a few more decades before valuable health information is known.” (i.e., we can predict Earth’s temperature 100 years from now, but 63 years of history with Teflon pans is not enough to say anything definitive; it is complicated by the fact that companies are getting insanely rich selling $10 pans at Target and using the profits to corrupt academic science)).

Have the drinkers of these fancy plastic-packaged teas done the required experiment for us? Their bodies might be half plastic by now and yet they aren’t dying off at an extraordinary rate.

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Why would health care look to startups for answers?

Several executives speaking at a recent 25th anniversary celebration for a health care informatics lab spoke hopefully about solutions that might be forthcoming from startups yet to be founded. This struck me as odd. A hospital is a huge enterprise (I learned that Children’s for example, has more than $2.3 billion/year in revenue). Health care is 18 percent of U.S. GDP (compare to 4.5 percent for Singapore where people failed to realize that they needed to take opioids 24/7 and also inhale medical marijuana).

When an industry is this big, why wouldn’t it be the biggest tech companies, e.g., IBM and Amazon, that deliver solutions? The current Epic system is clunky, but why wouldn’t the Epic research lab be the place where useful innovation happens? IBM and AT&T were slow-moving, but IBM Watson and AT&T Bell Labs were the main sources of useful innovation in their day, not a handful of engineers in a garage.

What has changed that we think it will be the startups that inherit the Earth and that fix what ails us? The availability of venture capital such that nobody capable of accomplishing anything wants to work for a straight salary anymore?

Separately, a friend who is plugged into Silicon Valley told me about the latest trend. VCs will try to fund a company around a bunch of former employees of a single big company, e.g., Xooglers (former coders on the Google plantation). This protects the VC from downside risk. No matter how lame the idea is or how poor the execution, even if the startup is a complete failure it will likely still be acquired by, e.g., Google, simply because the big company wants this set of employees back and they are known quantities. The VC fund will at least get most of its money back.

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The hospital 25 years from now: a tower of ICU

At a celebration of a health care informatics lab’s first 25 years, Boston’s most experienced hospital leaders came in to speculate on what an American hospital would look like in 25 years. The experts agreed that more procedures would be doable on an outpatient basis. So our hospitals would essentially empty out? No! They’ll be filled with people who are incredibly sick and whose cases are extremely complex: “A Tower of ICU.”

David Nathan, who graduated from Harvard Medical School in 1955 and eventually became Physician-in-Chief of Children’s and then President of Dana Farber, pointed out that it would be difficult to train young people in this kind of environment where there are no simple cases. (He also shed light on the economics: “You cannot make money doing research. And teaching is hopeless.”) John Halamka, a doc-turned-CIO, quipped “Don’t teach the Krebs cycle; teach the revenue cycle.” Sandra Fenwick, the CEO of Children’s (a $2.3 billion/year enterprise), said that hospitals like hers would see “far more complex disease,” with the simpler problems being handled at home, by primary care providers, and community hospitals.

What about information technology? Electronic health records haven’t resulted in the savings, efficiencies, or improvements that were promised by the vendors and the Obama Administration. In the rare cases when a data exchange is accomplished from one hospital to another, the treating physician is “flooded with useless data”. There is no practical way, currently, to pull just the relevant material from another institution.

Yet computers will be critical to treatment, the speakers believed. “The doctor will Google you now,” was the joke circa 2000, but machine learning will soon transform this into “The Google will doctor you now.” Diagnostic procedures are producing more data than a human can inspect. “The average number of CT slices used to be 30,” one physician said. “Now it is 300. A radiologist cannot look at 300 slices in 10 minutes.” (It was noted that Vinod Khosla predicts that 80 percent of doctors will be obsolete; perhaps we should listen to him since he was smart enough to leave Kleiner Perkins before Ellen Pao could have sex with him.)

How about payments? Atul Butte envisioned a realtime link from Epic to the payor and every order will be screened instantaneously as currently happens with credit card transactions. The doctor will order an expensive test and the insurer will immediately come back with “no.”

(You might ask how good a job hospitals and doctors are doing today. A Harvard-trained pediatrician at the conference said “Only once I had kids did I realize that all of the advice I gave to parents during my pediatrics training was bad advice.”)

What about the disastrous patchwork of private insurance, government largesse, uninsured and undocumented migrants, and self-pay surviving another 25 years? The panelists thought that we would enter the Glorious Age of Single-Payer rather than continue as an international rogue outlier. Germany was cited as a success story for single-payer (Wikipedia says that Germany has a “universal multi-payer health care system”).

Systems-oriented doctors have always loved aviation. See The Checklist Manifesto, for example. The docs at this meeting enjoyed the phrase “Care Traffic Controller” for the physician of the future, coordinating all kinds of services to benefit a patient. None of them seemed to have reflected on the fact that the primary function of an Air Traffic Controller is to separate planes, not bring anyone together.

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Business and software blueprint for a personal portable medical record

Good news: I can share with you a complete functional and business blueprint for how to make a personal portable electronic medical record.

Bad news: The plan is from 1994 and almost no progress has been made toward any of the goals set forth 25 years ago.

A slide for the Guardian Angel system appeared during a 25th anniversary celebration for a health care informatics lab that I played a small role in starting. From the big blueprint:

Current health information systems are built for the convenience of health care providers and consequently yield fragmented patient records in which medically relevant lifelong information is sometimes incomplete, incorrect, or inaccessible. We are constructing information systems centered on the individual patient instead of the provider, in which a set of “guardian angel” (GA) software agents integrates all health-related concerns, including medically-relevant legal and financial information, about an individual (its “subject”). This personal system will help track, manage, and interpret the subject’s health history, and offer advice to both patient and provider. Minimally, the system will maintain comprehensive, cumulative, correct, and coherent medical records, accessible in a timely manner as the subject moves through life, work assignments, and health care providers.

This would be awesome to have today and yet we are as far away from it, I think, as we were in 1994. Sobering!

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Why would isolated Eskimos get colds?

Welcome to cold and flu season, especially for those of you with kids in school.

The prevailing wisdom about colds is that the virus is passed from person to person, right? “Why can’t we cure the common cold?” (Guardian, 2017, about “a breakthrough”):

The only failsafe means of avoiding a cold is to live in complete isolation from the rest of humanity.

Eskimos in the pre-machine age came pretty close this “complete isolation” and yet, in The North-West Passage Roald Amundsen reported from Gjöa Haven, about as isolated as humans can be:

The return of the Eskimo again imparted a lively and variegated aspect to our little harbour. They came on board, as a rule, generally of an evening in great crowds to visit us or to introduce new friends. They were always gay and happy, and we became very good friends with them. It has always been believed that the air in the Polar regions is absolutely pure and free from bacilli; this, however, is, to say the least, doubtful, in any case as far as the regions around King William Land are concerned, for here the Eskimo nearly every winter were visited with quite an epidemic of colds. Some of them had such violent attacks that I was even afraid of inflammation of the lungs, and as nearly every one of them contracted the illness, it must in all probability have been occasioned by infection. Happily those on board the “Gjöa” escaped, but we certainly took due precautions. We had great trouble to put a stop to the spitting habit. The Eskimo are very bad in this respect, but when we had them some time under treatment they improved and paid more attention to our prohibition.

A bit later in the same book:

Summer is, one may say, rapidly succeeded by winter; the lakes freeze over, and the snow falls; but with the Eskimo there is a short period which may be described as their autumn, and as their most dismal season, just before the ice is thick enough to be used as building material. Superstition prevents them from lighting fires indoors. Their homes are, therefore, miserable in the temperature which then prevails, and they live in a raw cold, damp atmosphere, in which all, without exception, contract severe colds.

There was some travel among Eskimo communities back then, of course, but it often took so long that people would have gotten over their colds by the time they showed up at the destination settlement.

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True cost of Medicaid is 2X headline cost?

I recently attended a talk by the CEO of a hospital with $2.6 billion in annual revenue. She noted that patients on Medicaid are 40 percent of the census and that Medicaid pays only 50 percent of the cost of treatment. In order to at least break even at this not-for-profit, therefore, she has to charge privately insured patients enough extra to make the books balance.

(A doc who was formerly Physician-in-Chief of this hospital and then president of another hospital said “you can’t make money doing research” and, financially at least, “teaching is hopeless”.)

This might explain why apparently healthy people are paying such big premiums. “Employer Health Insurance Is Increasingly Unaffordable, Study Finds” (nytimes):

A relentless rise in premiums and deductibles is putting insurance out of reach for many workers, especially those with low incomes.

Instead, she quit her job last summer so her income would be low enough to enroll in Medicaid, which will cover all her medical expenses. “I’m trying to do some side jobs,” she said.

The average premium paid by the employer and the employee for a family plan now tops $20,000 a year, with the worker contributing about $6,000, according to the survey. More than a quarter of all covered workers and nearly half of those working for small businesses face an annual deductible of $2,000 or more.

Annual Medicaid spending is supposedly roughly $600 billion per year, about 3 percent of GDP. But if hospital-related charges are the majority of Medicaid costs and, in fact, the hospitals are recovering half of their expenses from unrelated privately insured patients, the true cost of Medicaid to Americans is closer to $1 trillion per year (about 5 percent of GDP, meaning that people who work 40 hours/week have to stay at work on Friday from 3-5 pm to pay for Medicaid).

Note that this off-books funding for Medicaid is done in a regressive manner since the money is extracted silently from all Americans with employer-affiliated or other private health insurance. I.e., the cost of a health insurance policy also contains a hidden tax to pay for about half of Medicaid (and also to pay for the uninsured who throw out the hospitals’ $100,000+ bills?).

[Anecdotally, we know plenty of folks in Massachusetts who are careful to refrain from earning more W-2 wages than the thresholds for public housing and MassHealth (Medicaid) eligibility.]

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