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The Wall Street Journal posted an essay reviewing the impact of Obamacare. As one might expect, Obamacare is neither an unqualified success nor an unmitigated disaster (much to the chagrin of many political commentators). Overall, it seems that the legislation achieved some of its goals to a limited extent.

The Wall Street Journal posted an essay reviewing the impact of Obamacare. As one might expect, Obamacare is neither an unqualified success nor an unmitigated disaster (much to the chagrin of many political commentators). Overall, it seems that the legislation achieved some of its goals to a limited extent.

Significantly, 10 million Americans who were previously uninsured now have coverage. Unfortunately, most of people received care through the expansion of Medicaid, a program estimated to provide a benefit equivalent to about 20%-40% of its cost. The growth in healthcare spending slowed down for a few years, but it looks like it is picking back up again (perhaps attributable to the economy). So, the short-term results were mixed in many areas. What does seem clear, however, is that Americans became far more familiar with concepts such as deductibles and network coverage.

Consumers who shopped on the health insurance exchanges likely also have a better understanding of the trade-offs between deductibles, network breadth, and premiums. It's possible that this consumer exposure to the trade-offs and the underlying cost of health care might actually have a substantial impact on the industry in the long-term.

Even with just a few encounters with medical providers, we quickly learn that pricing for health care services is different than it is for other industries. How many other industries struggle to tell you ballpark pricing until after the service is performed? Health care consumers can also get lost in a sea of technical terms like deductibles, co-insurance, in-network, and formulary. An article published on Harvard Business Review's website explain yet another way in which healthcare pricing can be bizarre.

Even with just a few encounters with medical providers, we quickly learn that pricing for health care services is different than it is for other industries. How many other industries struggle to tell you ballpark pricing until after the service is performed? Health care consumers can also get lost in a sea of technical terms like deductibles, co-insurance, in-network, and formulary. An article published on Harvard Business Review's website explain yet another way in which healthcare pricing can be bizarre.

The article starts off by explaining that there is actually little pressure on pharmaceutical companies to reduce pricing -- after all, who would want to deny patients potentially life-saving medication? No surprise there. What is surprising is when organizations (known as pharmacy benefit managers, or PBMs for short) that are specifically paid to help their clients save money actually end up better compensated when they don't. The authors explain that this quirk can happen as a result of PBMs getting to keep a percentage of savings that they negotiate above a certain fixed amount. While that scheme may have worked when drugs cost less than $500, the economics become vastly different when the prices are substantially higher (an increasing trend in the last several years). The article raises questions of when and how large employers will react to the new reality of higher prescription costs. Until then, this conflict of interest is just another example of how pricing in health care can be so difficult to understand.

There has been a movement afoot to bring more transparency to health care, especially in terms of pricing. One of the ways that this has been evident has been how some states have been trying to create what are known as "all-payer" databases. The idea is that as all payers within a state submit their claims information into a common database, researchers and policy analysts (and others) can pore over the data and gain insights. Ideally, payers (and others) would learn enough about pricing to help consumers select better value options when selecting medical care. Some would argue that for these databases to truly be effective, they must include the vast majority of claims for a given population.

There has been a movement afoot to bring more transparency to health care, especially in terms of pricing. One of the ways that this has been evident has been how some states have been trying to create what are known as "all-payer" databases. The idea is that as all payers within a state submit their claims information into a common database, researchers and policy analysts (and others) can pore over the data and gain insights. Ideally, payers (and others) would learn enough about pricing to help consumers select better value options when selecting medical care. Some would argue that for these databases to truly be effective, they must include the vast majority of claims for a given population.

Interestingly, some companies have sued to keep their own payments private. A paper in the New England Journal of Medicine reports that 63% of employees in the US receive coverage through self-insured firms, making up a large fraction of the total population. If the majority of these self-insured firms were to not report (whether because of the cost of creating the reports or because they want to hide data), these all-payer databases would take a huge step backwards. The US Supreme Court will hear the case soon, and the decision could have meaningful ramifications for transparency within health care.

Ezekiel Emanuel wrote about why our intuition regarding getting the "best" doctors (specifically cardiologists) might be wrong. Apparently, research published in JAMA Internal Medicine found that certain truly sick cardiac patients fared better when senior cardiologists were not present. Emanuel speculated why this might be the case (research ability vs. clinical ability, or more unnecessary interventions), but the cause is unclear.

Ezekiel Emanuel wrote about why our intuition regarding getting the "best" doctors (specifically cardiologists) might be wrong. Apparently, research published in JAMA Internal Medicine found that certain truly sick cardiac patients fared better when senior cardiologists were not present. Emanuel speculated why this might be the case (research ability vs. clinical ability, or more unnecessary interventions), but the cause is unclear.

This is clearly a counter-intuitive finding: if your uncle were undergoing a heart-attack, would you rather have him treated by a cardiologist with decades of experience or one recently out of residency? I haven't read the actual papers themselves, but the conclusion points to why proxies are limited in their usefulness. We assume that patients will fare better under the care of experienced physicians, and therefore, we might consciously look for experienced physicians. However, it's far more informative when prospective patients can actually see risk-adjusted outcomes over a certain volume of procedures; we simply rely on experience (and other proxies) because we can't get access to the data that is closer to what we are looking for. The medical industry has been reluctant to release this type of information at the individual physician level (for some good reasons, and some bad reasons). It'll be interesting to see over the next decade if attitudes towards this type of information changes, especially since in some cases, it can literally be a matter of life or death.

Open enrollment season is upon us and many people are reviewing their options for health insurance. The New York Times reported that many consumers feel that they still cannot afford health care. The twist in this article is that the people mentioned weren't complaining about insurance premiums, but rather their deductibles (the dollar amount that a patient is responsible for paying before the insurer starts contributing, excepting certain things such as preventative care). Understandably, there's a tradeoff between saving money upfront (lower insurance premium) and saving money later if something happens (lower deductible). The same tradeoff applies in automobile insurance.

Open enrollment season is upon us and many people are reviewing their options for health insurance. The New York Times reported that many consumers feel that they still cannot afford health care. The twist in this article is that the people mentioned weren't complaining about insurance premiums, but rather their deductibles (the dollar amount that a patient is responsible for paying before the insurer starts contributing, excepting certain things such as preventative care). Understandably, there's a tradeoff between saving money upfront (lower insurance premium) and saving money later if something happens (lower deductible). The same tradeoff applies in automobile insurance.

The current administration has been touting how affordable health insurance is under the Affordable Care Act. Indeed, many who literally were previously unable to purchase health insurance on their own can now do so. However, as the article points out, this type of catastrophic health insurance isn't what many had in mind, leading some to drop their insurance policies. To some extent, this points to the marketplace perhaps inadequately informing consumers about the implications of their choice. To a greater extent, that health care is either too expensive in the premiums or in the deductible points to medical costs themselves being expensive. One person was quoted as saying, "I'm better off not purchasing that insurance and saving the money in case something bad happens." That statement suggests a lack of understanding that if something truly catastrophic happens (e.g. cancer requiring treatment), the savings in monthly premiums -- even when added up over a lifetime -- would not be sufficient to cover the current costs of standard treatment.

The premium versus deductible tradeoff gives people a chance to guess how they will come out ahead, but it doesn't actually address the underlying cost structure of health care (discussed, for example, in Steven Brill's "Bitter Pill"). I don't think there will be an easy answer to that problem (e.g. regulating physician fee schedules comes with its own undesired side effects), but I think that problem is one that will need to be addressed. The Affordable Care Act is only one step -- albeit a big one -- in America's journey to resolve its health care issues.