Successful Health IT Deals Are Obamacare Agnostic

 

(A version of this Health Alert was published by Forbes.)

Obamacare has definitely benefitted the health sector. My Forbes colleague Zina Moukheiber makes the case the Affordable Care Act (Obamacare) and the HITECH Act of 2009 (which channeled 30 billion taxpayer dollars into Electronic Health Records) deserve the credit (or blame) for the explosion of health information technology investments. That is undoubtedly true for traditional Electronic Health Record (EHR) providers like Cerner or Epic, which were boosted by the HITECH Act. In addition, the recently signed Medicare “doc fix” will likely ensure they continue raking in money for a while, because the law increases the EHR burden on physicians.

However, other successful new health IT ventures have prospects quite independent of Obamacare’s risky future. Rather, they appear robust in the face of a wide range of possible futures for U.S. health reform. Because health care is so dependent on government, it is not surprising that adoption of effective IT in health care has lagged behind other sectors, where suppliers have to rely on customers — not government — for revenue. Nevertheless, even a sector so politically protected from disruption as U.S. health care must eventually give way to change. Three examples show this change can come from different directions, despite Obamacare’s straightjacket.

Hawaii’s Obamacare Exchange Closing After Spending $205 Million

 

If a tax credit falls from Washington, and no Obamacare exchange receives it, what subsidy does it make?

Despite over $205 million in federal taxpayer funding, Hawaii’s Obamacare exchange website will soon shut down.  Since its implementation, the exchange has somehow failed to become financially viable because of lower than expected Obamacare enrollment figures. With the state legislature rejecting a $28 million bailout, the website will now be unable to operate past this year. (Alexander Hendrie, Americans for Tax Reform)

This is kind of perfect storm: State-based exchanges have or will shut down, both because most of them rival the DMV for customer service and because there is no more federal money to pay for them.

On the other hand, the Supreme Court will soon issue its decision in King v. Burwell, which might terminate Obamacare tax credits in the federal Obamacare exchange, healthcare.gov.

By the end of the year, Obamacare tax credits might have nowhere to go, effectively bringing Obamacare to a halt. It will give Congress a great opportunity to re-open the health reform debate.

Have Employer-Based Health Benefits Dropped?

 

Just the other day, my analysis of the RAND Corporation’s survey of health insurance from September 2013 through February 2015 led me to conclude that “economic growth improved coverage more than Obamacare did.”

However, there are other sources that contradict the RAND survey’s conclusions about employer-based benefits. My Forbes colleague Scott Gottlieb, MD, reviews a new report from Goldman Sachs that estimates small employers dropped 2.2 million beneficiaries from coverage, a reduction of 13 percent from 2013.

Last year, Ed Haislmaier and Drew Gonshorowski of the Heritage Foundation concluded that nearly 3.8 million people lost employer-based coverage through June 2014.

Both the Goldman Sachs and Heritage Foundation analysts relied on data from insurers rather than beneficiaries. Nevertheless, I am at a loss to understand how people who lost employer-based benefits would not say so in a phone survey.

At the Health Affairs blog, Marc Berk issues a caution about the “quick turnaround” surveys that are exciting the Obamacare debate, noting that the government itself is relying especially on the Gallup-Healthways survey instead of sober estimates produced by its own Census Bureau and Centers for Disease Control and Prevention.

The surveys agree that more people are dependent on Medicaid and Obamacare exchanges have enrolled a few million. The great divergence is with respect to employer-based health benefits.

Electronic Health Records: Not Just An American Problem

 

A few years ago, this blog discussed the failure of government-dictated Electronic Health Records (EHRs) in the United Kingdom.

In Australia, the Liberal-National coalition government has decided to scrap the nation’s Electronic Health Record, blaming the previous Labour government for the current one’s failings. Unfortunately, the government plans to replace it with a new one, instead of leaving well enough alone:

The Abbott Government will deliver a rebooted personalised myHealth Record system for patients and doctors that will trial an opt-out, rather than opt-in, option as part of a $485 million budget rescue package to salvage Labor’s failed attempts to develop a national electronic medical records system.

Opt-out rather than opt-in? Doesn’t that sound kind of like a mandate? It’s an odd choice for a government that espouses free-market principles.

Malpractice By Electronic Health Record

 

Arthur Allen of Politico exposes yet another reason for doctors to fear Electronic Health Records: Their errors lead to lawsuits:

Medical errors that can be traced to the automation of the U.S. health care system are increasingly an issue in medical malpractice lawsuits.

Some of the doctors, attorneys and health IT experts involved in the litigation fear that safety and data integrity problems could undercut the benefits of electronic health records unless HHS and Congress address them aggressively.

“This is kind of like the car industry in Detroit in 1965,” says physician Michael Victoroff, a liability expert and a critic of the federal program encouraging providers to adopt EHRs. “We’re making gigantic, horrendous, unsafe machines with no seat belts, and they are selling like hot cakes.

Readers of this blog know why they are selling despite their serious flaws: The government has thrown almost $30 billion at hospitals and physicians to cause them to buy them.

Economic Growth Improved Health Coverage More Than Obamacare Did

 

05a941ec-8542-467a-97ad-fb1d4dc04d69_d1028errr(A version of this Health Alert was published by Forbes.)

The RAND Corporation has published a thorough analysis of Obamacare’s effect on health insurance that should have put an end to the Obamacare success narrative. Unfortunately, too many continue to confuse the effect of the delayed recovery with Obamacare. What the RAND study really shows is that employer-based benefits have been restored as jobs have started to come back.

The headline is that 172.7 million people, ages 18-64, are covered in 2015, versus only 155.8 million in 2013. The number of uninsured dropped by 16.9 million from 42.7 million to 25.8 million, falling from 21.5 percent to 13.0 percent of the population in that age group.

However, the RAND survey examines people insured or uninsured at a point in time, reporting changes from September 2013 through February 2015. The good news is the number of people with employer-based benefits increased by 8 million, from 111.9 million to 119.9 million (The total population is adjusted for death, aging and migration over the period.)  Digging deeper, it looks like this improvement would have been much higher, but for Obamacare.

Health Care Added One in Five Jobs in April

 

45,000 of the 223,000 jobs added in April were in health services, according to today’s Employment Situation Summary from the Bureau of Labor Statistics. This continues the trend seen in March. As shown in Table 1, jobs in ambulatory settings accounted for well over half of health jobs.

T1

Electronic Health Records Don’t Help Stroke Victims; And More Bad News

 

electronic-medical-recordNew research on over half a million stroke victims admitted to hospitals from 2007 to 2010 shows that there was no difference in quality of care for those admitted to hospitals with EHRs and those without:

The new study “is a wake-up call that we should heed,” writes Dr. John Windle, chief of cardiology at University of Nebraska Medical Center, in an accompanying commentary. Windle said electronic health records haven’t been proven to improve quality of health care, the health of large groups of people, or efficiency.

“An [electronic health record’s] first priority must be support of clinical care, not documentation for billing and reimbursement,” Windle said. (Randy Dotinga, HealthDay)

Zenefits Raises $500 Million More To Reinvent Small-Biz Health Benefits

 

Most of us buy small-business health benefits the way our grandparents did when they ran the hardware store. It’s a business in dire need of reinventing. Zenefits looks like the company to do it. The company that was one of the top venture deals in health care last year is looking to repeat, raising $500 million at a $4.5 billion valuation:

This is Zenefits’ third funding round in less than a year and a half. The company raised $15 million in its Series A last January, then added $66 million in an June Series B round that valued it at more than $500 million.

Zenefits offers a cloud-based software-as-a-service human resources platform for small businesses that tries to be an all-in-one solution for compliance, onboarding, payroll, health insurance, and other employee benefits. The key is that the software is free to businesses; Zenefits makes its money as a broker of services, for example earning a fee from health insurers who register new businesses through Zenefits. (Brian Solomon, Forbes)

Washington, DC: Rich World’s Worst Capital for Infant Mortality

 

Save the Children has a new report ranking 25 of the world’s richest capital cities by childhood mortality. Washington, DC is the worst. Prague, Stockholm, Oslo, Tokyo, and Lisbon lead.

But I think the international ranking was just to get headlines. The real point of the report is to emphasize differences in infant mortality between rich neighborhoods and poor neighborhoods in these rich capitals:

  • In examining infant deaths in D.C., Save the Children found that in 2012 the infant mortality rate in DC’s poorest neighborhood (Ward 8) was more than 10 times higher than the rate in DC’s wealthiest community (Ward 3).

  • In 2012 the infant mortality rate in ward 8 was 14.9 deaths per 1,000 live births. In contrast in Ward 3, the city’s wealthiest ward, the rate was 1.2 deaths per 1,000 live births.

I suppose that many will use this report to call for increases in Medicaid spending, which has increased relentlessly over the years without eliminating this difference.