Slashdot Mirror
How Big Data Is Destroying the US Healthcare System
KindMind writes "Robert Cringely writes on the idea that technological advances have changed the health care system, and not for the better. The idea is that companies now rate individuals instead of groups, and so move to a mode of simply avoiding policies that might lose money, instead of the traditional way that insurance costs were spread over a group. From the article: 'Then in the 1990s something happened: the cost of computing came down to the point where it was cost-effective to calculate likely health outcomes on an individual basis. This moved the health insurance business from being based on setting rates to denying coverage. In the U.S. the health insurance business model switched from covering as many people as possible to covering as few people as possible — selling insurance only to healthy people who didn't much need the healthcare system.'"
Is this the real Robert X. Cringley, or the dishonest Sears Robert X. Cringley.
"National Security is the chief cause of national insecurity." - Celine's First Law
Insurance companies can do what they like - who are we to tell them what policies they can and cannot agree to? Furthermore, by keeping the future-sick out of the pool, they lower costs for the patriotically healthy.
Down with Statism! Towards a Individualist Future for All!
That will require a government solution. Either laws preventing health insurance companies from turning down coverage on individuals in that manner, or an actual heath care system for all and an end to regular private insurance.
Or we can go full capitalist and just get rid of health insurance, then the cost of heathcare will have no choice but come down because almost no one will be able to afford the service (causing the providers to go out of business).
It's to their credit that we as a culture see them as the gateway to health care, and they have done many, many things to insure that people don't interact directly with providers, but in the end, they are middlemen. Nothing more. They do not provide care. Doctors, nurses, clinics and hospitals do. And, given the current state of things, they have done nothing to control costs.
Big Data isn't destroying the US health system. It's the lack of coverage, for-profit insurance protecting their margins by charging everyone more and more to do less and less, to deny payment (and therefore care) so that people get so sick that they lose their jobs and their coverage, passing on the burden to providers and taxpayers that, by law, can not deny essential care. It's a system that only pays up when absolutely necessary, that does not to help people stay off of the doctor's office.
It's a culture that insists that chronic illness or disability is a moral failing and that it is the fault of the person for merely being ill. It's the insistence that health is a privilege, not a right. It's not some computing trend that insurance companies are using to discriminate. Insurance companies have been doing that forever.
This is not destroying the healthcare system - it is (potentially) destroying the health insurance industry. The two are different things.
The auto insurance industry has had very fine grained data on drivers and their habits for many, many years. That hasn't affected the auto industry at all, and it doesn't seem to have materially affected the auto insurance industry either.
A business that makes money by turning customers away does not lend itself to "free market solutions".
So Obamacare prevents companies from refusing coverage or dropping it when the customer gets sick.
The ability to deny coverage to higher risk individuals has been eliminated with Obamacare, and that's a good thing. If you are filthy rich you cover yourself. If you are poor you are covered by the government. If you were middle class and had some health condition you were screwed if you didn't have employer-based insurance. It didn't take much to be denied - things like macular degeneration or asthma or hyperthyroidism would deny you. One big sickness away from bankruptcy. In the richest country in the world.
Great timing to have an article about insurance companies using big data to isolate individuals, when the previous article is about researchers putting together a database of people's family ties...
http://tech.slashdot.org/story/13/10/29/2223231/genome-hacker-uncovers-13-million-member-family-tree
Medicare Bills Rise As Records Turn Electronic: The goal was not only to improve efficiency and patient safety, but also to reduce health care costs. But, in reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care. Hospitals received $1 billion more in Medicare reimbursements in 2010 than they did five years earlier, at least in part by changing the billing codes they assign to patients in emergency rooms, according to a NY Times analysis.
Several years ago, I was called by the company providing the extended warranty on my appliances. The were offering me a renewal of the warranty. I said I'd only renew on the dishwasher. They responded that it was the only appliance they wouldn't cover. When I declined the extension, they reminded me that things are more likely to break the older they get.
I didn't feel like pointing out the reason they were declining coverage on the one appliance was probably because it was the only one that needed to be repaired, and twice at that. As such, it would be the most likely to fail again. And it did.
Still don't make it right though.
We'd better get used to things being more "personalized," this is what we're moving to.
Various economic (and business) theorists have pointed out that this is part of a general pattern that's well understood: Insurance is based on spreading the cost of unpredictable events over a population, so that the victims of such events aren't bankrupt/homeless/dead/whatever if a disaster hits them. Insurance is basically a gambling game. If an event becomes predictable, insurance no longer works, since only those susceptible to a disaster will want insurance, but the insurance companies will refuse to sell policies to exactly those people.
A classical textbook example is flood insurance. There are many cases where the probability of a disastrous flood event has become predictable. The people and companies in the high-risk area want insurance, but the price is so high that a policy will bankrupt them. Such "insurance" can then only be provided by the government, but in reality, it's more in the nature of planned disaster prevention/recovery than insurance.
Various other theorists studying the medical field have been predicting that this will rapidly happen in medicine, too. Medical insurance made sense when most diseases were poorly understood, and it was impossible to predict with any accuracy who might be susceptible to which medial problems.
But we are getting more knowledgeable about such things. Medical problems are becoming much more predictable in general, and many major medical tests have much better accuracy than a few decades ago. Again, the inevitable result is that insurance companies will get access to the information, and will refuse to sell coverage (or will price it at bankruptcy levels) to people whose tests predict imminent medical problems. Eventually, this will mean all of us. This is how insurance has always worked, and medical insurance is not significantly different.
(Well, except for the fact that we know the exact probability that each of us will eventually have a major medical problem: 100% ;-)
Insurance isn't medical care. it's what insurance always is: a way of spreading the cost around in an unpredictable world. It only helps if the problems are unpredictable, but don't hit everyone. Medical problems are becoming more predictable, so medical insurance is slowly becoming irrelevant and unworkable.
In summary: The real problem here is using "insurance" to pay for health care. We don't need insurance; we need health care. As medical knowledge improves, the insurers will do what they always do: They'll collect premiums until just before you are likely to need something expensive, and then they'll refuse to renew your coverage. That's how their business works, when knowledge becomes available and the results of a gamble can be predicted. The "Free Market" system rewards companies that get good at this, and those that aren't as good go out of business.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
If you think that America's foremost healthcare problems have anything at all to do with technology, you are hopelessly deluded.
Kind of bizarre that this whole jeremiad seems to ignore the fact that the Obamacare reforms ban exactly this practice starting in 2014? This is responsible for a lot of the disruptions to the market we're seeing now -- some young healthy people are going to be paying more, and some older sicker people are going to be paying less. (The other disruptions are that some of the old policies had coverage caps that wouldn't have covered expensive catastrophic illnesses; that's also banned, and their replacements are more expensive.)
If you take out the ability of insurance companies to selectively deny coverage (which the ACA does), this ability to model outcomes can enable new more effective ways of paying doctors for care and hopefully improving outcomes. Given an expected outcome, an insurance company can pay for improving that outcome rather than just paying for every test run or treatment rendered.
Think about it from the point of view from the insurance* provider...
If one provider takes on coverage for "suspected losing cases", then they will go out of business, especially if their competitor is always only taking "profitable cases".
Really, doesn't it all boil down to charity and one's lot in life? As a society, it would be nice to provide the basics, such as trauma care, like a few sutures to stop some bleeding, fixing broken bones, toss in some antibiotics, etc. because that is cheap.
However, everybody dies sooner or later. rich or poor.
Basic needs are one thing, but then there are "wants"... if you want to live? too bad, everyone dies. You want transportation? Society says the public bus is good enough. Want a chauffeur driven Mercedes? Earn it. Need an antibiotic? Society says, yeah, hear ya go. Want to extend your life with an expensive procedure? Earn it.
* don't confuse healthcare with insurance.
This is slightly off topic, but I think it's not just the application of computing power to medical data, but the application of computing power to control and recover a lot of costs has generally been so successful that I think it's actually cutting the "slack" out of the economy and contributing to the decline of the middle class and growing economic inequality.
They're shaving the savings off the top and putting it in their own pockets, but the economic byproducts of the savings (cheaper goods) doesn't offset the economic loss of the savings not being spent on goods and labor, like additional inventory or additional workers.
Say a business sells a widget for $10. Their cost to make the widget is $4 and because of imperfect data/processing, sales forecasts, shipping, etc are all less accurate. They have to carry inventories to meet customer needs. Inventories require workers, facilities (which need construction...), they have to buy more raw materials. So $2 is added in overhead to the $4 and the profit on the widget is only $4.
With improved data/processing, they gain efficiencies. They carry as close to zero inventory as possible. They buy less raw materials. Need fewer workers. Smaller facilities (...less construction, fewer carptenters, less building materials, less ....) and so on. But the nominal cost of the widget doesn't go down, but the margin increases to $5 per widget because they save $1 in costs.
Since the price of the widget doesn't go down and at best rises slower, the consumer is only marginally benefitting, especially since the depressed employment resulting from greater operating efficiency results in lower wages, further mitigating any price declines or slowing price increases.
The $1 that was previously "lost" on administrative costs is now executive salaries, bonuses and benefits where it produces less economic impact than had it been spent on productive economic activity.
The fact that a majority of Americans get no-questions-asked health insurance through their employers is exactly the problem and why we can't implement a sane system like the rest of the civilized world. Too many people think it's just fine the way it is.
And it is "just fine", until you decide you want to become self-employed and start your own business. Then all of a sudden, oops, you have a pre-existing condition? Sorry, no insurance for you. Or maybe you get laid off from work and can't find another job for a long time (hello, recession!). Sorry, no insurance for you. Or you're young and the only thing you qualify for is an entry-level job that doesn't offer health insurance as an employee benefit. Sorry, no insurance for you.
People who've worked stereotypical job-with-healthcare-benefits all their life can't fathom what it's like to not be in that position. And most importantly, they don't have a good understanding of how easily they could lose their nice job, along with their health insurance, in an instant and through no fault of their own.
The only reasonable health insurance system is to put absolutely everyone in in the same risk pool from birth until death. Anything else ends in having to tell some people, "Well, better hope you die quickly."
Any successful business man will tell you that there is such a thing as a customer you don't want. Ones that tie up your employees and resources are bad. It's only when you're selling commodities with a fixed price and a high turnover rate (Milk, eggs, oil, beer) that you can take all comers.
At the risk of being modded troll, let me say that that's the trouble with Capitalism. The real world doesn't fit into it's principles and ideas. Health care is too complex and purchased too rarely to make Capitalism a good fit for acquiring it. The classic example is that it's tough to comparison shop on a heart transplant....
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
I always think of this when I think of evidence based medicine. It is a reminder that the details of implementation are important, often more important than the big picture ideology surrounding them.
"First they came for the slanderers and i said nothing."
No, looking at it from the outside [I'm not in/from the US, and rarely visit], the Republican's seems entirely against it because Obama is for it. They can only win if Obama and the Democrats lose. How it affects the American public is a distant second.
For example, way back, the Democrats tried to start healthcare reform with "Lets start with the proposal John McCain publicly came forward with during his run for the Presidency." Republicans response "No".
They are unable in any way, shape or form of publicly saying ANY aspect of the ACA is good, simply because it was put forward by a Democrat.
Sleep your way to a whiter smile...date a dentist!
You go in for an oil change. It costs $5 no matter what. You get a statement from the auto insurance company that is "not a bill" which is a good thing, because it shows that you were charged $500/qt. for oil.
The $5 oil change would be great, except that your auto insurance bill is $3000/mo, up from $2700/mo last year. Your lucky though. You're a 40 year old driver who hasn't had a ticket in 15 years. Family man. You've heard the horror stories about the young people and seniors trying to get car insurance. You try not to worry about it.
The real trouble comes when you get a fender bender. Totally not your fault. Your car was parked, and somebody hit it. You've got to report that, or you'll lose coverage.
You can't get the dents knocked out anywhere near here. There's a great shop that does that down the block, but they're not in your car insurance company's provider network. Being a licensed mechanic doesn't mean squat if he's not in the network. It's $20 to have the dents fixed, but you don't even know what it would cost if you just went to Joe's down the block. $2000 for out of network dent repair. Not worth it, so you're driving 40 miles down the El Camino to Sunnyvale today.
You used to think, "maybe I'll just ride the bus". A lot of people did. Then they started requiring people to buy car insurance even if they didn't have a car. Most people will be drivers at some point in their lifetime. By requiring non-drivers to purchase car insurance, we will reduce the overall cost of car insurance for everybody.
At least, that's what the car insurance companies said while they drafted the 1600 page Federal Universal Car Car Act.
As for cars, well... I wish I could tell you they were cheaper. Really, I don't know. Your car insurance plan tells you what models you can buy, where you can buy one, and whether or not the state of your current vehicle meets the standards for repurchase. The actual cost of a vehicle is anybody's guess. The list in proprietary information. It's all in the fine print, you know. The copay is $1000 no matter what though. Pretty sweet deal. Used to be a $2000 copay under my old plan. Sigh... I really wanted a Ford F-150 though. Ford is out of network...
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
As a Canadian, here's the thing I don't get about the American "fear" of single-payer health care system : "Oh my god, the paperwork! And the bureaucrats that deny care!"
Now here's how it works for a Canadian : You go see a doctor, you give them your single-payer card and... That's it. There's no additional charges or paperwork to fill out, no administrative useless bullcrap. Heck I got surgery done a few years back and all I had to do was to show up at the hospital on time and show them my little card. No cash needed, no bill, just care.