How Big Data Is Destroying the US Healthcare System 507
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.'"
Sounds like a problem... (Score:5, Insightful)
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).
Insurance is not the health system... (Score:5, Insightful)
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.
Healthcare vs. Insurance (Score:5, Insightful)
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.
Why the PPACA was necessary (Score:5, Insightful)
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.
One advantage of Obamacare (Score:5, Insightful)
Re:Sounds like a problem... (Score:5, Insightful)
I'm generally not a "government solutions" kind of person, but I do wonder how private insurance is allowed to exist for essential things like health care. How does the profit motive not create an inherent, unethical conflict of interest?
Also, insurance spreads risk and expense over a pool of policy holders. Pretty much everyone needs health care. Coverage-wise, it would seem like one large, central pool would be the best case. And, if the insurer isn't out to make money, it could instead focus on, say, reducing premiums.
Re:Sounds like a problem... (Score:2, Insightful)
I like it!!!! I am going to register a corporation tomorrow to get ready for this. I will then offer by far the cheapest option available. For getting such a huge piece of the market I will of course pay myself tens of millions per year in salary. In 15 years, when it turns out I cannot actually cover their health care, I'll simply have to close the company and leave the poor saps who bought my insurance dangling in the wind. I'm going to have my hundreds of millions though, so whatever.
Re:Healthcare vs. Insurance (Score:4, Insightful)
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.
If the government required auto insurance companies to insure people with pre-existing conditions (i.e. their car is already wrecked) then the situation would be different.
Re:Healthcare vs. Insurance (Score:5, Insightful)
In the auto insurance industry, if you can't get insured, you don't get to drive (legally). In the health insurance industry, if you can't get insured, you die. Slight difference. Also, if you can't get auto insurance, it's generally your own doing. If you can't get health insurance it's generally due to factors beyond your control (regardless of the statistically poorer health of people who take worse care of themselves).
Re:Sounds like a problem... (Score:5, Insightful)
Funny how medical tourism turns out to only be available to the wealthy...
Re:Sounds like a problem... (Score:5, Insightful)
That's why in sane countries they've gone Single Payer, as opposed to the USA which is run by lunatics who still think laissez-faire anarcho-libertarian economic theory does anything but cause monopolism and boom/bust depression cycles.
Re:As an Asshole, I support this (Score:4, Insightful)
Re:Personalization (Score:5, Insightful)
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.
Re:Healthcare vs. Insurance (Score:5, Insightful)
Health insurers are destroying themselves. Why do you think people like me don't have insurance? We've figured out the game. If they are willing to insure a person, it can only be because that person doesn't need health care. So those who need it are denied, and those who don't shouldn't buy insurance because it is a ripoff. Either way, no one should be a customer of a health insurance company.
If you get insurance anyway, should change insurers about every 2 years so you don't get charged a huge "inertia tax", the penalty they love to levy on loyal customers for being loyal and not changing. And changing is only if you haven't developed some problem they can claim is a pre-existing condition that they shouldn't have to cover. And be ready to get a lawyer to sue them if you are injured and actually need health care. They will deny half the claims on various technicalities. They're testing you, seeing if you'll roll over, play dead, and let them get away with it. If you have family and friends to help you fight back, or aren't too beat up to fight back yourself, then they try to walk the fine line of denying just enough that it's not quite worth suing them. They'll try to wear you down, bury you in paperwork. They'll occasionally take your side and save you from an outrageous bill here and there.
The medical community's outrageous prices are the only thing keeping insurance going. If not for that, it'd be better to deal directly with the doctors. You still can, so I've heard. Have to do a lot of haggling, but it can be done. You may also need the leverage of not having any money, to get them to cut you some deals. They'd rather get some money than no money, if you should go bankrupt and get all those medical debts erased. Of course if you're hurt or sick, haggling sessions are the last thing you need on your plate. Medical debt is the #1 cause of bankruptcy in the US. Medical debt is also quite peculiar-- it doesn't seem to count the same as other kinds of debt, and I've heard it is possible to defer paying it and still be able to buy the basic necessities and even have a credit card. For this reason, many doctors won't even see you if you don't have insurance. Too easy to stiff them entirely.
Yes, it is a parody, and yet... (Score:2, Insightful)
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.
Re:Sounds like a problem... (Score:5, Insightful)
Re:Sounds like a problem... (Score:5, Insightful)
This is a struggle for me. It seems reasonable to me that there should be access to basic medical care for all citizens with as little standing in the way of this care as possible. No one should die from Dysentery in the United States. On the other hand, if Pyro_Peter's Nuclear Anti-cancer Medicines, Inc. spends $10,000 to make each Fermium Armed Genetically Tailored Smart Bomb Anti-Cancer Pill then I completely understand that if we want more FAGTSBAC Pills (*whew* that was close to being a really baaaad acronym) then Pyro_Peter's Nuke Pills, Inc. must charge more than $10,000 for that pill.
I think the tough part here is that the line for "reasonable access to basic care" is in different places for different societies. I'd also be concerned that the act of drawing that line would be sufficient force to prevent it from naturally rising with time. What if that line was drawn in the 1920's US? Where would medicine be today? Would we have some metric like the Consumer Price Index but for medical care to keep moving that line up?
Finally, and I know this is diverging from the actual topic of this thread, it is clear to me that your right to health care is a different sort of right than your right to free speech or your right to be free from unreasonable searches. No one else has to do anything for you to speak or for you to not be searched. Health care is different. Someone else has to do something for you to have a right to health care. What if they don't want to? Can you (or a government agent working on your behalf) compel someone else to provide you care?
It is a complex issue and the more closely I look at it the more complex it seems to get.
Peter
Re:What a load of BS (Score:5, Insightful)
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."
Re:Why the PPACA was necessary (Score:4, Insightful)
So Obamacare prevents companies from refusing coverage or dropping it when the customer gets sick.
hmm, I now see why the republicans hate this idea. its bad for Big Business and good for the little guy.
Re:Sounds like a problem... (Score:2, Insightful)
Right to free speech - You can practice with no one else involved
Right to healthcare - You cannot have without imposing on others and either taking resources from them or forcing them, like indentured servitude, to provide for you. If no one decides to become a doctor or nurse, how does the government provide "reasonable access to healthcare"?
You are wiser than most to realize that there is a distinction between Constitutionally granted rights and what many people are now declaring is a right. One is natural and the other is at the point of a gun. I think you just didn't come to the full obvious conclusion yet.
Another point on your post. In a single payer system, that $10,000 pill would never be developed because it would never be administered. So do you want a society where the pinnicle of healthcare is decided by what the "death panels" decide is approprate, or one where your ability to pay decides what the pinnicle is.
Not really (Score:5, Insightful)
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....
Re:Sounds like a problem... (Score:4, Insightful)
because spoiled brat rich guys don't want to contribute their fair share to the society that made them rich.
that's why.
they won't act good on their own.
Re:Sounds like a problem... (Score:2, Insightful)
By inserting the step of "declaring bankruptcy", it magically changes from "fraud" to "a viable business model".
Re:so... (Score:2, Insightful)
Re:Sounds like a problem... (Score:4, Insightful)
LIfe, liberty, property, pursuit of happiness and all that.
Still, I don't know why we get all hung up in debate. National health care works. There is proof everywhere. The question you ask really is irrelevant. There are models that work well we can simply copy.
When a broken limb doesn't carry the threat of crippling debt and care of a chronic but treatable illness isn't a severe financial burden life is simply better. Getting injured and having a many-nights stay in a hospital in Europe might cost you all of 20 dollars, not tens or hundreds of thousands. No years-long fight with medical providers and insurance companies afterward either. If you're an American, this is probably really shocking to you.
Does this hurt some companies business models? Sure does.
Are we going to have to kick a bunch of crooked politicians out of office? Yep.
Are we going to have to tell a bunch of ignorant conservatives to sit down and shut the fuck up? Yes. (Yes. They are the problem. It's time to grow up and talk like adults.)
Re:Everybody pays (Score:5, Insightful)
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.
Re:Sounds like a problem... (Score:5, Insightful)
Funny how medical tourism turns out to only be available to the wealthy...
No, it's not - the reverse really. If the treatment or surgery is expensive enough in the US, then a flight to Thailand and inpatient hospital care there is cheaper than care in the US. If you're wealthy, you don't go to a country with no medical liability and take your chances for the best care, you just write the check.
OTOH, single payer in the US with certainly create a 2-tier healthcare system, with doctors either working as employees of the hospital system, or working on a cash-only basis for far more money catering to wealthy clients. This has already started happening as doctor compensation is falling within the system. Long waits and second-tier care for the many, immediate boutique care for the few. But apparently that's the system people want.
Re:As an Asshole, I support this (Score:5, Insightful)
Yep, that's why we should have a single payer system of health care coverage. The hell with the insurance company middle men.
Re:so... (Score:4, Insightful)
Radical libertarian playbook step 1: Try to make the story about the government.
Re:As an Asshole, I support this (Score:5, Insightful)
I know it's parody, but there is a really good point in it:
Yes, in a free market, companies are free to do what they want. (policy and contract wise)
But... if they do what they want, who is doing what should be done? Namely providing health insurance to the ones who need it (which may be anyone here at some point)
And that's the point where the state had to step in, because the insurance companies didn't do what they were supposed to do.
Re:Yes, it is a parody, and yet... (Score:4, Insightful)
So it is the classic problem of "behavior B is best for everyone, but behavior A is best if others are doing B or A", so unless some force changes the payouts (i.e. regulation) to make B more attractive and A less.
Re:As an Asshole, I support this (Score:5, Insightful)
This is the difference between Insurance and Insurance Companies.
Insurance is a bet between the insurer and the insured that the insured will not need to cash in. By setting appropriate odds, the insured pays less for benefits than if he/she covered them directly and the insurer makes a profit.
This scheme can be extended in 2 ways. First, the insurer can take some of the premiums and invest them, insuring more profit, since the invested money helps reduce the amount of reserve cash that has to be held in order to meet obligations.
The second way to extend this is to broaden the pool. Take lots of people. It's possible to compute over a statistical population how many people will cash in and set rates, reserves, and investments accordingly. This is what actuaries are for. You also deepen this pool by extending it through time, since the claims rates for many insurable conditions vary with age.
That was the original idea. Insurance companies were early and enthusiastic adopters of computer technology since computers helped with the bookkeeping of the large pools of insured people as well as being able to assist with actuarial computations.
More recently, however, 2 things have distorted that plan. One the one hand, advances in technology have skewed the original actuarial computations. Car crashes are more survivable, cancer isn't a guaranteed death sentence, and so forth. You have people paying in longer, but the expense of the payouts has also risen, and the likelihood that multiple payout events later in an otherwise curtailed life will occur likewise.
The other distortion has been that really cheap computing has led to the development of sophisticated data mining. This, in turn has led to the processes of "cherry picking" (favoring those who will pay in but not make a claim) and "lemon dropping" (dropping the policies of people most likely to prove unprofitable). All of which makes the process more efficient.
The problem is, this efficiency is gained at the expense of one of the primary benefits originally accorded to organized insurance. The pools become shallower and narrower. The insurance companies get more profit, but the outliers in the insured base pay for it. The more likely you are to truly need insurance, the less likely you'll get it. If not from outright denial, simply because in order to support these extra profits, you'll pay a higher premium rate. If you can afford it at all.
Re:Why the PPACA was necessary (Score:5, Insightful)
Health insurance companies couldn't drop people when the customer gets sick prior to the ACA. The change is that they now can't deny coverage for previously existing conditions.
Its good for some little guys, however its bad for the majority of little guys. Some people will get coverage who otherwise would not have. The rest of us will have higher premiums.
That's pretty much the definition of insurance. Yes, you pay more than you likely would have to, but you don't get catastrophicaly screwed if you are 'that guy'. When you write 'the rest of us', you are assuming that you are the heathly person, and not the one with the previously existing condition. You don't know that. It might be true right now, but that could change tomorrow, based on some test or event.
Further, your analysis assumese that the costs for a person without an existing condition just disappear. They don't. That person, who possibly can't get insurance, ends up in the hospital anyway, and then costs are shared by everybody else because your insurance pays for it in higher hospital costs. When you go to the hospital, it costs $100 rather than $50 because there is $50 added for uninsured people. It's even worse than that because it's a hidden cost. You don't know what percent of that $100 is cost of treatment and how much is overhead cost by uninsured. Better to have everybody covered, your insurance go up by a little and then the hospital costing $50.
Re:As an Asshole, I support this (Score:5, Insightful)
"Inelastic demand."
A "free market" (supposedly) works by normalizing prices to the point where profit is maximized and no higher.
In the case of "healthcare," the good for sale is "not dying", so a moment's consideration should be all it takes to realize why it is entirely a sellers' market.
Re:Yes, it is a parody, and yet... (Score:5, Insightful)
The whole free market angle on health insurance is complicated by the fact that the people who require the most expensive medical care can't work. This isn't like shopping for night classes, maids, smart phones, cars, or new housing - in all of those cases you have an income while you search for a deal on new service. With health insurance, if you desperately need expensive medical treatment there's a good chance you aren't able to work to pay for it.
In addition to that, while some people with expensive medical costs will never recover fully and will always be a net financial drain on the system and the economy, others can. If your cancer treatment fails or prolongs your life slightly but you still die of cancer, then that is tragic and expensive. But increasingly people do go into remission and live and work another ten, twenty, or forty years after their cancer diagnosis. Likewise surgery and care to recover from an accident, assault, etc... might take years but you could emerge at the other end a fully functioning member of society again.