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Science Policy Around the Web – February 19, 2016

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By: Fabrício Kury, MD

Affordable Care Act

Obamacare supporters don’t like talking about it — but the individual mandate is working

Among the many goals of the enormous piece of legislation that is the Patient Protection and Affordable Care Act (PPACA), one is to deliver universal health care access in a nation that often ranks no. 1 in the ranking of cost of health care per capita, and without flirting with socialist-minded models such as single-payer health care that would have failed to pass in Congress. Because it is so expensive, health care in the U.S. is largely paid for via health insurances, which act as pools of the risk of needing healthcare and dilute the cost among all insured individuals. However, in a free capitalist market, the health insurances suffer from the fundamental problem of adverse selection, in which only the people who need health care purchase insurance, while those who are mostly healthy opt not to. This becomes a “death spiral” that leads to financial insolvency of insurance companies even despite them going to extreme lengths in denying insurance coverage to individuals expected to be costly. To address this, the PPACA prohibits insurance companies from denying coverage on the basis of pre-existing conditions and at the same time addresses the problem of adverse selection by making it mandatory that everyone (with few exceptions) must have health insurance or otherwise face a financial penalty – the so-called “individual mandate”. Recent statics on enrollment in the ACA show that the financial penalty aspect is working to encourage young, otherwise-healthy people to sign up, exactly as it was intended. (Sarah Kliff, Vox)

Technology and Health Care Policy

When Software Tries to Eat Regulation

In the era of disruptive innovation, billion-dollar unicorns, there-is-an-app-for-that mindset, it is no surprise to hear that ”every smart tech person I know is working in healthcare,” the $3 trillion industry that occupies more than $1 out of every $6 spent in the entire U.S. economy. Underpinning digital revolutions such as Uber, Airbnb, Spotify, even Wikipedia, lies the concept of delivering value in a dramatically rethought manner that longstanding behemoth corporations fail to compete with. Health care, however, cannot be provided by a team of youngsters in a garage because what is at stake is more serious than whether or not you get to find a cab when you need one. Health care is delivered amid walls of regulations that protect patients and assign liability, and health care consumers are not necessarily looking forward to risking security in favor of imaginative, cheaper alternatives. Since 2013, the Food and Drug Administration (FDA) has laid out regulation for responsible innovation in mobile health and followed up final guidance this year, while the HHS Office for Civil Rights offers guidance on adhering to HIPAA for health app developers. In this article, the examples of Zenefits, Theranos and 23andMe demonstrate that the FDA has consistently made clear that the “Ubers” of health care must exist within the same legal framework that safeguard the existing U.S. health care delivery models. (Erin Griffith, Fortune)

Fee-for-Service Heathcare

The Hidden Financial Incentives Behind Your Shorter Hospital Stay

In basically any U.S. market, if you purchase a product and it breaks too soon, you either get a new one or you receive your money back. In U.S. health care, though, up until 2012 if a patient was discharged from a hospital, but soon had to be re-admitted due to a preventable problem such as a poorly disinfected surgical wound, the hospital profited again from the new patient admission. The 2012 Medicare’s Hospital Readmission and Reduction Program, part of the Patient Protection and Affordable Care Act (PPACA), financially penalizes facilities that fail to meet historical measures of what is considered an acceptable rate of re-admissions, but this has been bringing the adverse effect of “workflow gymnastics” to make patients not be re-admitted or at least, not get counted as so. Another approach, the Bundled Payments for Care Improvement initiated in 2013, extends the concept of a single payment per diagnosis to include all care needed by the patient including out-of-hospital care. While these approaches seem to have been successful, they are still built on top of the fee-for-service rationale, where health care is paid for by the number (volume) of treatments provided. The American Hospital Association (AHA) affirms there exists considerable agreement that fee-for-service is one of the major culprits in the decades-old unrelenting upward trend in the percentage of the U.S. gross domestic product that is spent on health care. The opposite model of fee-for-service is capitation, where providers are paid a fixed price to provide all care to a group of individuals regardless of the volume of the care provided. The ACA has made capitation a possible alternative for some types of Accountable Care Organizations, however it is not mandatory, the programs are still temporary, and their details must evolve from the failed capitation models of the 1990s. (Austin Frakt, The New York Times)

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Written by sciencepolicyforall

February 19, 2016 at 9:00 am

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