Ian Morrison

It’s complicated. Health care that is. American health care may be the most complex, technologically advanced and administratively intricate of any health system in the world. The rise of complexity of health care is driven by a number of interrelated factors:

Clinical Complexity

Clinical complexity is increasing at an exponential rate driven by continuous advancements in science and technology. In particular, the exciting progress in customized, genomic medicine creates more targeted clinical interventions but also increases the complexity of care. Every year more than a million articles are published in medicine and related disciplines, and experts estimate that scientific knowledge doubles every nine years.

At a recent University of California–San Francisco conference for hospitalists that I spoke at, my host and friend Dr. Bob Wachter invited me to stay after my little talk to hear a real doctor lecture on recent advances in the treatment of complex cardiac patients in the intensive care unit who have experienced heart failure. Of course I understood none of it.

The visiting Stanford professor giving the lecture reviewed the science and gave periodic pop quizzes challenging the group with clinical vignettes. As I recall, in many cases, a majority of attendees got the answers wrong, not because they weren’t smart, but because the amount of knowledge that any one human can store has become unknowable.

I asked the good Dr. Wachter if that was pretty typical, and he reminded me that this was just one of the hundreds (if not thousands) of diagnoses that a hospitalist may have to treat, each with its own emerging science, new therapies and new evidence. It seemed to me impossible to keep up without sophisticated support from information technology. It would be hard to make it all simple.

Yet, much effort is being made to standardize clinical processes and provide sophisticated decision support to aid clinicians with this rising scientific complexity. It may seem like an uphill battle, but it is an important counterbalance to the rising tide of clinical complexity driven by scientific advances.

Older, Sicker Patients with Co-Morbidities

Not only is there increasing scientific complexity, but patients are older and sicker with more comorbidities. It is interesting to compare the United States with other countries. In surveys conducted by the Commonwealth Fund, patients are asked how many conditions they suffer from. A full 68 percent of American elderly patients claim to have two or more chronic conditions while only a third of British elderly patients responded that way.

(It is hard for me to believe that Americans are actually more unhealthy than the British. I grew up in Glasgow where the local delicacy was deep-fried Mars bars and where pie, beans and chips is known affectionately as the Glasgow salad. So it is incomprehensible to me that Americans could actually be that much sicker. More likely it reflects the great quote from my old mentor Bob Evans that “good health is a state of incomplete diagnosis.” In the United States we actually find out about how many illnesses we have, while in the United Kingdom they don’t bother finding out and they just live longer.)

Nevertheless, whether rising morbidity is real or imagined or discovered through more thorough and complete diagnosis, the typical American hospital is experiencing rising levels of acuity and complexity of the patients who are being admitted for inpatient care. Obviously this is partly a result of the least severe cases being handled now in the ambulatory environment. But the fact remains that inpatient care is becoming increasingly complicated from a clinical perspective.

This is further amplified by the move toward sub-specialization in medicine and the expanding base of science. As a result, in all medical specialties care is becoming more complex.

Coverage Complexity

Obamacare was a good thing for the nation’s uninsured. Twenty million people got covered, half through Medicaid expansion and half through exchanges. Most of those folks are low income and they cycle in and out of eligibility for Medicaid and exchange subsidies as life happens: They get a job, they lose a job; they marry, they divorce. A full 40 percent of exchange enrollees churn in a year, about 25 percent in Medicaid. Similar rates of churn exist in the small group and individual market because of the considerable volatility in employment and economic circumstances. Tying health insurance coverage to employment and income is asking for volatility and complexity.

Medicare is more stable. Once you turn 65 you are in it forever, because you are unlikely to ever turn 63 again.

Administrative complexity

It is well known that America health care spends considerably more on administrative costs than any other country. This shows up in multiple ways. Comparisons with other countries on the net cost of insurance reveal that America spends approximately 7 percent to 10 percent of all health expenditures, while countries with single payer systems or (just simpler payer systems) spend 2 percent to 3 percent.

The complexity of payment systems and the administrative burden of regulatory oversight can be seen when comparing administrative costs of hospitals with other countries, the United States has the highest administrative costs of countries studied at 25.3 percent with Canada and Scotland the lowest at 12.4 percent and 11.6 percent respectively. (By the way, this is where Donald Trump got his idea that Canada and Scotland had great health care. He saw this finding on a show.)

Multiple Payers

The primary underlying cause of administrative complexity is the multiple payers in American health care both public and private. Medicare, Medicaid, TRICARE, Department of Defense, Veterans Administration, and state and local governments, along with a myriad of insurers in the private sector, all have different programs with multiple insurance offerings. Many countries, such as the UK and Australia, have a mix of public and private sector components to the payment stream; some, like the Netherlands and Switzerland, have multiple competing insurers, with higher administrative costs as a result. But no other country has the intricately involved set of financial relationships to deliver money to health care that we have in the United States.

(Some years ago, Humphrey Taylor and I published a similar blog on this increasing complexity on the eve of Obamacare implementation. It has become even more complex than we forewarned.)

Multiple Methods of Payment

Not only do we have multiple payers, but the methods of payment are many and complex and are becoming more so. While capitation may seem like a simple and pure form of payment, it is a tiny sliver of American health care financing. Most of the health care system is paid on the basis of what I call fee for service with tricks (simple FFS with small inducements at the margin to encourage quality, outcome or customer responsiveness). Whether it be bundles or value-based payment or risk adjustment or severity-based payments, all the new models add complexity. Don’t get me wrong — I’m in favor of the move away from unfettered fee for service toward paying for value — but it probably doesn’t make the health care system any simpler.

The Medicare Access and CHIP Reauthorization Act of 2015 is a perfect example of this well-intentioned trend having unintended consequences of increasing administrative complexity. In recent surveys of physicians conducted by Deloitte and by my colleagues at Nielsen, the vast majority of physicians had either never heard of MACRA or didn’t really know what it was. MACRA affects how most doctors are paid by Medicare, which is kinda important, given old people often use the health care system, no? Many doctors have thrown up their hands and thrown in the towel. In the Nielsen survey of physicians, the top response of what MACRA would do to physicians was to drive them toward being employees of health systems.

Organizational Complexity of Accountable Care

The accountable care organization movement has galvanized many providers of all types to explore new organizational arrangements under the rubric of accountable care. Leavitt Partners estimated recently that 28.3 million people are covered by an accountable care arrangement, either public or private.

While the impact of ACOs on costs and quality are under some debate, the most authoritative academic studies show modest costs savings and minor effects on quality, but after administrative costs are factored in, it seems much ado about nothing. What is undeniable is that these new arrangements make the system more complicated for providers and patients.

Risk and Population Health

To cap it off, some brave health systems (maybe as many as 20 percent) are taking insurance risk by offering policies in the market to individuals and groups, contracting directly with employers, or taking Medicare Advantage patients. Population health management is similarly well intentioned but makes the work of health care systems much more complex.

So, while risk and population health may all work out well (if these health systems can actually pull it off), it makes life more complicated.

Consumer-Directed Health Care

Rising deductibles and co-payments over the last two decades have fulfilled the dream of many economists who long advocated for patients to have more skin in the game. Well, they got their wish. Nearly half of Americans with employment-based insurance have a deductible of $1,000 or more, and 29 percent have a deductible of $2,000 or more. And here’s the kicker: Most of the bottom half of the income distribution (households with incomes less than $53,000 per year) can’t come up with those deductibles because they live paycheck to paycheck. So for them, paying for health care is not only complicated (involving loans, credit card debt or pharmaceutical patient assistance programs), it’s also downright painful.

There is little or no meaningful transparency on cost and quality that is actionable by real consumers. Providers challenge the validity of measures on hospital and physician performance, while consumers rarely use the information to select providers and default to convenience, proximity and the recommendations of their physicians when making choices. It’s all too complicated, and consumers have inadequate information at the time of choosing.

Revenue Cycle Management

All this administrative and clinical complexity explains why revenue cycle management is the hot new thing. There is money in complexity. At the big industry trade shows there are acres of revenue cycle management vendors. I have gone out on a limb to forecast that within five years the revenue of the revenue cycle management industry will finally exceed the entire revenue of the health care system in a health financial management equivalent of the Rapture.

Impact on Costs, Quality, Access and Provider Morale

All this complexity is taking its toll. It drives up the total costs of health care as more and more administrative responsibility is added to providers and payers alike. It impedes quality and access by increasing the time and financial burden on patients and providers. And it undermines provider morale. In recent surveys by Mayo and Nielsen, a majority of physicians report they are suffering from burnout, suicide rates are at all time highs in the medical profession, and there is a widespread improvement fatigue among physicians that I have written about in this column before (http://www.hhnmag.com/articles/3507-what-to-do-about-improvement-fatigue).

Signs of Simplicity

Forget health care for a moment and think about other service experiences in your life. How much time do you spend on your phone? Is it the vehicle for your life? Is it your primary gateway to your family, friends, travel reservations, recipes, dates and data?

How simple is it to use?

The complexity of health care is being judged against a backdrop of other service industries that seem to effortlessly deliver service in a way that is simple and easy to use. And it is not just smartphone-enabled apps.

Think Southwest Airlines. It flies the same planes on all routes so crews are interchangeable. Southwest keeps it simple: no bag fees, no tricks. And they still give you peanuts.

Or think Netflix. It knows what you like and makes it easy to binge watch House of Cards without leaving your couch.

Or Amazon. It will get you absolutely anything on your front door step within a day or two. Maybe an hour or two when they get the drone thing down.

Or Uber. You press a button and a Stanford graduate student picks you up in his Prius in three minutes and you don’t have to tip him or fumble for cash.

These businesses are backed by enormously complex technology and logistics. They use sophisticated algorithms to customize the user experience. It is immensely difficult to design and execute these services, but to the customer it appears simple.

We need to learn from them. And we can find signs of simplicity in health care:

Kaiser Permanente. Kaiser delivers health care and acts as an insurer. While it is experiencing all the complexity described here, it has simplicity in its business model. It accepts pre-payment and it organizes care delivery to minimize unnecessary use of expensive resources like hospitals. It uses a pure and simple model that aligns incentives. It has also maximized use of digital delivery models with over half of all patient encounters at Kaiser occurring digitally whether through tele-health, portals, e-mail or secure clinical messaging. Kaiser members are fiercely loyal. While Kaiser has had to abandon first dollar coverage and embrace consumer cost-sharing to be market relevant, it still strives to make the consumer experience simple and easy to understand.

Covered California. California is an active purchaser state and it has used that power to simplify and standardize offerings on the exchange. In 2016 Covered California narrowed down the available options at the silver level to eight options in Los Angeles; this is in contrast with Seattle where a bewildering 50 options were available, or New York with 46.

Concierge medicine. A private equity investor (himself a physician) explained to me recently that the only group of happy doctors he has run into in the last year was a group of concierge doctors, who have converted to a fixed monthly fee for membership for their patients. They drastically reduce their panel size with the subscription making up the bulk of their income. Most of their patients are on Medicare and many of the doctors bill Medicare in addition, but they are not dependent on it. Not all doctors can be concierge doctors because there are not enough rich people to go around. But some can. And many of the more affluent patients value the enhanced connection and connectivity to caregivers and are willing to pay a subscription for the service. One Medical offers a similar experience targeting affluent, tech-savvy millennials.

Book MD. Book MD has targeted self-insured employers and provides a customized bundled payment platform for “shoppable services” such as mammography. It has negotiated a preferred rate and in return provides prompt payment to providers; it has also engineered its consumer facing app and integrated it with participating providers’ scheduling systems to provide same-day access to services. Users like Disney have seen dramatic results in improving busy executives’ adherence to screening guidelines such as mammography. It’s simple, convenient and fast.

These signs of simplicity teach us a few principles.

It’s complex to be simple. The user experience may be simple and easy but there is immense complexity behind the scenes. It’s hard work and requires sophisticated technology.

We need win-wins for providers and consumers. Simple, successful services make life better for consumers and make economic sense for the vendor. Successful business models are simple and aligned.

Software and algorithms, not bricks and mortar. To date, health care innovation has been too much about buildings and big clinical iron. Simple health care will depend increasingly on software and algorithms.

Put the user at the center. Great service businesses design simple solutions from the perspective of the user. As we strive to improve the patient experience we need to make it simple for the user. Too often, even with good intentions, we make it more complicated.

Two of the big stories for 2016 have been income inequality as a key issue in the presidential election debates and the increasing focus on population health in the U.S. health care system. These two are strongly connected. Indeed, if you believe the classic definitions of population health, income inequality is the primary driver of disparities in health status. But, in the contemporary United States context, “population health” tends to mean doing a better job at managing the care of patients along the continuum, keeping them healthy by focusing more on prevention and by targeting social and medical interventions for those folk that we are at highest financial risk for.

In contrast, scholars outside the United States view population health as much closer to the classic notions of social determinants of health. International (non-U.S.) researchers and policymakers attempt to isolate the contribution that socioeconomic factors make to health status and intervene accordingly, politics willing. In the United States, however, population health is more about the health and health care of those people we are at financial risk for, rather than factors affecting the health status of the entire population such as housing, education and income.

This distinction matters. Are we talking everyone in the population or just the crowd we are responsible for? And are we really going to pull policy and program levers like income redistribution, education, early childhood development, housing, transportation and social policy to improve health and health care, or do we limit ourselves to factors we are more comfortable with, like giving wellness the old college try and doing a better job with diabetic registries?

Defining Population Health

My cynical definition of population health is it’s the phrase CEOs use during a lull in the conversation at a hospital board meeting when they really don’t have a strategy. As Monty Python said in the famous Piranha Brothers sketch in reference to a gangster: “Cruel but fair.”

Part of the confusion about population health is mixing terms between classical views of population health (mainly from outside the United States) and the emerging contemporary trends in population health management, here in the United States. Both are valid and indeed are connected.

The View from Outside the United States

Wikipedia, whence all true knowledge comes (actually this definition is from scholars David Kindig and Greg Soddardt) defines population health as “the health outcomes of a group of individuals, including the distribution of such outcomes within the group.” It is an approach to health that aims to improve the health of an entire human population.

In my view, the seminal works of classic population health are the Whitehall studies in the 1960s and 1970s and the work of the Canadian Institute of Advanced Research Determinants of Health Group led by my old colleague and mentor, Canadian health economist Bob Evans, in the 1990s.

The Whitehall studies of health status and death rates in the British Civil Service showed that despite the fact that all civil servants in England have the same access to health care, there was a strong correlation between social status and health even after adjusting and controlling for health-affecting factors such as obesity, exercise, smoking and drinking.

In the 1990s Evans brought together multiple researchers from disciplines as diverse as medicine, economics, political science, animal biology and sociology to distill the knowledge about health disparities. The group produced the classic work “Why are some people healthy and others not?”

Key connections were made in that research between socioeconomic status and health. It produced important insights linking the brain chemistry of individuals and populations and found that psychosocial stress was a key variable of health and longevity. As Robert Sapolsky of Stanford has shown in the field and the laboratory: If you’re going to be a baboon it’s better to be a leader than a follower. It’s healthier to be at the top of the hierarchy than at the bottom.

I recently reconnected with all of the members of the group at a reunion to celebrate Bob Evans’ retirement from the University of British Columbia in Vancouver. Over a couple of days in conference we heard from many of the key thinkers in that group and other notable researchers who have picked up the mantle of population health research. What struck me was the enduring resilience of the conclusions that Evans and his group identified, namely that there was a strong, if not dominant, role that income inequality and socioeconomic status played in determining the health of individuals and populations. And that role persisted even after accounting for risky personal behaviors such as overeating, indolence, smoking and imbibing.

One particularly poignant presentation for me was by Canadian physician John Frank, policy scholar and epidemiologist who now leads a health policy research unit at the University of Edinburgh (also my alma mater). John’s presentation highlighted the uncomfortable truth of how residents of public housing estates on the fringe of my native Glasgow had life expectancy 15 years less than the populations in the leafy suburbs where I grew up. John described how despite Scotland’s progressive health policies, the sad truth of disparity persisted. Growing up in an awful place with drunken parents who have no job and no hope is not the best way to live a long, healthy life. Being poor will kill you.

Population Health in the United States

In practice, most hospitals and health systems in the United States have a more “hopey-changey” definition of population health, to misquote Sarah Palin. In the contemporary context, population health leaders such as my pal Dr. David Nash, dean of the nation’s first college of population health at Thomas Jefferson University in Philadelphia, is leading us to focus the field at a more practical level on a set of initiatives that can be pursued to deliver Don Berwick’s noble Triple Aim: better health of the population, better patient care and lower per capita costs.

As leaders of the population health management movement, Nash and others are exhorting us (appropriately, in my view) to:

Segment high-risk populations. Identify those 5 percent of patients who account for 50 percent of costs and mange their care aggressively.

Harness advanced analytics. Use big data to identify heavy utilizers, monitor populations, and target and measure performance.

Use patient registries and medical homes. Effective registry strategies, coupled with high-performing teams in medical home models, can improve health and reduce spending.

“No outcome, no income.” Nash’s famous quote captures the essence of a change toward value-based payment in a population health world.

Go upstream. More and more we learn that the solutions look more like social work than medical care.

Eat your own cooking. Health systems employees are normally self-insured, so starting your population health journey with your own employees can be both a learning and a financial opportunity if you can improve performance.

Focus on the whole population. Medical care isn’t everything, and traditional public health and classic social determinants are important where policy and program levers exist.

Meet people in their lives. Socioeconomic context matters: What works for affluent suburbs may not work in the projects.

Emphasize wellness and prevention. There is a thirst for health reflected in popular culture —harness and help this.

Think outside the box. Some of the solutions may be weird, unfamiliar and counterintuitive, but try them anyway.

Partner, partner, partner. Whether it be health plans or skilled nursing facilities, schools or landlords, retail clinics or barber shops, we have to learn to partner with any and all who can advance the Triple Aim.

Nash and other leaders are fully cognizant of the role that the classic social determinants of health play in creating health disparities. But most American practitioners of population health management are focusing much more on these health care–related activities than on addressing the fundamental causal drivers such as socioeconomic status. And this is maybe as it should be in the U.S. context given how squeamish we Americans all are about anything that smells too much like socialism, right, Bernie?

Income Inequality

Mitt Romney may have started it with his comments about the 47 percent who don’t pay tax. He may have lost the 2012 election because he alienated hard-working people who actually do pay FICA taxes but don’t pay income taxes. (And by the way pay a higher share of their income to such taxes than did Romney, just sayin’.)

Angst about the gap between the high-rollin’ top 1 percent versus the growing discontent, dismay and disillusionment of the rapidly shrinking and sinking middle-class has been the backdrop of this presidential campaign season.

Bernie unabashedly wants to redistribute income, get money out of politics, make college free, make health care free and pay for it all through higher taxation on the very wealthy. Hillary is being dragged every day in that direction.

Trump uses the economic angst of displaced factory workers to whip up support for a xenophobic fantasy of good jobs at good wages being returned to the United States because the CEO will receive a threatening phone call from the new president. Or because deported Mexican factory workers will not be able to climb over a 20-foot-high wall to return to their families in the United States.

It is undeniable that income inequality is increasing. The causes are globalization and technology. Neither can be stopped easily. But as the social determinants of health literature tells us, their effects can and should be ameliorated by massive investments in human capital to lift all to achieve their human potential, starting particularly in early childhood. This may come too late, and likely will not help, many of the angriest who are unlikely to be retrained as Ruby on Rails programmers and who want to remain mining coal in narrow seams that are never going to be reopened.

Public support for Addressing Income Inequality

I have had a research partnership with Bob Blendon and his colleagues at the Harvard School of Public Health for 30 years, and I continue to learn so much from Blendon about public opinion, politics and policy.

Blendon and longtime collaborator John Benson recently published a seminal systematic review of all the available polls (national and international) on the public’s interest in and willingness to address income inequality. Let me paraphrase what they found:

Everyone sees the inequality. Overall, two-thirds of the public believe that the gap between the rich and poor is getting larger. This includes about three-fourths of Democrats as well as a majority (56 percent) of Republicans.

Democrats rate it more important. Seven in 10 Democrat registered voters described economic inequality as very important compared with just 42 percent of Republicans.

Countries vary in their concern. In terms of how concerned they are about the rich versus poor gap, overall just 46 percent of American adults described it as a very big problem in the United States or ninth among 13 industrialized nations. By contrast 84 percent of Greeks, 74 percent of Spaniards and 73 percent of Italians deemed it so in their countries.

Democrats look a lot like Europeans. The partisan difference in the United States is striking: Nearly 60 percent of Democrats consider the income gap to be a very big problem compared with 49 percent of independents and only 19 percent of Republicans. (Democrats are like the French, Republicans are from another planet — my words not Blendon’s.)

Self-reliance versus government to blame. The two reasons (out of six offered) American cited most often for income inequality were “people working harder than others” (24 percent) and “the government’s economic policies” (24 percent) with worker pay, the educational system and the tax system also receiving some credit for the inequality of the six variables asked about.

Government deemed responsible outside the United States. Other countries have a greater consensus that governments are to blame for income inequality.

Democrats say government should act; Republicans don’t. A full 81 percent of Democrats believe government should do more to reduce the gap between rich and poor compared with just 34 percent of Republicans. When asked how much the government should do to reduce the gap between the rich and everyone else, 62 percent of Democrats said “do a lot” compared with just 23 percent of Republicans.

Tax the rich. Finally, three-quarters of Democrats believe that the government should redistribute wealth by placing heavy taxes on the rich compared with only 29 percent of Republicans.

That’s the election right there, whether it is income inequality or Obamacare. The question is, Are rich people going to write a check for poor people?

Obamacare has actually been one of the principal vehicles of income redistribution in the last 12 years. Expanding Medicaid and providing highly subsidized coverage to low-income folk has on balance effectively increased the minimum wage by as much as $2 an hour for those who receive the benefits.

If Democrats are elected, this trend will likely continue in the form of greater subsidies for the low-income to purchase health insurance and limit co-payments and deductibles, further expansions of coverage under Medicaid (including the undocumented), increases in the minimum wage, and redistributive taxation from the rich toward lower- and middle-income household groups.

If Republicans prevail, it is less likely that the income distribution will become more equal and it is much more likely that it will become more unequal.

But with Trump, who knows? He still hasn’t released his tax returns at this time of writing so that probably means either he doesn’t make as much money or he hasn’t paid as much tax as he should have. Trump might actually take on the hedge fund managers and their carried interest. Especially if he doesn’t have as big a carried interest as he bragged about.

Elections matter for all kinds of reasons. But this time, people, it’s really serious. Good luck with that.

Income Inequality and Population Health

The income inequality debate and the population health debate collided in the last few months with the release of several blockbuster studies linking income to health.

The Princeton economist and Nobel laureate Angus Deagan and colleagues released a startling report that documented declining life expectancy of low-income white males in the United States in contrast with rising life expectancy for all other ethnic and income groups in the United States and in almost all developed countries. They attributed the alarming statistics to the rise of drug, alcohol and opioid use, and much higher rates of depression and suicide. These are the combined health effects of an economy that cannot provide decent jobs to sustain lower-income households.

More recently, a massive data study (not big data, massive data) by Stanford and Harvard researchers led by Raj Chetty documented similar trends in life expectancy and highlighted that the core variation across time and across the country could be correlated to a number of socioeconomic characteristics.

The Chetty study confirmed what we knew: Life expectancy correlates with income. It is a gradient; the richer you are, the longer you live. And the gap is widening over time.

But most interestingly, the most recent study documents that there is significant variation in life expectancy among low-income groups in particular cities. For example, life expectancy for the bottom quartile of income was as much as 4.5 years higher in San Francisco and New York than in Dallas and Detroit. The correlates of income distribution on mortality were surprising. For example, having a high percentage of immigrants had a very strong positive effect on life expectancy for low-income groups. The conclusion I draw is that liberals have coat tails and that if you’re going to be poor it’s better to be poor in a place where there is interest in social policies that are more progressive than in a place where social policies are more Darwinian.

Support for this hypothesis also comes from the work of Elizabeth Bradley and colleagues at Yale. Professor Bradley was the first person I know to pull together health spending and social spending by country to show that we spend way more on health than most developed nations but way less on social spending than most other countries, putting us in the middle of the pack on the combined measure of social and health spending. The French lead the way in such combined spending, quelle surprise.

Bradley’s most recent study with colleagues at Yale showed that in the United States context, states that spent more proportionately on social spending than on health had better outcomes in particular:

“We find that states with a higher ratio of social to health spending (calculated as the sum of social service spending on public health spending divided by the sum of Medicare and Medicaid spending) had significantly better subsequent health outcomes for the following seven measures: adult obesity; asthma; mentally unhealthy days; days or with activity limitations; and mortality rates for lung cancer, acute myocardial infarction, and type II diabetes. Our study suggests that broadening the debate beyond what should be spent on health care to include what should be invested in health — not only in health care but also in social services and public health — is warranted.”

Better Opportunities mean Better Health

The message from all of these studies is clear. It’s what I tell my kids: Be in the top 1 percent and you’ll do just fine.

But that doesn’t help typical American households who have seen incomes decline over the last 20 years in real terms and indeed, as I’ve hammered in this column over and over again, any increment in compensation that lower income folk may have received has gone to health care benefits.

They probably would have been better off (and much healthier) with the money, or jobs, or housing, or education, or social services. But, that is not what was on offer. We should all think about that.

Providence Health and Services, a powerhouse in the Western states, has entered an agreement to merge with St. Joseph Health, creating a $20 billion-plus health care system with more than 50 hospitals in seven states. These organizations share a common Catholic heritage but they also share a focus on innovation. Providence, in particular, has been a pioneer, drawing in talent and leadership from companies like Amazon and Salesforce to help transform both the consumer experience and core clinical operations. Leaders from both Providence and St. Joseph highlight a health system committed to innovation at scale.

Innovation Prowess

Professor George Day of the Wharton Business School is a leading authority on innovation prowess, which he defines as the “discipline times ability” to innovate. Day has identified through a lifetime of research the key traits of companies (in all industries) that consistently out-innovate the competition. Leading innovators distinguish themselves by:

• demonstrating leadership commitment to innovation talent;
• adopting an “outside in” mindset;
• encouraging risk-taking; and
• aligning innovation metrics and incentives.

At a recent HX360 conference in Las Vegas (sponsored by HIMSS and AVIA, a leading technology accelerator), Day explained the lessons learned to an audience of more than 200 health care system leaders.

In a series of panels with system CEOs and their innovation leaders these lessons were apparent. In a panel I moderated, I remarked to Providence CEO Dr. Rod Hochman that those traits sounded a lot like the Providence game plan. He agreed.

Providence is not alone in its commitment to innovation. Many leaders at the HX360 meeting share the passion for innovation from Cedars-Sinai and Dignity Health in California, to Memorial Hermann in Texas, to OSF Healthcare in Illinois, to Northwell in New York. All have important stories to tell, but I have had an opportunity to interact with Providence’s leaders several times over the last few months and have become convinced that Providence is a system to watch because of its deep commitment to innovation at scale.

Innovation at Scale

The merger between Providence and St. Joseph Health would give the new system a strong position in many markets in the West, including Washington, Oregon and Southern California. The combined entity would be the third largest system in the United States behind Kaiser and Ascension, a major force in health care transformation in the West, and a key competitor to the other West Coast giant, Kaiser Permanente.

The two systems’ focus on innovation was part of the rationale for the intended merger. As my old friend Bill Noce, board chair of St. Joseph Health told me in an interview: “The forward looking innovation culture at Providence was an attraction to us.” The St. Joseph’s innovation initiatives are very complementary to those of Providence, with many new development opportunities ahead in care innovation, patient experience and life sciences, Noce told me.

Why Innovate?

The HX360 conference highlighted that leading health care systems are pursuing innovation at scale, aimed at meaningful targets to improve patient care, patient and provider experience, and population health.

That statement is almost the verbatim description of how Providence CEO Rod Hochman, M.D., described the rationale for Providence’s innovation program to the HX360 audience.

In particular Hochman highlighted initiatives in three key aspects:

• developing population health innovations aimed at the broader community (such as supportive housing) as well as large self-insured employers such as Boeing through their accountable care organization arrangements;
• creating a digital platform for providers and consumers; and
• simultaneously strengthening core operations (clinical and non-clinical) through innovation.

Providence is not alone. AVIA research found that many health care systems are focusing digital innovations on patient as consumer, chronic care and behavioral health applications, post–acute care transitions, population health initiatives and core clinical system (what they term operations 2.0). But while Providence is not unique in its interest in innovation, it is impressive in its strategic commitment to innovation and to following Day’s principles of innovation prowess.

In my travels through American health care I have observed what I call the Scout Badge Problem when it comes to innovation. Like proud young boy scouts, almost every hospital can point to the merit badges it has accumulated: ACOs, telehealth, patient portals, electronic disease registries and so on. But when you ask the CEOs what percent of patients get this routinely, the answer is the square root of zero. Sure it is happening, but a lot of this stuff is pilots. Scout badges you can brag to the board about.

Not so for Providence. “Innovation is not a hobby for us,” Hochman said.

Hochman is committed to not only match or exceed performance of tough regional competitors like Kaiser in terms of innovation, but perhaps even more importantly believes “we need to disrupt ourselves or have it done to us by someone outside of the health care industry.”

A key rationale for Providence’s innovation agenda is purposeful “customer acquisition” of loyal consumers who will sustain the mission of the enterprise. Like many faith-based systems, service to the whole population is a fundamental goal at Providence. But Hochman frames the Providence strategy of customer acquisition (including millennial consumers and self-insured employers) as a counter balance to the inevitable growth in Medicaid and Medicare that all hospitals are experiencing.

The purposeful focus on customer growth and retention helps explain why Providence has reached out to bring in talent from the ultimate customer-focused retailer (and Seattle neighbor): Amazon.

The Guy from Amazon and the Providence Innovation Team

Providence has intentionally recruited about 30 percent of its current management team from outside of health care. One of them is Aaron Martin, senior vice president of innovation at Providence. Prior to joining Providence he was on the Kindle team and led self-publishing at Amazon.

Aaron is a former Amazonian with a self-deprecating sense of humor. In describing some of his early experiences at Providence in trying to develop innovations at scale and at speed (just like at Amazon) he was initially told by some older health care hands: “OK Amazon guy, but it doesn’t work that way in health care.”

With Hochman’s unwavering support, Martin’s team (including many former Amazonians and some hot shots from Salesforce) brings to Providence the sensibilities of the world’s largest online retailer, including the ability to observe and learn from online experiences with big data and to run sophisticated customer and provider facing online pilots and experiments in real time. They launched a new member website for their Boeing ACO in weeks, not millennia, as we normally do in health care.

Martin’s team follows many of the principles he learned at Amazon. For example, he told an HX360 audience: “We write the press release first.” This means they get very clear on what they are trying to achieve and what would constitute success, then they specify how it will be achieved. Afterward, they write an internal “working backward press release” which explains to customers or clinicians why the product will be valuable to them.

Another Martin aphorism: “There are no extra points for originality.” Martin described his innovation teams as the “pay attention team,” a group who look for solutions and actually work within the many ministries and regions inside the Providence system, identifying those worth diffusing. This is such a key insight about successful innovators: Innovation is about solving meaningful problems, not novelty. Great innovators understand that.

Way too much health care innovation is about pride of novelty rather than successful problem solving. (That applies to much clinical innovation, too: It may be novel and have statistically significant effects, but it really doesn’t make much of a difference that is detectible to human beings. Some, but not all, of the new crop of specialty pharmaceuticals are pricey exceptions to that rule.)

Innovation Focus

While the overall strategic focus for innovation at Providence is on population health, digital health and core clinical operations, there are a number of specific initiatives that are worth highlighting:

Platform strategy.

Martin described three platform strategies that have topped their agenda this year:

• clinical collaboration platform and internal network among Providence clinicians via secure telehealth and an internal social network, allowing them to treat patients at a distance, provide expert consults and trade best clinical practices;
• on-demand health care platform to help consumers access information (such as e-mail and telehealth) as well as support consumers receiving home care, retail care or care in alternate sites; and
• consumer engagement platform to enable communication and connection between episodes of care such as Providence’s Mom and Well Baby app.

Patient experience. Amazon sensibilities are being brought to bear across Providence as they innovate to enhance the consumer experience — whether for patients, healthy people or health plan members. A key challenge is to make the health system simpler and easy to use and relevant in their daily lives by focusing on health. All of us who use Amazon, Uber or OpenTable yearn for that simplicity in health care. 

The Boeing accountable care organization. Providence, along with Presbyterian in New Mexico, is an early pioneer in direct contact ACOs with employers. Boeing and Intel are tough, sophisticated, data-driven and demanding enterprises that expect extremely high performance from their suppliers, and health care is no different. Providence is winning the business and trust of Boeing employees in part through its digital innovation agenda.

“We own a high school…We can learn from them.” With a wry smile, Hochman pointed to the fact that Providence owns and runs a Catholic high school in Burbank, California, and suggested there is no better way to understand the behavior of future patients and health care workers than to understand the digital behavior of teenagers.

Walgreen’s partnership. Recognizing the retail revolution in health care, Providence has partnered with Walgreen’s and in a first for the retailer, will allow the health system to own and operate the clinics in Oregon and Washington with plans to open 25 stores in the Pacific Northwest over the next 18 months.

Migration to risk. Providence has operated a health plan in Oregon for nearly 30 years. With more than half a million at risk lives, currently mostly in Oregon, Providence can use its expanded geographic footprint through its merger with St. Joseph to offer ACO and direct health contracting to many more self-insured employers in the West. Providence’s commitment to migrating toward risk was evident when Hochman told HX360 attendees that Providence tries to “disconnect reimbursement from delivery” and endeavor with “PCPs and clinics to create compensation models as if we are under risk.”

Genomics, too. Providence just announced that the Institute for Systems Biology is joining Providence and that noted genomics researcher Dr. Lee Hood who leads the Institute will become the Providence system’s chief scientific officer. Hood’s pioneering focus on scientific wellness based on personalized medicine using genomics and big data will provide Providence and St. Joseph with exciting new avenues for their innovation agenda.

Looking Ahead

There are a few key health systems in the country that are market makers, not market takers. They shape the future through their strategy and the big bets they make. You know who you are. When it comes to innovation at scale, Providence is a system to watch, especially as it enters its proposed new partnership with St. Joseph. The Seattle-based system will be a major and growing force in the health care market and will teach us all how to bring in fresh, innovative thinking from outside the health system. We need innovation at scale.

It’s that time again. We get to pick a new president. And what an array of choices: socialists, secretaries, surgeons and senators, as well as several governors, a Clinton, and of course Donald Trump, who has excited the electorate and insulted most of the world’s mainstream religions. Is this a great country or what?

From Single Payer to Repeal and Replace

The range of political options is staggering and extreme. Bernie Sanders has unapologetically advocated for a single payer system, which is energizing college students (but not so much members of the U.S. Congress).

At the other extreme, Ted Cruz has sworn to repeal and replace Obamacare and end employment-based health insurance. And Ben Carson would like everyone to have a lifetime health savings account.

With the exception of Hillary Clinton, who has vowed to build on Obamacare and expand coverage and affordability (which is code for more subsidies), all of the candidates’ positions would limit the growth in dollars flowing into health care. And less money in the future will mean fewer health care jobs created.

As the national domestic policy debate centers on profound policy disagreements over jobs, income inequality and health care policy, let us not lose sight of the fact that health care is a major jobs engine delivering good jobs at good wages.

A Resilient Jobs Creator

I was always taught that health care expenditures equal health care incomes. It is a perfect equation. Expenditures are a function of the number and type of services delivered multiplied by the price. And the total expended on health care exactly equals the number and type of people employed in the health care system multiplied by their income. (OK, there is a little leakage to insurance and profit, and to drugs and supplies and so forth. But insurers and pharmaceuticals hire people, too, to misquote Mitt Romney.)

Let’s be clear. Spending more on health care has an opportunity cost. We could spend it perhaps more productively (and in more health producing ways) on education, housing, transportation, infrastructure and so forth. But that is not likely. Instead, in a world where globalization and technology and the ravages of the financial crisis have gutted the finances of the middle class, health care remains a resilient middle class jobs creator. Health care really is the mother of all Keynesian industries, and more productive and humane than digging holes and filling them up again (which is what Keynes once advocated because of the effect on employment and income).

But what are the facts? How good a job creator is health care?

The Chart

The chart below was published in 2014 in a major review of health care and employment by the Bureau of Labor Statistics (BLS). It shows the

resilience of health care employment through the dramatic job losses of the Great Recession.

From 2004 to 2014, health care added approximately 250,000 jobs per year. And since the report was published in 2014, we have seen the coverage expansion of Obamacare kick in. Jobs in health care have grown in parallel at an annualized rate of 400,000 to 500,000 per year over the last two years.

This is not new. A September 2007 BusinessWeek cover showed a Rosie the Riveter look-alike in nurse’s garb. The story detailed that basically all of net private sector job growth from 2000 to 2007 was found in the health care sector.

(Critics of the article at the time pointed out that other sectors of the economy, like retailing and food services, also added jobs on a net basis. But these sectors were swamped by manufacturing job losses, leaving health care as the industry accounting for all the overall net growth in jobs.)

Any way you cut it, health care is a major jobs creator and consistently has been for decades.

And for most geographic areas, from rural America to the largest cities, health care is a major if not the major employer. In a lot of America, health care is a key element of the economic base.

Growth in Good Jobs at Good Wages

The BLS report from 2014 not only looked back but ahead at the prospect for jobs growth in health care. The BLS forecast 26 percent growth in health care employment from 2012 to 2022, an increase of about 4.1 million jobs over the period. Growth in employment in offices of health practitioners accounted for 1.2 million of that overall growth, with hospitals accounting for approximately 800,000 of the increase — the balance (a 2.1 million increase) being in home care, long-term care and other ambulatory services. Indeed, home health care is forecast to experience the most growth in jobs of any sector by a full 60 percent from 2012 to 2022.

And these are good jobs. Most of the growth in hospital jobs is expected to occur in occupations such as nursing or hospital administration, with incomes in excess of $60,000. In the ambulatory environment and alternate site environment, more of the jobs are in occupations such as aides, assistants and personal care staff, although jobs for nurses are forecast to grow substantially in these sectors, too.

And many of these jobs are unionized, with resulting higher incomes. While unionization continues to decline across all industry sectors (with only 6 percent of the private sector labor force in unions), health care has a higher penetration of unionization (approximately 11 percent nationally), but not nearly as high as public sector employees (where over

a third of the workforce is unionized).

Why will health care jobs continue to grow? According to the BLS, the basic drivers are demographic: A growing, aging, more chronically ill population provides the fuel for health care demand. Add the technological advances that will create new procedures, tools and interventions along with the coverage expansion of recent years, and it seems hard to believe that growth will somehow stop.

The demographic factors are certainly important key driving forces for employment growth. And there is reason to suspect that employment growth will come from the stunning and increasing complexity of health care. Think: navigators, Medicaid eligibility workers, population health managers, care management professionals and social media specialists, to name a few.

Could the Jobs Engine Stall?

If Ted Cruz or Bernie Sanders were to prevail and have his ideas actually implemented, then we are probably looking at significant reductions in health care employment. Economists have reviewed Bernie Sanders’s plans and, at best, they estimate the Sanders plan would reduce health expenditures by a half trillion dollars or so (which, remember, equates approximately to a half trillion of jobs and incomes).

If more moderate regulatory schemes were implemented ­— for example, the proposals academic researchers

have made to limit all private insurance payment rates to no more than 125 percent of Medicare — such schemes would likely require a minimum of 20 percent layoffs in hospitals, given current care models.

Donald Trump will take care of everyone with health care and will bring so many jobs back that we will have plenty of good jobs in every industry … for the best people. So maybe we don’t have to worry about health care jobs in a Trump administration. I relish reviewing the specifics.

But the jobs engine could stall for reasons beyond political and policy malfeasance. Here are some trends to watch for:

Care redesign. If we seriously move from volume- to value-based payment and redesign care, we may change the locus of care even more dramatically than is already forecast by the BLS report. Creative use of scope of practice changes, new technology and innovative care pathways could transform the jobs outlook.

Uberization. Uber is a metaphor for disruptive innovation. Uber has killed taxis in many cities and now threatens to enslave debt-ridden Uber X drivers who have company car loans and need to keep driving to pay them off. Kinda like cab drivers, eh? We have yet to see a big disruptive player in health care. But if it comes, it could change the jobs outlook. I am not holding my breath. Software solutions don’t change diapers, or give bed baths.

Immune to foreign competition. One key advantage health care has over most industries is that it is harder (but not impossible) to outsource health care to other countries. While there is some medical tourism (of which the United States is still a net beneficiary), health care remains a local good delivered in person. There are obvious exceptions — from Australian-based radiology services to flying to Thailand for a hip replacement. But for most Americans, health care will be delivered and consumed locally, creating good jobs at good wages.

Ian Morrison, Ph.D., is an author, consultant and futurist based in Menlo Park, California. He is also a regular contributor to H&HN Daily and a member of Speakers Express.

As we enter a new political season, the direction health care policy and practice should take will be hotly debated. Do we know if expanded coverage has increased access to care? How affordable is that care, really? And in turn, what impact has increased access to care had on the health of populations? Drawing on a range of evidence from the Oregon Medicaid experiment to the national coverage and access trends under the Affordable Care Act (ACA), this column tees up the debates on “if not Obamacare, then what?” And if we actually do proceed as planned with the ACA and marketplace reform, how do we improve the connection between coverage and health?

The Connection between Coverage and Health

Giving people insurance cards doesn’t mean that you have necessarily improved their access to health care and health. That connection is not lost on health policy leaders. As Peter Lee, executive director of Covered California, told me in an interview: “We are very focused on all parts of the chain connecting affordable insurance coverage to access to care that the insurance provides, and in turn to the performance of the health care system in delivering health for the population we serve.”

It is undeniable that coverage has been expanded substantially under Obamacare, with approximately 20 million of the 50 million uninsured gaining coverage (half through Medicaid and half through exchanges). Coverage expansion has been achieved in every state (except Wyoming), even in states that were strongly opposed to coverage expansion through Medicaid. Indeed, a recent State Scorecard report published by the Commonwealth Fund covering data through 2014 found that 39 states had reductions in the rate of uninsured of 3 percent or more. Ten states had even more major reductions (6 to 9 percent), from around 20 percent uninsured to around 12 percent. These 10 states, including California, Washington and Kentucky, expanded Medicaid and established high-functioning state exchanges.

The Commonwealth Fund report also lays out substantial progress in many states on performance measures such as access to care, equity, affordability, health system performance on such issues as readmissions and preventable harm, and prevention. On balance, it seems that much has been achieved across the country in coverage expansion, access to care and improving health.

But there is also evidence that the promise of Obamacare has not been completely fulfilled in many dimensions, such as true affordable coverage (particularly for ambulatory services), reduction of unnecessary emergency room (ER) visits, access to primary care and specialty care services, and impact on health outcomes.

This wide range of emerging evidence, sometimes contradictory, is being used (and sometimes abused) in political and policy circles as candidates prepare for party primaries and the presidential election debates ahead. What should we make of the progress so far? What matters to hospitals and health systems? And what does it mean for the future?

Following the Chain from Coverage Expansion to Health

The chain between coverage expansion and health starts with affordable coverage, and that affordability has two main components: premium levels and out-of-pocket costs. The cornerstones of the ACA were Medicaid expansion and insurance exchanges. Medicaid is characterized by low cost sharing and premium sharing in most states, although Republican governors and statehouses in states such as Ohio and Indiana have pursued Medicaid expansion using more aggressive cost sharing: skin in the game for poor people. Brilliant.

The core starting point of affordable premiums is a high-functioning risk pool and the rules of the road to maintain it. Covered California’s Lee points to the principles that the California exchange has followed from its inception: “We are an active purchaser state; using standardized benefit designs with fewer simpler, clear and comparable options; and no plan differences in the individual market inside or outside the exchange.”

Rate increases nationally on insurance exchanges for 2016 vary widely, but the basic lesson is that if consumers are prepared to shop around, the rate increases for 2016 can be manageable and modest. Take Nebraska, a typical non-expansion state with moderate numbers of uninsured close to the national average. In Nebraska the approved exchange insurance premium rates increased anywhere from 15 to 30 percent for 2016; however, two new insurers entered the market for 2016, offering rates that were identical if not slightly lower than the market leading rate of 2015. So careful consumers could have zero increase in premium from 2015 to 2016. That is the general story: the more high-functioning the exchange (such as an active purchaser like California), the more competitive the insurance market (not sheer numbers of players but also their capability and commitment to the market) and the more the consumer is prepared to shop around, the more affordable the rate is likely to be.  Hey, that’s why the call it a market.

Obamacare critics carp about “corporate welfare for insurers,” referring to the three Rs program (risk corridors, reinsurance and risk adjustment) that are intended to make insurers whole, financially if they suffer extraordinary adverse selection from sick patients. Similarly, United Healthcare recently complained it is losing money on its exchange business nationally and threatened to pull out in 2017. No such concerns exist in California, according to Lee: “Insurers are not losing money in California, and they paid into the national risk corridor program rather than needing a rebate.” Again, here is testimony to a high-functioning risk pool and an active purchaser marketplace.

But elsewhere the picture is not always so rosy. For example, the CO-OPs (local, community-based nonprofit startup health plans created with seed funding from the ACA) were all counting on three R bailouts to make it through the next winter. Not happening. Sorry, CO-OPers, this was a bad idea from the start. I had a slide when CO-OPs first were conceived that showed a grainy picture of an Amish barn raising, onto which I photoshopped a neon sign that said: “North Dakota CO-OP: We suck! But we’re Local.” Weirdly prophetic. This was amateur hour and it should never have happened. Just like we need to shut out the crazies on the right, we need to shut out the crazies on the left; CO-OP is a perfect example of Liberals Gone Wild.

Done correctly, exchanges orchestrate access to private insurance, and most importantly, they are the vehicle for delivering both premium subsidies and cost sharing support. Nearly 90 percent of Americans gaining access to coverage through state and federal exchanges are receiving some form of subsidy. And let’s be clear, many of those folks (some would argue most) would not buy the coverage without a subsidy because they simply could not afford coverage and still eat.

Critics of exchanges (from both the right and the left) have argued that Obamacare is not really affordable coverage even after subsidy because of the high deductibles. It is true that Obamacare has legitimized high deductibles by establishing high thresholds for individuals and families, but compared with what? Employer-sponsored coverage? Surveys show that 40 percent of workers with employer sponsored coverage now have a deductible of $1,000 or more, and 20 percent have a deductible of $2,000 or more (and the proportion of Americans with ever higher deductibles grows every year).

Less attention has been paid to the cost-sharing reduction provisions of the ACA for those covered through exchanges that earn less than 250 percent of the Federal Poverty Level. In California that is 58 percent of all those covered through exchanges (similarly nationally). The cost sharing provisions substantially increase the actuarial value of the plan and therefore reduce the total financial burden for low income folk, and the provisions have significantly reduced the barriers to accessing care.

Awareness of these provisions remains relatively low in the general population and in the populations who would benefit. Yet in surveys of newly covered populations who now understand their coverage, satisfaction with covered benefits and out of pocket costs is as high if not higher than those with employer-sponsored coverage.

Coverage expansion has

undeniably helped hospitals and health systems by substantially reducing the uncompensated care burden. But the rise of high deductibility has dampened demand for some ambulatory services and has potentially increased bad debt for physicians who are seeing more patients with high deductibles. In addition, Medicaid expansion and exchange related discounts to insurers have weakened margins as payer mix for hospitals and physicians skews more toward public coverage. Overall, coverage expansion has been a financial positive as evidenced by various metrics such as the overall reduction in uncompensated care and the robust economic performance of for-profit hospital providers attributed to the positive effects of coverage expansion.

Access to Care

Getting an insurance card should improve access to health care services, and apparently it has. A March 2015 tracking survey by the Commonwealth Fund, reviewing progress from ACA expansion, found that 68 percent of the newly covered had used the card to access care, and 62 percent of that group said that “prior to getting this coverage, they would not have been able to access and/or afford this care.”

A similar story comes from Kaiser Family Foundation surveys conducted on the California experience and released in May 2015. The report found that among the newly covered, significant majorities had a usual source of care and a regular doctor compared with a minority of the uninsured. In particular, 43 percent of uninsured adults reported a usual source of care, with 22 percent having a regular doctor; among the newly insured, the percentages were 61 percent and 43 percent respectively, compared with 80 percent and 70 percent for the previously insured.

Looking at all Covered California members and all Medicaid members compared with the privately insured, both Medicaid (71 percent) and Covered California members (69 percent) have a usual source of care, which is getting close to the 81 percent rate enjoyed by the privately insured. As these newly insured are gradually absorbed into the delivery system and they “learn” to use their new coverage, these numbers are likely to rise.

As Lee told me succinctly: “We have not been flooded with complaints from people who can’t access doctors.”

The Kaiser Family Foundation study found that only 7 percent of the newly covered Californians had providers say they did not accept their coverage, compared with 4 percent of the previously covered.

But, the access to care issue is complicated. Which providers? What settings? What quality? What about specialists? Do we have enough primary care providers? What

happens in 2016 when payment rates for primary care under Medicaid revert back to previous levels (not the Medicare levels providers have enjoyed for the last two years)?

These are all good and difficult questions to answer easily. Here are some clues:

Where was the massive primary care surge? Despite claims of massive surges in primary care demand that we heard from some physicians and health systems, a study conducted by Athena Health based on data from their 16,000 providers found a surprisingly low increase in visits to primary care practices. This makes intuitive sense to me: As one of my old physician colleagues taught me, “there is only so much doctoring you can do in a day,” and absent a massive increase in supply of primary care physicians, why would we expect capacity and volume to increase massively? Indeed, when Canada finally got universal physician insurance coverage in the 1960s, overall demand for primary care did not increase much. (Higher income folk got fewer visits and lower income folk got relatively more.)

Did all the new demand end up in the ER? Another survey released in 2015 of a large sample of more than 2,000 emergency room physicians found a substantial increase in ER visits that could be attributed to the newly covered, due particularly to Medicaid expansion. In particular, 28 percent said that volumes to their ER had increased greatly since the ACA was implemented, and a further 47 percent saw slight increases. Historically, ER utilization research has shown that as many as third of visits are for conditions that could and should be seen in routine primary care settings, but because of convenience, primary care physician preference or perceived sophistication of services, patients end up in the ER. Emerging benefit designs for employer-sponsored coverage and for exchanges are intended to encourage beneficiaries to seek routine care in less expensive settings than the ER, but it is harder to craft such incentives in the Medicaid population.

What about network adequacy and affordability? “Narrow networks are a necessary building block of affordable coverage,” Covered California’s Lee told me. And while exchange recipients in surveys report less of a preference for broad networks than those in employer-sponsored coverage, the issue becomes significant for new members when they have a serious illness and may find certain providers (particularly high-profile ones) are simply excluded because of the providers’ high costs.

For me, this has gotten personal. In California, products, networks and plans in the individual market are identical inside and outside the exchange. As I have written in these pages before (see “My Journey through Obamacare”), I am in the individual market, and all I need is a low-cost narrow network that includes the Palo Alto Clinic (part of Sutter Health) and Stanford Health. The reason I like both of these systems is partly because they have national and international reputations for quality, but mostly because I live within walking distance, and I am a geography major. As we geographers say, nothing compares with propinquity.

Unfortunately for me, my insurer, Blue Shield, severed its contract with Sutter, and more recently with Stanford, because both are deemed to be excessively expensive. In a spirited letter to Stanford leaders that was widely leaked, Blue Shield’s CEO pointed to Stanford’s prices, margins and profits in comparison with Shields’ self-imposed pledge to return any profits in excess of 2 percent to customers. All noble … but now I have to drive to UC San Francisco if I get really sick.

As far as I can determine, I cannot buy any Blue Shield plan that includes these local providers. I am not sure if any plan marketed to individuals includes them, but finding that out would involve hiring Homeland’s operatives to do the necessary espionage on who is actually in what network.

This little drama is playing out everywhere. Who to blame? Obama, Covered California, Blue Shield, Stanford and Sutter, me, all of the above, no one?

The Last Mile: The Connection to Health

So coverage does seem to help access to care, but does it improve health? We have some answers from the Oregon Medicaid studies.

Oregon presented health services researchers with a rare gift in social science: a randomized trial. In 2008, Oregon wanted to expand Medicaid but had limited resources, so it had to limit expansion to 35,000 of the 85,000 on the proposed eligibility list. The solution: a lottery. Assign them at random. This is as good as it gets for research economists.

Researchers at Harvard, MIT and Oregon Health Sciences University jumped at the opportunity to analyze what effect coverage expansion

really did have, not only on access to care but also on the health and financial outcomes for enrollees. What did they find?

Coverage expanded utilization. Not surprisingly, and consistent with all we have seen with Obamacare, coverage increases utilization. Comparing the covered with the uncovered: Outpatient care was 35 percent higher, hospitalization was 30 percent higher, prescription use was 15 percent higher. And 18 months after implementation, ER visits were up 40 percent. The study found: “Overall, the increased health care use from enrollment in Medicaid translates into about a 25 percent increase in annual health care expenditures.”

Prevention improved. Coverage improved preventive practices, with cholesterol monitoring up 50 percent and mammograms over age 40 doubling, for example.

Beneficiaries were better off, financially. Catastrophic financial consequences of health care were eliminated for the covered population, and the financial burden to enrollees was sharply reduced.

Health improvement proved more elusive. The study found that in the first one to two years of coverage, Medicaid

improved self-reported health and reduced depression, but had no statistically significant effect on several measures of physical health. In particular, the study found that:

“Medicaid increased the probability that people reported themselves in good to excellent health (compared with fair or poor health) by 25 percent.

“We did not detect significant changes in measures of physical health including blood pressure (systolic or diastolic), cholesterol (HDL or total), glycated hemoglobin, or a measure of 10-year cardiovascular risk that combined several of these risk factors. Nor did we detect changes in populations thought to have greater likelihood of changes, such as those with prior diagnoses of high blood pressure of the portion of our population over age 50.

“Rates of depression dropped by 9.2 percentage points, or a 30 percent reduction relative to the control group rate of 30 percent.”

On balance, coverage did have an effect on self-reported health status and on depression, but did not have any measurable effect on objective measures of physical health, which many observers would argue is the ultimate goal of the health care system and of expanding health care coverage.

The Chain of Coverage Expansion to Health and Its Impact on Policy and Politics

Iowa is upon us — and then who knows who will be running the country?

If Republicans are ascendant in 2016, they will seek to chip away at Obamacare and roll back subsidies and Medicaid expansion, jeopardizing the coverage gains made for 20 million Americans. The candidates and their advisors have said as much. Less money for subsidies and more block grants and flexibility will in turn will have a major impact on reducing utilization and revenue for hospitals and health systems that have benefited economically from expanded coverage.

If Democrats prevail, their focus will likely be on expanding coverage to the still uncovered; minimizing the economic damage of cost sharing to all who have coverage, including those with employer-sponsored coverage; and minimizing the economic damage that consumers face from high-priced outliers. A good example of what may lie ahead is the No Surprises Law in New York, where providers have to give the consumer a heads up in advance that they are going to be screwed by the second assistant surgeon who is out of network. Nice try, but it doesn’t really solve the problem. If Democrats prevail, hospitals and health plans will feel pressures on margins from attempts to box them in on price, either directly through regulated prices or indirectly through requirements on network adequacy and standardization of benefit design.

So pick your political poison: pressure on the top line or the bottom line. Depending on your mission, vision and values, you’ll make it all work one way or another. That’s your job, and I have confidence in you all.

Implications for Hospitals

No matter who is running the country, hospitals can learn from what we know about the connection between coverage, affordable care and health outcomes. And we should use these insights to encourage us to find new ways to deliver care that are more affordable to cover and are more effective in outcome. In particular:

Don’t expect massive expansion in coverage. Even if Democrats prevail, don’t expect massive coverage expansion from 2015 levels. Exchanges will do well to have the same number of enrollees who have paid their premium by the spring, as they did at the end of 2015. Why? Overcoming the 30 percent churn is an enormous head wind, given that the low-hanging fruit have signed up and an improving economy has meant that employer-sponsored coverage has remained stronger than expected in a tightening labor market. Further Medicaid expansion is possible in some states, but many of the more conservative state legislatures will still resist Medicaid expansion like they resist Syrian refugees (even if Hillary is president).

Ask whether medical care is just overrated. I must confess I find it a bit of a buzz kill to find the whole connection of coverage expansion to health outcomes falls apart at the end of the story with the results from the Oregon Medicaid experiment. Is medical care just over-rated as a contributor to human health? Is it just so for low-income people? Do we have the right delivery models to truly connect the dots? I think we have to use this as a learning opportunity to rigorously explore models of care delivery that improve outcomes, not just provide access to medical services.

Focus on delivery model innovation for Medicaid and low-income populations. A specific subset of this problem is finding sustainable, affordable and effective delivery models for low-income, economically vulnerable enrollees in Medicaid and beyond (even in employer-sponsored coverage). High-deductible narrow-network insurance is not a coverage panacea for the bottom half of the income distribution, no matter who pays for their coverage, nor perhaps is episodic fee for service delivery. But what? Kaiser may help us find solutions as it takes on more Medicaid patients, and other health systems are exploring targeted delivery innovations focused on lower income patient segments. We need more solutions, including new delivery models. FQHC 2.0 perhaps?

Be accountable for health outcomes. In all our dalliances with accountable care, we must remember to be accountable for health, not just ticking all the boxes of service delivery. As the Commonwealth Fund state scorecard shows, we are making significant progress on all fronts across the entire country. Let’s build on that progress and better connect the dots from coverage expansion to health creation. And most of all, please let’s not get distracted by political demonization and demagoguery that undermines or reverses the substantial gains we have made and the significant improvement that will lie ahead if we are smart and focused on our important work.

Ian Morrison, Ph.D., is an author, consultant and futurist based in Menlo Park, Calif. He is also a regular contributor to H&HN Daily and a member of Speakers Express.