Tag: wall street journal

Chicken or egg: Do family dinners lead to health or vice versa?

November 19th, 2014 by
No class warfare at breakfast, please!
No class warfare at breakfast, please!

We’ve heard for a long time that families that eat dinner together experience all sorts of benefits: better physical and mental health, better diet, more satisfaction. According to today’s Wall Street Journal (No Time for Family Dinner? Try Breakfast), the same benefits may be available to families that eat breakfast together instead.

But deep down in the article we find the dirty little secret about the relationship of family mealtimes with all those wonderful things:

Children’s suppertime leg up on life may have more to do with the types of families that prioritize regular, happy time together, not the evening meal, itself, says Kelly Musick, associate professor of policy analysis and management at Cornell University and co-author of two large-scale studies that question how family dinner affects teenage well-being.

Families with higher incomes, two parents, one parent who doesn’t work and strong family bonds have family dinner more often than families without those characteristics, according to the studies. “When we accounted for that, the link between family dinner and outcomes is much weaker than previously reported,” Ms. Musick says.

It makes a lot of sense when you think about it.

It bothers me when the Journal’s op-ed page uses the term “class warfare” to attack those who call for making income taxation more progressive. The truth is that we don’t live in an equal opportunity society. Those with lower socioeconomic backgrounds often lose out due to lack of opportunity, not a deficit of virtue.


photo credit: Robby Ryke via photopin cc

By healthcare business consultant David E. Williams, president of Health Business Group.

Whining about the thousand-dollar pill

August 7th, 2014 by
Medicine is too expensive!
Medicine is too expensive!

When I saw Paying for the Thousand-Dollar Pill, an anti-Sovaldi op-ed in the Wall Street Journal by the health plans’ head lobbyist, it brought back memories from my childhood when I toured the FBI headquarters in Washington, DC. The tour guide started off by showing us a wall with pictures of the 10 most wanted fugitives in the country and asked for our help in tracking them down.

“If that’s their plan for catching these guys,” my dad whispered to me, “we’re in more trouble than I thought.”

The author, Karen Ignagni, complains that the prices charged for new drugs like Sovaldi don’t “reflect the cost of investment.” She worries that the government is giving drugs a monopoly through the patent system. And she fears that her cries for “transparency in the relationship between the price of a drug and the cost of its development” will lead to allegations of “price controls” –which the insurance industry doesn’t want. Boo hoo!

Rather than whining and complaining in the press, the insurance industry should do its job of containing costs and ensuring quality. The problem with Sovaldi, a novel drug that claims a high cure rate for Hepatitis C, is not that the per pill cost is $1000 or about $84,000 for a course of treatment. There are several drugs that cost a lot more than that and aren’t as effective against the diseases they target. The problem is that Hepatitis C is a common condition, and many, many cases that have accumulated over the years that can now be treated. That makes the total bill very high at least for the next couple years even though the total cost to the healthcare system as a whole may drop because there will be fewer transplants and fewer Hep C cases over time.

One way to deal with the problem Ignagni cites would be to move to a single payer system and global budgeting. Then the government could just dictate the price and be done with it. You don’t see the national health insurance systems in other countries quaking in their boots about Sovaldi. Instead, they’re negotiating prices and limiting the treatment to those with severe disease. Once competitors enter the market, access is likely to be expanded.

Clearly the US health insurance industry doesn’t want to put itself out of business so I don’t expect Ignagni to cheerlead for single payer. But I would expect closer scrutiny of the clinical claims being made for Sovaldi, which are not as airtight as they are typically presented. Plans could take a harder line on price negotiations, encourage some patients to wait for treatment, and more publicly critique the evidence beyond Sovaldi.

Meanwhile, I think it’s great that companies that come out with novel, useful drugs can make a ton of money.

The health insurance industry shouldn’t come crying to me or the rest of the American public if they can’t figure things out.
photo credit: ★ spunkinator via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group


Games health plans play: Understanding 2015 Obamacare premiums

June 19th, 2014 by
Get your health plan here!
Get your health plan here!

Health plans are starting to announce the rates they’ll be charging on health insurance marketplaces (aka exchanges) for 2015, the second go-round for Obamacare. For students of business strategy, healthcare policy and game theory, the results are fascinating to watch.

According to Avalere Health, average monthly premiums will rise 8 percent across the nine states with rate filings so far. Average premiums in Oregon will drop, and in other states they’ll increase between 2.5 and 16 percent. Meanwhile, the variation in price between the lowest and highest priced plan in each states will actually be bigger in 2015 than this year. The Wall Street Journal pursues a different angle, focusing on the 8.5 to 22.8 percent increases proposed by the largest health insurer in each state.

Here’s my take on what’s going on:

  • Health plans went into the 2014 market pretty aggressively. They didn’t want to miss out on the biggest increase in newly insured patients ever, so they dived in even though they were unsure of how profitable the business would be
  • As expected –and consistent with the intent of Obamacare– customers were able to compare plans on an apples-to-apples basis. Most shoppers paid close attention to price. As a result the health plans with the lowest or second lowest price grabbed the biggest market share in all 10 states the Journal analyzed. That helps explain why the Journal’s 8.5 to 22.8 percent price increase is so much bigger than Avalere’s 8 percent figure. Plans with the lowest prices are increasing rates for two reasons: first, they may have underpriced their products in the first place and are not meeting profitability targets. Second, they hope that consumers won’t bother to switch –since it will be easier just to keep what they have. The amount of switching will depend on how easy the exchanges make life in year two –something that is not known yet. Let’s just say that the big winners from last year are hoping for some friction that makes it easier just to renew
  • In an efficient, commoditized market, one would expect prices for similar products to converge rather than widen, which is why it’s so interesting that price variations are actually increasing for 2015. But we can understand this outcome if we consider the market dynamics. Health plans that over-priced last year did not gain as many new customers as they had planned. So this year they’re being especially aggressive, because they want to gain share and feel the need to overcome the inertia of other plans’ customers, who may not feel like spending time shopping for health insurance again or may worry about disrupting their relationships with providers. In addition, new plans are entering the exchanges, and they realize they need to be aggressive to win customers

One thing that neither Avalere nor the Journal emphasized is that while average premiums are rising and top players are raising their rates more, it should be possible for most consumers to obtain lower rates than they paid in 2014 as long as they are willing to change plans.


By healthcare business consultant David E. Williams of the Health Business Group

WSJ does a little bit better on retiree health insurance exchange follow-up

September 10th, 2013 by

I criticized the Wall Street Journal’s coverage of IBM’s decision to put its Medicare-eligible retirees into a health insurance exchange. (See Health exchange confusion: WSJ style.) The article was unduly negative on exchanges without really explaining what they are. And the fact that the policy shift was limited to Medicare-eligible retirees should have been highlighted more directly.

In a follow-up article (Time Warner Joins IBM In Health Shift for Retirees) the same author does a little better. At least he makes exchanges the explicit subject of the article, not about how companies are abandoning their retirees. And there’s a quote from an AARP spokesperson in favor of the concept.

Health insurance exchanges (or marketplaces, which I prefer) are a good thing. They offer individuals and families a broader choice of coverage, which means they’re more likely to find a plan that’s a good fit. I hope the Journal decides to do a more detailed piece about what private exchanges are, how they differ from public exchanges, and how they work. That would be much more of a service than these pieces about individual companies making changes, which provide such an incomplete picture. This article, for instance, does not specify whether Time Warner’s move is limited to its Medicare retirees or whether it affects all retirees, which would be a much bigger deal.

Does ObamaCare really depend on the young?

July 25th, 2013 by

Health Law’s Success Rests on the Young” is the headline on a front page Wall Street Journal article today. The Journal’s Op/Ed pages have been hopelessly reactionary for decades, but it’s only recently that the news section has started to become polluted with bias.

The article makes it seem as though ObamaCare’s survival depends on 20-something’s signing up for health insurance to pay for all the old, sick people out there. The article also points to Portland, OR to demonstrate that subsidies for those with low incomes will be lower than expected and thus will discourage people from signing up. The implication is that young adults won’t sign up for health insurance because it will be cheaper to pay the penalty for violating the mandate than to buy insurance.

The article includes a balanced view if you look carefully, but t de-emphasizes a number of important points:

  • Penalties may be low at first, but they go up by a factor of 4x over the first three years starting in 2014. So even if it seems worthwhile to pay the penalty at first, that calculus will change over time
  • The reason subsidies are lower than expected is because some insurance companies are being more aggressive than expected in offering low-priced plans. Those low prices are available to all –whether they are eligible for subsidies or not– and I expect people to choose those inexpensive plans. Contrary to what critics expected/hoped for, prices on the exchanges will be aggressively low
  • The exchanges are only one of the ACA’s mechanisms for offering health insurance to young adults. Everyone can stay on their parents’ plan till age 26, small employers will receive subsidies for coverage, and Medicaid eligibility will be expanded. It’s a real stretch to assert that those who aren’t covered by any of these mechanisms are the key to the law’s success