The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

A dose of light reading

August 9, 2013

Health care is a complicated mess.

So much so, that even top CEOs of large health care organizations tell me privately that they feel overmatched by it.

I certainly do. Which is why I read as much as I can about health care.

So starting with this post, I’m going to periodically give you a peek at my reading list. I’ll highlight reports and reportage that I have found either helpful or provocative. I hope you do too.

I’ll start with something fun: New York Times’ reporter Elisabeth Rosenthal’s thorough look at the orthopedic implant industry, centered in Warsaw, Ind., which some economists call a "cartel." Aggressive markups, by both the device makers and the hospitals that implant the devices, have driven some American patients to fly to Europe, where government price controls help them get hip and knee replacements at a fraction of the cost they would pay in the United States. If such medical tourism becomes a trend, it’s bad news for the folks in Warsaw, where three of the world’s five largest implant makers are based.

While Rosenthal focuses on the orthopedic implant makers, another study shows hospitals have lots of air in their orthopedic pricing. An analysis by two UC-Berkeley researchers of Indianapolis-based WellPoint Inc.’s reference-based pricing experiment in California, which I wrote about earlier, shows that hospitals do respond—quite rapidly—when patients are enabled and encouraged to factor price into their decisions. This study has been getting lots of attention by the press and by health policy researchers. If you want one economist’s take on its significance, look here.

If you're a consumer thinking about buying health coverage in Obamacare's exchanges later this year, the Indiana Department of Insurance came out with a helpful document that is full of examples of how the cost of insurance will change for Hoosiers buying coverage next year. The upshot of the department's analysis is this: healthy people will pay (a lot) more, unhealthy people will pay (a lot) less. I would skip to page 13 of the report to read Appendices 2 and 3, which lay out numerous examples of premium increases and decreases and then more examples that factor in Obamacare’s subsidies.

Finally, if you’re really into the numbers, I suggest you read the actuarial memos filed by each of the three health insurers that will be offering exchange plans in central Indiana. These memos explain each insurer’s assumptions about why costs will rise and for whom:

Anthem Blue Cross and Blue Shield actuarial memo.

MDWise Inc. actuarial memo.

Physicians Health Plan of Northern Indiana Inc. actuarial memo.

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