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October 2014

Exhibit A of underwhelming design: the "new" Google Maps

(Update: for a peek into the DDI2014 conference, check out my previous post on Design vs Innovation.)

With all that talk by very successful multimedia designers and other creative types making jibes at big companies during DDI2014, it is easy to forget that sometimes, such designers (maybe not the ones at the conference, but at least their colleagues) can fall flat on their face quite spectacularly. Case in point: the "new" Google Maps, although it is not so new anymore. Why did anyone think it was a good idea to remove the navigation button that lets you explore the surroundings by yourself, or just check the name of a nearby street that doesn't appear in the corner of the map you're looking at? Checking the name of nearby streets can be useful when you're driving so that you know to get ready for a turn. (And yes people can use GPS, but sometimes the GPS doesn't give you the route you want to take, for instance if you want to take a scenic route or avoid a toll highway.) Exploring stores on side streets if you plan to be walking through the neighborhood doesn't seem like such an outlandish idea either. Isn't the first rule of design to ask users how they use the map? Because I have a hard time imagining I'm the only one who wants to be able to get information from the map besides the route that Big Brother Google has helped me pick (even if I get to adjust it). 

At a more conceptual level, I thing today's online maps are really terrible, given what the web allows us to do. For instance, one could imagine multiple layers on a map, color-coded to show restaurants or hotels or coffee shops or residences. (By that I mean that the whole building would be color-coded.) Even better: you could use the information that businesses put on Google Maps to tell users (or provide an option for the users to see if they so wish) which businesses are still open at a certain time and give an idea of whether the area is deserted or full of activity. It'd be good to get such information for pedestrians and not just car traffic. 

On one hand, Google Maps and Mapquest are free services, so there is only so much users should ask of them. On the other hand, since their revenue management philosophy relies on advertisement, maybe the loss of the navigation button on Google Maps is associated with a desire to gather more actionable information about users' searches - if I use the navigation button to look around, Google won't know what exactly I'm looking at. If I use the "search nearby" function, Google knows what I'm interested in and what link I ultimately click on. 

In the end, you can't wish for Google Maps to look more like Paula Scher's iconic, colorful maps. That just wouldn't be practical; however, there has to be better ways to visually convey information than what Google Maps or Mapquest have been doing. I like some of the things the folks at Google Creative Lab have been doing, but not with respect to maps. (To be honest, their contribution vs the contribution of Google's engineering team isn't completely clear to me. Maybe all the blame should rely on the engineers.)

If Google is to remain a symbol of tech-driven creative energy, it might want to step up its game a little. There hasn't been much creative in the way they have handled maps or even email. (For instance, visualization tools to sift through and organize email should be a lot stronger. Today's email appears in long vertical lists on the screen and is classified using text labels. If you look for an email and don't remember exactly the words in the email or the date, you have to go through long email chains to find what you're looking for - which in my case, is often an attachment someone sent me without using a descriptive title. I wish there was a "notes" function on Gmail, but there is not. In this day and age, you should for instance have visualization tools showing you the email exchanges you've had with a given person over a period of time and the topic of those exchanges with little snippets of the email containing the key words and icons showing you which documents had been attached to which email. I also think there should be, for Gmail, something to be gained from the oft-maligned Google+ in the way that emails vs posts are displayed in the composition window, making email composition a lot more visual than text-driven. Or at least an option to better visualize previous emails in a chain while you are composing your answer.)

I'm not saying it should be free. I like Gmail - it is far superior to any webmail service I've used. I understand we are already lucky to have "free" services like Gmail or Yahoo! Mail that shift the revenue-making part of the equation onto advertisers. Maybe one day Apple will develop a webmail type of service that it can bundle into the pricing of its computers. (Actually, that would be a great idea, although I'm not sure that it wouldn't be a distraction for them from their core products.) I'm just saying, if you want to brand yourself as a tech-creative pioneer, you've got to make sure you can deliver in terms not only of technology but also creativity for the products you put in the marketplace. Maybe that's not Google's goal: it is first and foremost a technology company. But then one has to wonder what the folks at Google Creative Lab would have been capable of doing if they'd been at a company that valued design and creativity a little more.


Design vs innovation

I went to MIT Media Lab's Design-Driven Innovation (DDI) conference where, among other things, five teams of students presented a product they created during a weekend-long hackathon (there were 11 teams, but only 5 were selected to present at the conference). Among the 5, there was 1 that attempted to solve a pressing public-safety issue by creating a helmet that would be useful not only once you have an accident by protecting your head from a fall, but beforehand by incorporating lights that would blink if you are going to turn (activated by the blink of an eye) or decelerate. I think there might also be a series of lights that could be turned on at night. The idea is to help motorists better understand what bicyclists are doing so that they can avoid a crash. The students had a working prototype that they filmed working correctly on the MIT campus. They say the cost of materials was about $80 per helmet, while according to their presentation, the cost resulting from bicycle accidents in Massachusetts is said to be $4 billion a year. Perhaps someone else has thought about this before, and there would be then be a need for the student team to make a business case for their idea and justify why their product would be more successful than whatever currently exists in the marketplace.

The other teams had products that weren't overly useful and some presentations were stronger than others but their prototypes worked and they made good cases for their little innovation. The last team created a device that would allow users to create and broadcast their own online radio station; others would notice part of the device in their front pocket with the channel number on it and would then be able to listen to the channel. They dubbed their concept "social listening" and, having a MBA student in the audience, it shouldn't come as a surprise that they were the only ones who had secured a webpage and a Twitter name (@WaavyIsComing named after their product Waavy). You can really tell when a MBA student is part of the group and when there is not: MBA students make sure interested folks can stay in touch somehow. No doubt it will positively affect the product's chance of seeing commercialization.

At the end of the five presentations I was sure that the bike-helmet team (I don't want to give their name in case someone else then grabs the domain name instead of them) was head and shoulders above the others. It simply taps into a much more important collective story. You may not bike but if you drive you've probably seen bicyclists around and maybe worried about how to safely pass them or perhaps witnessed near-misses between bicycles and cars. The safety of bicyclists is simply a bigger story, especially in conjunction with the sustainability movement and the rise in bicycle accidents.

In the end, the helmet team did win second place and a check for $2,000, but judges picked for first place ($3,000) a product where the soles of people's shoes light up neon pink or neon green or neon blue based on some interface on your phone when you are looking for your friend or your own shows light up neon blue and that, if you're lucky, tells you something about what is underground (although obviously the data would need to be available and formatted in a usable way to be incorporated on the smartphone, and that part seemed more wishful thinking than impending reality). And the name they picked for it was just cheesy, but it went well with the whole purpose of the product.

Now, I'm not competent to judge design itself, but if you think of the bigger picture, for design to be taken seriously, it is perhaps not the best-advised move to pick for first place a product that made people laugh because of its ridiculousness and the vacuity of its purpose, no matter how well done it was (LED lights in 3 colors!), instead of the product that had an important public-safety purpose. The need the helmet product solved is just far more critical for society. If the sole of your friend's shoe fails to light up when you look for her, you can call her and ask where she is. If you don't build better helmets, some people's lives will be tragically cut short. 

Now, this was not a business competition, and I'm sure the judges had good design-based reasons to pick the winners they did. And people who make public-health prototypes shouldn't be given a free pass just because they work on an important problem and the other teams are not. (In this case, the prototype was working and seemed complex enough.) I wouldn't feel so strongly about the whole thing if the prototype of the team that had received first place actually did something interesting - the team that won third place, for instance, created a harness where LED lights light up depending on whether you put your weight on your left or right leg, to help ballroom dance students understand how dance moves are created. Not life-changing, certainly, but interesting enough. At least you learn something from watching the lights. But the need the first-place product solved was so tiny (nonexistent?) as to be ludicrous, I find.

For design to be taken seriously as a discipline central to innovation, it might need to be a bit more conscious of the image it projects through the products and prototypes it rewards. You have to be incredibly myopic and focused on your little part of the picture to miss the bigger point. You'd expect the design world, from all places, to know that image is important.


Specialty Pharmaceuticals in Health Affairs, Part 1

10.cover The October issue of Health Affairs is on speciality pharmaceuticals - those expensive prescription drugs that often find themselves in the news due to the financial burden they put on patients and payers while offering the promise of healing severe medical conditions. Here are a few articles that caught my attention. (Also, given the topic of this post, maybe my readers will be interested in a whitepaper I wrote about the Minimum Viable Market Share (MVMS) of stratified medicine in various market settings, to extend work by Mark Trusheim and co-authors in Personalized Medicine. Even if you don't like math, the tables should be relatively easy to understand since I've color-coded the MVMS based on how easy or difficult it would be for a pharmaceutical company to reach that threshold in market share.)

The impact of speciality pharmaceuticals as drivers of health care costs (B. Hirsch, S. Balu, K. Schulman, all from Duke). Excerpt: "Currently, 86 percent of prescriptions in the US market for small-molecule agents are for generic medications. This is an astonishing change from 1995, when only 40 percent of retail prescriptions were for generic medications. The industry therefore sees speciality pharmaceuticals as a way to offset losses from brand-name small molecules' losing patent protection." This paper is very good and very interesting for many reasons. Below, I'll mostly talk about the very basic mathematical model and Health Affairs's policy of relegating even the simplest math statement in its dreadful online appendix system, but it is only a small part of the paper. If you don't care about that, you can skip to the paragraph that starts with the header: "Going back to the paper".

The authors describe a simple economic model they created to evaluate the impact of specialty pharmaceuticals. In their words: "Let us assume that every person covered by a hypothetical insurance plan had a yearly out-of-pocket medical expense of $3,500 to cover his or her premiums, absent the use of any specialty pharmaceutical. The derivation of this value is presented in the online Appendix, as are the underlying assumptions of the cost model."

What you have to understand about Health Affairs (which is the leading journal in health policy that everyone dreams to publish in) is that it puts everything that remotely smacks of data or (always basic) models in an appendix, so that the paper itself only contains the high-level setup of the study, some tables and figures, attempts at analysis, and conclusions. But the online Appendix is, per Health Affairs guidelines (not the authors' fault), a double-spaced Word file formatted in 12pt Courier font, aka typewriter font, and if you've never seen what it looks like you really have to give it a try right now to get an idea of the ugliness of it. When you see a file formatted like that, you really don't want to read it. Health Affairs's idea of data is usually R-square values for regression or some really basic statistic concept that everybody in the health policy sphere seems to agree shouldn't be in the main paper, thus making it harder to discuss the authors' basic models once they have been green-lighted for publication.

Keeping the quantitative details of a study away from the main paper and in a format that only the most dedicated readers like yours truly will want to put up with helps feed the idea to non-quantitative policy-makers that anything about math is better left unseen (and frankly, as much as I do love Health Affairs and have learned a lot from reading it, which I can't say of any other journal, the mathematical models in the journal are extremely simple, usually focused on data analysis, sometimes using regression tools. The hardest part always seems to get your hands on the data. This is not to say that I don't like the authors' models, in fact I find them very interesting. But I think Health Affairs should make its policy to include more details about the models in the paper itself to foster discussions within the community. If this sounds anathema to policy-makers, then maybe the abstract can be extended for their sake.

In the present case, let's first talk about the $3,500 value, which the authors justify in the online appendix rather than the paper itself. It turns out they took a number from the 2013 Kaiser Family Foundation survey of $16,351 per family, assumed an average family size of 4 (which, I think, is an overestimate, since the US Census puts the average family size at 2.58, but maybe the authors assume insured people are more likely to have children? they never explain that), and a medical loss ratio of 0.85. We have 16,351*0.85/4=3,474 rounded up to $3,500. (And if they had picked 2.58, it would have been almost $5,400.) When you reach a situation where the authors feel compelled somehow to put 16,351*0.85/4=3,474 (which technically they don't really put, they just give the 16,351 and the 0.85 and the 4 separately) in an online appendix, you know you have a long way to go before data is accepted by policymakers, although this is not the authors' fault.

The authors assume that cost to payers and patients is $100,000 per patient and enrollment drops by 1% for every 10% increase in the cost. (It would have been good if they could have justified this number, which they never do.) The statement that "health care costs would be expected to increase by $250 for every o.25 percent of the population using the speciality pharmaceutical or $1,000 for every 1 percent increase in utilization" follows from the fact that the costs would increase by $100,000 times the prevalence in the population. If you inject prevalence = 0.25% you get $250 in cost increase or 7.14% compared to the initial $3,500 amount, although the authors curiously put the percentage increase at 6%. (This may be a typo, because the numbers for 1% prevalence do amount to a 29% cost increase as stated.) And, that's it for the online appendix!

Because there is a 29% cost increase at 1% prevalence, enrollment drops by 2.9% given the authors' assumption of 1% enrollment drop per 10% cost increase. This means that premiums must increase by 2.9% to cover the enrollment drop. In the article, the authors then show Exhibit 2 (Rate and Percent Increase in Insurance Premiums for a New Specialty Drug Costing $100,000 per Treated Patient Depending on Disease Prevalence.) So while the authors had warned their model was "intentionally simplistic", the online appendix ended up a little underwhelming, to say the least.

Again, that's not a comment on the authors, but on Health Affairs's philosophy. (Basic models can provide very valuable insights into a topic. There's no need to go right away to a complex model if a basic model can easily give us the big picture.) Realistically, the math involved is really very basic multiplication and division of numbers (not unknowns or parameters) of the type you learn in, what, middle school. That sort of math should not be relegated to an online appendix in Courier font that doesn't even look like it belongs to the same journal, not being typeset in the journal's template.

And what happens if we use the average family size of 2.58? $1,000 is then only 19% of the baseline cost, leading to a premium increase of 1.9% or about one third lower than what the authors state. But since the authors forgot to reference their "1% dropout per 10% cost increase" number, it doesn't mean the 1.9% premium increase is any more meaningful than the 2.9% in Exhibit 2 of the paper.

Going back to the paper

The authors also point out that those increased costs could be mitigated by decreased hospital admissions. They then investigate cost-sharing through copayments and co-insurance and discuss the influence of section 340B of the Veterans Health Care Act of 1992. They explain: "The purpose of the [340B] program is to ensure access to pharmaceutical agents at safety-net hospitals." Following the Omnibus Budget Reconciliation Act (OBRA) of 1990, "pharmaceutical companies were less willing to provide aggressive discounts to safety-net hospitals" because the prices those hospitals received were now used to establish benchmarks, for the rebates that OBRA required pharmaceutical companies to offer state Medicaid programs. The 340B program ensured that "prices under this program would not be considered in establishing Medicaid rebates under OBRA" for hospitals providing high levels of uncompensated care. This has led to 30-50 percent discounts off the market price. There is thus an "enormous financial benefit" in being enrolled, and in fact, one-third of all US hospitals now participate in this program. 

Yet, the authors state, "The 340B regulations do not limit the application of discounts received by hospitals to medications used in the care of indigent patients, nor do they require hospitals to pass their cost savings along to payers or patients." The program is now expected to cost $12 billion by 2016 and may lead to manufacturers increasing their prices "to compensate for the loss in revenues related to the program." The authors provide convincing examples as to why this "may have negative economic effects on patient care."

Then they discuss biosimilars and price competition, especially given the expected loss of patent protection for several biologic agents in 2013-18. They observe that: "This approval pathway [for specialty pharmaceuticals] is not subject to the generic drug provisions of the Drug Price Competition and Patent Term Restoration Act of 1984... so there is not a standard pathway for competitors to enter the market once a specialty pharmaceutical's patent expires." They point out, however, that the Affordable Care Act "included provisions for the approval of biosimilar products" but also that "in 2010 the Congressional Budget Office estimated that biosimilars would yield only a 2 percent reduction in pharmaceutical costs by 2019."

If there is only one message to keep from this well-written and well-researched paper, it is that specialty pharmaceuticals present valuable opportunities for new innovation pathways but there is an urgent need for far-ranging discussions on their implications in the health care market.


Links Worth Reading

All from the Economist...

  • Experimental medicine: a year after the big launch, is Obamacare working? This is a very basic article about the reforms brought about by the Affordable Care Act, and in no way does it begin to answer whether the ACA is working or not. But if you haven't followed a thing about the ACA implementation, the article will give you good hints as to why the system evolved to be the way it is.
  • The problem-solvers: Hints of how to provide better health care for less money. This short insert describes a clinic north of Miami called ChenMed, which focuses on poor elderly people with many chronic conditions. The article explains: "Medicare, the public health programme for the elderly, has a growing share of patients who use government money to buy private insurance. ChenMed contracts with those insurers, most of which pay a capped rate for each patient, and then plies patients with primary care to keep them out of hospital." It also transports patients to appointments, has implemented a simple check-in process where patients only need to wave a card, and offers a mobile app that doctors can use to easily "see their patients' medical records and refer to clinical protocols." 
  • (Schumpeter column) The China wave: Chinese management ideas are beginning to get the attention they deserve. The column was motivated by an issue of MIT Sloan Management Review examining innovation and management lessons from China. It also mentions the Harvard Business Review article "A Chinese Approach to Management". A key concept is accelerated innovation, using "mass-production techniques to speed up not just the manufacture but also the development of products", launching beta versions "straight into the market" instead of to "a select group of guinea-pigs" as in the West. The speed of innovation also requires significant delegation. Excerpt: "They are developing management techniques that help them create things faster, and they are proving adept at reacting quickly in rapidly changing markets."
  • Grand openings: Changes that will bring scientific discovery more freely into the public domain are happening, about time too. About open-access publishing. However, I doubt that, given (1) how often researchers put working-paper versions of their work online, (2) most top research universities have extensive library access to those journals and (3) universities that don't have access to the journal you need to access a paper have well-coordinated inter-library services, the issue of hefty subscription bundle fees will be solved by well-intentioned open-access. What universities really should do would be to publish at least internally to their own intranet the price they pay for those journals, with access and usage data. With tight funding, who is the researcher eager to spend more money on open-access fees when he can publish for free and use the money for something else? The problem of academic journals as money machines for their publishers rather than their authors won't get solved until researchers feel personally gouged by the prices charged to their libraries. But it may open a can of worms because a university may be better known in one discipline than the other, justifying a stronger focus on the better-known discipline, and no one (in the other department) wants to be told "sorry we're going to have a lot more journals in, say, materials engineering than astrophysics because our materials engineering department is Top 10 and the astrophysics department isn't even in the Top 100, and the work that you people in the astrophysics department have been doing just isn't worth the hefty journal fees that will be better used elsewhere, although we understand you like to fancy yourselves as first-rate scholars in spite of the overwhelming evidence to the contrary. Tough luck!" At the very least, people in the same discipline should talk with their libraries to discuss which journals are more important to keep, disregarding the pressure of professional organizations that insist you lobby your libraries to add all of their journals to the roster (when the researchers aren't the people who are paying). 
  • Why textbooks cost so much (key bits: "the nominal price of textbooks has risen more than fifteenfold since 1970, three times the rate of inflation", "in 2013 the Supreme Court ruled that Americans have the right to buy and resell copyrighted material obtained legally", the article also comments that foreign editions are often cheaper and sometimes by up to 90%.)
  • Secularists at bay (on Turkey's president Recep Tayyip Erdogan): I follow closely what is happening in Turkey since some of my former PhD students are from there, so it has been interesting to listen to their perspective and then read about the events in the news, especially over a long enough period of time. I can't really recommend one article that would give a good picture of what is going on but if you are interested you should also read the comments (The Economist has the only website I can think of where you can also learn something from the most-recommended comments) and all the Economist articles from as far back as you can.
  • (Bello column) Memory is not history: "Dirty war" memorials should not be used to rewrite the past. Disclaimer: The fact that I link to this column and say it is "worth reading" is not an endorsement. In fact, I find many things wrong with it and I strongly agree with the critical comments to the column that you can read here on the Economist website. I believe it is worth reading because it is ironically a good example of what the columnist is supposedly taking issue with. The article points out that "the historical truth silenced by 'memory' is that the cold war in Latin America was fought by two equally authoritarian sides" and goes on to giving examples in Argentina and Chile. But in Chile, for instance, Allende's government was democratically elected. My understanding is that he also didn't torture and "disappear" opponents. He did implement hard-left policies and the author may be trying to suggest that Allende's policies may have contributed to the economic crisis that made the generals decide he had to be stopped through a military coup (something I read in A Nation of Enemies). The author also takes pains to downplay the number of victims of the Argentine junta. In the end I am surprised that the Economist published this. The first commenter on the Economist page put it best when he/she wrote: "It's these kinds of articles, where suddenly both sides have somehow committed equal atrocities, that try to rewrite history." You think you should only worry about the objectivity of well-known biased media outlets, but in fact "rewriting history" can creep in the most respectable news magazines too.
  • Electric conductor: A new musical director picks up the baton. Andris Nelsons has just become the new music director at the Boston Symphony Orchestra, which spent years with a music director suffering from significant health problems, and whose allegiance may have resided with the Metropolitan Opera and New York City all along. In addition to Nelsons being a phenomenal conductor, his vitality (ebullience, the article says) at 35 is well-aligned with Boston's positioning as innovation hub, with an emphasis on creativity and new ideas that extend from performing arts to technology. It also goes well with the very active Boston performing-arts scene, including fringe theater (the performing-arts equivalent of tiny startups, one might argue, in the stage of idea development, whether for a play or for a product). Quotes: the presence of Mr Nelsons "seemed to signal the start of a new, more vigorous era at the BSO where musty halls would open up to let in sunshine and a boisterous crowd." and "This new raft of [young] conductors [in Philadelphia, Los Angeles and now Boston] also reflects a wider desire to rebrand an art form that has come to be seen as the exclusive property of the grey-haired and well-heeled." You can read the New York Times review of Nelsons's first BSO concert here.

The Finance Side of the Healthcare System: Links

For today's post, here are a few resources about health policy that I found interesting.

Affordable Care Organizations

A December 2006 Health Affairs article by Dartmouth's Elliott Fisher et al, Creating Accountable Care Organizations: The Extended Hospital Medical Staff, suggests ACOs should consist of local hospitals and the physicians who work around them. The authors observe that "virtually all physicians are either directly or indirectly affiliated with a local acute care hospital, whether through their own inpatient work or through the care patterns of the patients they serve." This allows them to "empirically define the multispecialty group practices that [they] refer to as an 'extended hospital medical staff.' " 

A January 2011 article by Jeff Goldsmith of the University of Virginia, Accountable Care Organizations: The Case for Flexible Partnerships between Health Plans and Providers, makes the case that "health care services [should be divided] into three categories: long-term, low-intensity primary care; unscheduled care, including unscheduled emergency services; and major clinical interventions that usually involve hospitalization or organized outpatient care. Each category of care would be paid for differently, with each containing different elements of financial risk for the providers."

A January 2014 article by Arnold Epstein of Harvard School of Public Health et. al., Analysis of Early Accountable Care Organizations Defines Patient, Structural, Cost and Quality-of-Care Characteristics, analyzes the profile of ACO enrollees and compares it to non-ACO enrollees in order to establish a baseline for further program assessment.

ACOs have also been the topic of a number of Health Affairs blog posts, such as this one (payment reform landscape), this one (a look ahead for 2014: fantastic resource about the growth in ACOs, lives covered and geographic dispersion), this one (on current data about which ACOs, whether Pioneer, Medicare Shared Savings Program, Commercial or Medicaid, were financial winners or losers) and that one (about the Totally Accountable Care Organization, with the very unfortunate acronym TACO, although the authors themselves use that acronym and thus must be rather happy with it - maybe someone just has to come up with something healthcare-related that would make the acronym BELL and the health care system will be saved! Side note: in French, a tacot - you don't pronounce the T - is an old, beat-up vehicle, basically a clunker. I swear I'm not making it up. The authors' TACOs refer to Medicaid ACOs. They explain that: "“Totally” refers to the expectation that these organizations will be responsible for services beyond just medical care (for example, mental health, substance abuse treatment and other social supports), as well as the aspiration that these organizations will assume accountability for all associated costs of care, ultimately, through global payment mechanisms.")

Reinsurance

From a 2013 Kaiser Health News article comes a description of the ACA's Reinsurance Tax, which charges each health plan $63 per enrollee to help cover 80% of the costs for claims between $60,000 and $250,000 per person. According to the Department of Health and Human Services, premiums for individual coverage would be about 10-15% higher without the reinsurance tax (see link in the KHN article). Interestingly, it seems from the KHN article that the tax is also assessed on enrollees of employer-sponsored plans, although those employers and their health payers cannot access the tax's benefits. 

A 2005 report from the Commonwealth Fund provides a good overview of reinsurance and how it can help states lower premiums. If you don't have time to read the PDF, you can always read the issue brief instead. At the time the brief was written, state-level reinsurance programs had only been implemented by New York (excess-of-loss) and Arizona (aggregate stop-loss). Being the analytical nerd that I am, I found the details of those two reinsurance programs just fascinating. First, definitions: as you might have guessed, New York focuses on reinsurance for individual enrollees, i.e., it protects insurers "for the risk of extraordinarily high costs incurred by any individual." In contrast, the Arizona program "provides protection to insurers for the risk that a large number of enrollees may have above-average but not necessarily extraordinary expenses—a situation that typically occurs when they are more likely to have chronic health problems."

The programs also offer different incentive structures for insurers. In New York, "the insurer is responsible for 10 percent of the costs between $5,000 and $75,000 and all of the costs above $75,000." In Arizona, "the plan encourages insurers to reduce total costs."

The report also has data on how reinsurance lowered premiums. For instance, "In New York City in 2004, Healthy New York premiums were 40 percent lower than the average small group HMO premium and two-thirds lower than the self-pay individual market premium, while in Arizona, "the total state subsidy was $8 million per year [at the inception of the program in FY2001]. By FY2004, because expenses had been significantly reduced, this subsidy could be cut to $4 million."

There is also an interesting 1997 report on reinsurance prepared for HHS, but it is so old that the numbers provided in the analytics part have become completely outdated. 

Narrow Networks

This Kaiser Health News article aggregates several news articles about trends in 2015 regarding narrow networks. A great reference if you're curious to learn more about what's going on.