Healthcare Policy

Optimal facility in-network selection for healthcare payers under reference pricing

My working paper with Victoire Denoyel and Laurent Alfandari of ESSEC Business School is online! Read it here.

Abstract: "Healthcare payers are exploring cost-containing policies to steer patients, through qualified information and financial incentives, towards providers offering the best value proposition. With Reference Pricing (RP), a payer or insurer determines a maximum amount paid for a procedure, and patients who select a provider charging more pay the difference. In a Tiered Network (TN), providers are stratified according to a set of criteria (such as quality, cost and sometimes location) and patients pay a different out-of-pocket price depending on the tier of their chosen provider. Motivated by a recent CalPERS program, we design two original MIP optimization models for payers that combine both RP and TN, filling the gap of quantitative research on these novel payment policies. Carefully designed constraints provide the decision maker with levers for a trade-off between cost reduction and patients' satisfaction. Numerical experiments provide valuable insights in that respect, displaying also how the tiers are scattered on a cost/quality plane. We argue that this system has strong potential in terms of costs reduction for public or private payers, quality increase for patients and visibility for high-value providers."

To the best of our knowledge, our paper presents the first quantitative model about tiered-networks design for a healthcare procedure under reference pricing, a model the CalPERS pilot study will certainly popularize.

Our paper is here. (Comments welcome!) We're now working on extensions that we hope to share and discuss soon.

If you're interested in learning more in reference pricing for healthcare procedures, I recommend the work of James C. Robinson of UC Berkeley, who led the analysis of the CalPERS pilot, for instance "Payers test reference pricing and Centers of Excellence to steer patients to low-price and high-quality providers" (Health Affairs, subscription required). 


Minimum Viable Market Share for Empirical vs Stratified Medicine

In 2012, Mark Trusheim and his co-authors published an analysis in Personalized Medicine where they argued using a NPV framework that stratified drugs (drugs for patients with a specific biomarker, especially in oncology) face a very challenging financial outlook due to their smaller market potential. As a follow-up to that, I've attached a short case study I did that investigates the Minimum Viable Market Share for the scenarios in the Personalized Medicine paper under assumptions of earlier commercialization and shorter time to sales peak. It will be mostly of interest to healthcare finance professionals, and perhaps to undergraduates studying engineering economy. (It'd be a good homework problem, in fact.) The article ends on a "cliffhanger" (on my standards... healthcare finance is fascinating), since one of the six scenarios can't be made financially viable in my NPV setting. Thankfully, the work of my undergraduate research assistant Jillian Sloand last semester made important advances in addressing that, and I hope to be able to post our write-up online soon.

HarvardX: PH210x United States Health Policy

Ph210x_banner608x211PH210x United States Health Policy, taught by Professor John McDonough from the Harvard School of Public Health, is quite simply the best MOOC I have taken to date (and I have enrolled in quite a few, out of both personal and professional interest). The course is entering its fourth week tomorrow - I have to admit I only completed Week 1 so far due to other obligations, but I'm slowly catching up - and runs for a total of 13 weeks, requiring about 3-4 hours of work (mostly watching informative videos) about the US healthcare system.

Since my research is in healthcare finance, I like to think I know quite a bit about the ACA and health policy in the US today and the Health Policy Orientation Workshop in October and the National Health Policy Conference in February, both held in DC and organized by AcademyHealth, were a great help in getting a better sense of the system, but when it comes to teaching the basics of the health policy system, PH210x is a home-run. (Of course, part of the value of the conferences is also to interact with healthcare policy-makers, and MOOCs have more content-based strengths.) I also like that the "homework" questions are multiple-choices "check all that apply", instead of "pick the one answer that is true" that I have seen in other MOOCs (where I usually could guess the correct answer before watching the videos) or the "peer grading" system that other courses have put in place - I don't think peer grading works very well when the audience is highly heterogeneous.

Week 1 was an introduction to the US health policy system and the reform, presented by John McDonough. The topics on following weeks, presented by outside speakers, were Medicare (Week 2) and Medicaid (Week 3). Week 4 - online tomorrow - will be the basics of healthcare finance and payment, as well as private health insurance. Week 5 will be on quality - a topic of particular interest to health systems engineers. The whole 13-week syllabus is available on the course webpage on edX.   

In summary, if you are interested in US health policy, I highly recommend that course.

Further readings:

From HFM Magazine

Logo_mainBelow are a few articles from recent issues of HFM magazine (the monthly magazine of the Healthcare Financial Management Association) that caught my attention. All articles linked require login.

A framework for managing risk-based managed care contracts (article, December 2013) This article discusses the operational, competitive and financial risks associated to the patient population, the use of patient care management to manage operational risk, the competitive risk that may arise when boundaries between payers and providers are blurred and tactics to manage financial risk beyond malpractice and stop-loss insurance.

The new break-even analysis (article, December 2013) While the idea of questioning the assumptions that underlie break-even analysis will not strike analytics professionals as particularly groundbreaking, it is certainly a novel suggestion in healthcare finance, where quantitative tools are more recent. The article also has the added benefit of providing a detailed list of healthcare-specific factors that decision-makers should consider in their analysis, such as service on medical equipment and length of stay (especially when a new technology has the potential to decrease length of stay by an unknown amount). It is also important to consider patient demographics and competition to assess new capital investments. Finally, the article provides simple, illustrative examples for joint replacement technology investments and prostate surgery technology. 

Collaborating with payers to deliver value (article, October 2013) I liked this article for the sidebar on Mountain States Health Alliance or MSHA, which I have been researching as part of my research. MSHA is the majority owner of Integrated Solutions Health Network, a regional health solution company, through which it has created a self-funded insurance plan, its own Medicare Advantage plan and an ACO called AnewCare Collaborative.

The structure of value (article, January 2014) The author recommends the following: compelling vision, alignment of cultures between partners, early wins, measurement of patient and staff satisfaction both before and after initiatives are implemented.

Developing an exchange strategy (article, January 2014) I was very impressed by this article, which advises (1) "understanding how both the public and private exchanges work", (2) "conducting a thorough analysis to quantify how exchanges will affect the organization's current and future patient populations and revenue base" (what the author refers to later as "anticipating changes in the payer mix", on the grounds that "in many states, a greater proportion of exchange enrollment is projected to originate from commercial lives than from the uninsured"), and (3) "determining when to participate in the exchanges, keeping in mind current market position as well as competitors' exchanges."  

HFM magazine has many more fascinating articles in each issue that are must-reads for anyone interested in current practices and trends in healthcare finance.

Making the Business Case for Healthcare Finance Reform

Today's post is about a recently published report on "Making the business case for payment and delivery reform", written by Harold Miller, president and CEO of the nonprofit Center for Healthcare Quality and Payment Reform and funded by the Robert Wood Johnson Foundation. The report provides ten steps to develop a business case to support improvements in health care delivery and payment systems:

Screen Shot 2014-03-21 at 3.49.23 AM

Below is a more detailed list of questions to ask at each step, according to the report's author.

Step 1: What changes in patient care are planned? Which patients will receive the change in care? Which payers and purchasers will be involved? What benefits for patients and purchasers are expected? (reduction in avoidable complications, improvements in quality of life, reduction in cost of services) In what timeframe will the changes occur? Will there be temporary transition costs?

Step 2: Planned changes in care: number of patients eligible to receive change in services, changes in types and number of services for eligible patients, probability of eligible patients receiving the new/different services. Changes in avoidable complications and health problems: existing complications and health problems, complications from new services. 

Step 3: How payments will change under the current system.

Step 4: How the costs of services will change.

Step 5: Changes in operating margins for providers under current system: equal or better (in which case there may be no need for a change in payment system) or lower but positive margins (in which case payment systems may need to be modified to avoid disadvantaging the provider), or negative margins (in which case payment systems must be modified).

Step 6: How the payments must change to restore providers' operating margins.

Step 7: Whether a business case exists for both providers and purchasers: no change in payment needed? changes that would result in lower total spending for purchasers/payer? changes that would result in higher total spending but better outcomes for patients? changes that would result in higher total spending and worse or same outcomes for patients? 

Step 8: Refine the changes in care to improve the business case. 

Step 9: Impact of deviations from planned care and expected outcomes. There may be a business case at the expected levels, but a good business case also should include "sensitivity analysis" on key parameters.

Step 10: Design a payment model that provides adequate payment by payer to provider with sufficient flexibility to enable delivery of planned services, accountability by provider for achieving desired outcomes and protection of the provider against inappropriate financial risk. 

I found most interesting the detailed financial exhibits showing the changes in costs and revenues for payers and providers using realistic numbers. (See in particular Figure 4 on p.14, although the numbers will make a lot more sense if you have read the examples presented in the earlier steps.)

The report also discusses four sources of data required to develop the business case.

  • Health care claims/billing data: data on services delivered and on payment amounts. If payment amounts are not available, workarounds include (1) using Medicare payment amounts to estimate commercial payments (using a multiplier coefficient above 1, and analyzing the business case for various values of the multiplier) and (2) using a provider's published charges for service.
  • Clinical data: because claims data usually doesn't include information on expenses not reimbursed by the payer, and doesn't provide a full picture of patients' clinical characteristics, which play a critical role in risk adjustment and estimation of readmission rates.
  • Data on the cost of services: can only be obtained through providers' cost accounting systems, although unfortunately many providers do not currently have good systems in place. Those systems are usually also inadequate in capturing how costs will change after the implementation of the changes proposed in the business case, in particular as the volume of services changes.
  • Data on patient-reported outcomes: this information should be reported directly by patients.

You can find an interview of Miller with HealthLeaders Media highlighting key insights from the report here. His report is sure to become a much-used tool among healthcare finance professionals.

Wharton Health Care Business Conference 2014

For today's post, I'll give a few highlights of the Wharton Health Care Business Conference, which I attended last month. The conference was held at the Hyatt at the Bellevue in Center City and is entirely student-run. Two events particularly drew my attention: the startup showcase over lunch and the closing keynote speech by P. Roy Vagelos, MD, who currently serves as Chairman of the Board for Regeneron Pharmaceuticals.

The startups that I was most impressed by are Wellthie, Seratis and Fitly. Wellthie "is a digital health company whose mission is to redefine the way consumers learn about, choose and use their health insurance". Its products include the Affordable Care Advisor, "a private-labeled, consumer-facing tool licensed to health insurance companies." It "helps consumers get their bottom line costs, plan options, tax credits, and potential penalty in under a minute." The fact that it is licensed to health insurance companies provides an important revenue stream, in contrast with many health startups that try to make the end consumer pay for their product. In addition, the presentation was exceptionally well delivered. In my opinion, that startup slightly overshadowed (at least in the showcase) Picwell, another startup that aims at helping consumers decide by using advanced analytical tools from Wharton faculty to predict future healthcare costs and thus pick now the best possible insurance for a custoner. Given my love of analytics, I liked Picwell's product more, but Wellthie was clearly at a farther stage of development with a clear revenue stream and a professional-looking presentation. 

Seratis "is a mobile messaging application designed for healthcare professionals," which "streamlines patient care team coordination to increase productivity and improve patient focus. The unique patient-centric technology means that doctors and nurses can quickly view and securely communicate with every member of the patient’s care team. The patient centric feature simplifies handover and makes shift work easier." Since this description, from the Wharton Healthcare Conference website, doesn't do the product justice, I looked for a video online, and found the presentation that Seratis's CEO (who was also the speaker at the startup showcase) made at DreamIt Health Philadelphia last year. You might enjoy watching her talk below. Cool product, isn't it?

Fitly is also an alum of DreamIt Health Philadelphia. It aims to address the problem of poor nutrition by "making the process of planning for and cooking healthy meals as easy and painless as possible." Its app "allows customers to create personalized meal plans of delicious, healthy recipes in five minutes or less, and the necessary ingredients and simple cooking instructions are delivered to their homes weekly. Fitly’s recipes are designed to capture the taste buds of a broad audience while helping with weight loss, obesity, diabetes, and other conditions related to unhealthy eating habits." It is "backed by Independence Blue Cross, Penn Medicine, and Interstate General Media (IGM), owner of The Inquirer,, and Philadelphia Daily News" and has been featured in many media outlets. I am not sure how it can interact with other grocery delivery services, but there is certainly room for improved nutrition out there.

You can watch the video of Fitly's presentation at DreamIt here.

Finally, Roy Vagelos's keynote. I really hope someone is transcribing his speech to print it as is in Wharton Alumni magazine - it was that good. The sort of talk on leadership that universities dream of hosting in their lecture halls, except that few find someone of Vagelos's caliber to be their Executive-in-Residence or, more prosaically, lunch seminar speaker, and the sort of talk on leadership that reminds you some people who go to Penn do have truly exceptional careers, and rightfully so. I only wish everyone could hear him talk about his (ultimately successful) fight at Merck to combat river blindness, which had to be done by offering a new drug for free if needed because river blindness occurred in parts of the world so poor that inhabitants would never be able to spend anything on medications. You can read Vagelos's bio here. The most striking about him is that he is about 85 and has the energy and eloquence of someone much younger with the wisdom of, indeed, an 85-year-old. He is truly the sort of person who makes you wonder why executives are forced to retire at 65 - what pushed him out of Merck, where he held the position of CEO and later Chairman at the time of his retirement. He is now Chairman of the Board at biotech company Regeneron in Tarrytown, NY. His talk is not online (yet), so here is a summary of a 2004 talk he gave at Wharton and a 2006 Knowledge@Wharton podcast on the future of the pharmaceutical industry. YouTube also has a few videos featuring him, including the one below.

I also thoroughly enjoyed Pulse magazine, a publication also entirely prepared by students and distributed to conference attendees. It is full of insightful interviews with key players in the healthcare sphere. You can download a copy here.

National Health Policy Conference 2014 #NHPC14

For today’s post I just want to share some highlights of NHPC14, which I attended two weeks ago. The conference speakers all provided fascinating perspectives on current trends and future directions, but if I had to single only one I would pick Mark McClellan, formerly FDA Commissioner and CMS administrator, and now a Senior Fellow at the Brookings Institution, who gave the plenary speech on Tuesday (February 4).

Let’s start in reverse order with McClellan’s speech. He used the plenary to discuss the just-released report of the RWJF Commission to build a healthier America, which he co-chaired with Alice Rivlin, former White House OMB director and Fed Vice-Chairman, and now also Senior Fellow at the Brookings Institution like McClellan. The Commission makes the following recommendations (all quotes are from the executive summary):

  1. Prioritizing early childhood development, including: “creat[ing] stronger quality standards for early childhood development programs, link[ing] funding to program quality and guarantee[ing] access by funding enrollment for all low-income children under age 5 in programs meeting these standards by 2025” as well as “help[ing] parents who struggle to provide healthy, nurturing experiences for their children.”
  2. Linking community development and health, including “support[ing] and speed[ing] the integration of finance, health and community development to revitalize neighborhoods and improve health.”
  3. Connecting health and health care, for instance by “adopt[ing] new health “vital signs” to assess non-medical indicators for health”, “creating incentives tied to reimbursement for health professionals and health care institutions to address non-medical factors that affect health,” and “incorporate[ing] non-medical health measures into community health needs assessments.”

Here are a couple of initiatives that caught my attention:

  • “In Salt Lake City, Goldman Sachs, United Way of Salt Lake and the J.B. and M.K. Pritzker Family Foundation have formed a partnership to create the first-ever social impact bond designed to expand access to early childhood education through the early Childhood Innovation Accelerator.” (More information here.)
  • “Oklahoma has offered universal access to pre-kindergarten since 1998 and has one of the highest enrollments in the country, with 74 percent of the 4-year-olds attending a pre-K program.” (Way to go, Oklahoma!)
  • Educare is a network of state-of-the-art, full-day, year-round schools across the country that provide at-risk children from birth to age 5 with comprehensive programs and instructional support that build skills and lay the foundation for successful learning… Four Educare schools include or are directly adjacent to on-site health clinics. Additionally, two Educare schools are linked to elementary schools with on-site health clinics.”
  • “The Healthy Futures Fund developed by Morgan Stanley, the Kresge Foundation and the Local Initiatives Support Corporation is encouraging community development organizations and community health care providers to collaborate using Low Income Housing Tax Credit equity and an innovative New Markets Tax Credit structure to drive economic development that helps improve health outcomes. The project will support development of 500 housing units with integrated health services and eight new federally qualified health centers through a $100 million initial investment.”

You can read the executive summary here and the full report there. The findings echo a theme I’ve heard repeated many times throughout the conference, both by speakers and by attendees. Broadly speaking, the issue is that improving Americans’ health is not going to happen only through healthcare payments, no matter the incentives for efficient and early care (although obviously healthcare payments that incentivize good care are better than healthcare payments that unwittingly encourage wasteful spending or counterproductive behavior), but also through social payments, for instance free pre-kindergarten care.

Shannon Brownlee, formerly of the New America Institute and now of the Lown Institute on Monday (February 3), gave the other plenary speech, which also touched upon social payments. She is best known for her book Overtreated: Why too much medicine is making us sicker and poorer, after the publication of which she said some physicians refused to stand in the same room as her. The three action items she recommended in her speech – “keep patients out of the hospital, redeploy resources from hospitals into the community and begin building infrastructure” – would not have seemed out-of-place among the conclusions of the RWJF report.

Another speech I enjoyed was the talk Jeffrey Kang of Walgreens gave as part of a panel on primary care access. His focus was on the role of pharmacists and nurse practitioners (Walgreens operates 8,200 retail pharmacies, 30,000 pharmacists and 2,000 NPs). Did you know that 2/3 of Americans live within 3 miles of Walgreens and in particular 3/4 of the minority population? Walgreens stores are open at least 14 hours a day and some 1,500 stores are open 24 hours a day. This puts Walgreens in a position to play a key role in providing Americans community-based access to health care. (According to Kang, the chain is the largest provider of flu shots in the country.) Challenges include states’ “scope of practice” statutes, some coverage and reimbursement issues, and the fact that there is NO e-discontinuation order between the primary-care provider and the pharmacy, so that the pharmacy doesn’t know a prescription has been discontinued. The most common medication error is in fact that a doctor has discontinued a medication but the patient is still taking it at home.

I also liked the description of WA’s Healthplanfinder and the Washington Health Benefit Exchange in a breakout session on health insurance exchanges. Challenges in implementation have included call center volumes and wait times, Medicaid renewals, pending applications (including some people who enrolled but did not pay, presumably switching to a private carrier in the meantime), reconciling enrollment reports to carriers. Successes include the large enrollment, stabilized system performance, marketing and outreach, stakeholder support and infrastructure development. Total new enrollments in Washington State including Medicaid were at 323,000 when the presentation was prepared and Medicaid renewals were at 233,000.

While not everything went smoothly (wait times to the call center averaged 39 minutes at some point), the speaker, Richard Onizuka, referring to the color code of green, yellow and red commonly used in project management to describe tasks that are on schedule, borderline and beyond schedule, threatening project due date, explained that “we always knew it wasn’t going to be a green project, it was always going to be a yellow project.” The Seattle Times has a blog post about enrollment numbers as of January 2014, apparently not including Medicaid. Premera BlueCross and its subsidiary LifeWise (the only company that offers a state-wide plan) have captured about 2/3 of the new enrollees, totaling almost 43,000 between the two of them. (This incidentally means that the 323,000 number is above is predominantly due to Medicaid expansion.)

The blog post provides the following statistics: “More than 77 percent of people buying insurance on Washington’s exchange had incomes low enough to be eligible for tax breaks that reduce the cost of the monthly premiums. The majority of exchange shoppers bought so-called “silver plans,” which provide middle-of-the-road coverage. These silver plans also qualify for additional cost-sharing subsidies that can bring down the amount people spend out-of-pocket for their health care, again based on their income.”

A note of concern regarding the Washington State plans available on the exchange, though (emphasis is mine): Seattle Children’s Hospital announced in January that “it has treated approximately 125 patients who lost contracted access to Seattle Children’s when new plans on Washington’s Health Benefit Exchange became effective at the beginning of the year. Those patients… were all treated by Seattle Children’s regardless of their Exchange plan coverage, but continued access to the hospital remains in question.

“This is a dire situation for our patients,” said Dr. Sandy Melzer, senior vice president and Chief Strategy Officer, Seattle Children’s. “We can’t continue providing services to these patients without reimbursement from their insurance companies.  Eventually, these patients will have to seek care elsewhere, and for the treatment of many conditions, there is nowhere else to go in the region.”” These kids had coverage before. Why can’t they have coverage now? How does that help anyone to refuse them access to a nationally ranked pediatric hospital that has the most in depth knowledge for their condition?

(This is a serious problem. Seattle Children’s sued in October “over the state Office of the Insurance Commissioner’s “failure to ensure adequate network coverage” in several health plans being sold through the state’s new online insurance marketplace, called Washington Healthplanfinder. Most plans available through Healthplanfinder for coverage in 2014 do not include Children’s among their in-network providers, which hospital officials say could significantly disrupt and delay care for children in need of the hospital’s services. In King County, seven insurers are offering plans through the exchange. Only two — Group Health Cooperative and Community Health Plan of Washington — include Seattle Children’s in their provider network.” (About 20% of the new enrollees ended up picking these two plans.) More information in this Seattle Times blog post, from which the previous quote was excerpted. In fact, according to the article, Seattle Children’s is left out of the top two health plans mentioned above, Premera Blue Cross and LifeWise, although Premera later agreed to cover services only available at Seattle’s Children at a network benefit level. Call me opinionated if you wish, but insurers who don’t put the leading regional children’s hospital in their network in order to cut down costs are just taking the lazy way out.)

I’ll throw in another insightful article about the ACA, that one about insurers dropping out of the marketplaces: “Causes, effects of marketplace drop-outs unclear.” The article states that “marketplaces in at least 17 states and the District of Columbia offer plans from four or fewer insurers… [and some] prominent insurers have decided not to sell plans in the marketplaces of states where they already have a presence.” For instance, “high-profile marketplace departures have included Aetna dropping out of its Connecticut home state marketplace and United Health Group—the nation’s largest private insurer—opting not to offer plans in the California marketplace, which is expected to be the nation’s largest ACA marketplace.” While the article explains this is due to uncertainty regarding rates needed for the plans to remain solvent or the state regulators’ rejection of those rates, I wonder whether those insurers’ not wanting to have some of their already insured population switch to cheaper plans they would offer on the marketplace played a role, a risk touched upon in this other HFMA article.

Finally, a quote by a panelist about the ACA: “It’s like getting a library card. That doesn’t mean people will have libraries nearby. That doesn’t mean they will have access to books they like.” With the latest open enrollment deadline pushed back to March 31, we may not see for a while longer how it all turns out, but the consequences on insurers, including this year’s claims and next year’s rates and new entrants or dropouts, promise to be fascinating.

Public health's graph of the day: map of life expectancy in DC area

The Robert Wood Johnson Foundation's Commission to build a healthier America recently published its recommendations in a groundbreaking report that I all encourage you to read. (I had the opportunity to learn about the report thanks to former CMS administrator Mark McClellan's excellent keynote speech at the National Health Policy Conference, which concluded yesterday.)

For today, I just want to show you a stunning city map in the report (you can find other city maps here). The map shows the shocking disparities in life expectancies of babies born to mothers in D.C. and neighboring counties. Just a few miles can make a huge difference due to wildly different socio-economic conditions, and the report advocates the following to decrease disparities:

  • "Invest in the foundations of lifelong physical and mental well-being in our youngest children"
  • "Create communities that foster health-promoting behaviors"
  • "Broaden health care to promote health outside of the medical system"


Staggering, isn't it?

Two WaPo articles on the healthcare reform

The Washington Post recently published two very informative articles on the healthcare reform: the first one on the Maryland health exchange ("Maryland officials were warned for a year of problems with online health-insurance site," January 11) and the second one on the impact of the reform on small businesses ("Second wave of health-insurance disruption affects small businesses," January 11 as well).

The Maryland health exchange

The Maryland article paints a sobering picture of what went on behind the scenes in the year leading to the exchange launch: officials who failed to heed warnings that no one was in charge, three different project managers, a feud between contractors and the departure of key employees. The article also states that the website crashed within moments of being launched on October 1 and that only four people were able to enroll in the first 24 hours. (When the article went to press, the number of enrollees had increased to 20,000.)

What is most surprising about the debacle is that Maryland had been an enthusiastic, early adopter of the healthcare reform, hoping to lead the nation with its health exchange website. The article provides specifics on the challenges faced by the triumvirate of decision makers, and in particular by the project leader who had come on board from Kaiser Permanente to lead the exchange, Rebecca Pearce. Pearce, who took part in a panel in October in the Health Policy Orientation workshop I attended and impressed me with her thoughtfulness and obvious dedication, resigned in early December. The article explains she aced an incumbent project manager (her direct report) who apparently preferred to go and report to someone else, until the manager was replaced. The article gave me the impression that Pearce had not been brought on board with enough time to successfully complete the project. She could only do so much given the project foundation she inherited and the deadlines she had, but of course since the health exchange has become a political liability for certain key Maryland officials, it makes sense (from a political standpoint) that she had to resign.  

Here is an excerpt from the January 11 WaPo article that particularly caught my attention. It describes how Pearce attempted to log into the health exchange in the early morning of October 1 and did not understand why the system wasn't allowing her to. Emphasis below is mine.

"“What’s wrong?” she demanded. No one was sure. Someone noticed that Pearce had left blank a box for the four-digit extension of her Zip code. Maybe the computer code required every single data field to be filled in to proceed. Try adding that, one manager said. Pearce did not know the extension to her Zip code. They listened as she Googled it and attempted a fourth sign-on. Click. She was in."

The Maryland State Finance Committee will hold hearings about the health exchange at the end of the month and its chairman has requested an updated every two weeks on the status of the Maryland website, although a switch to its federal counterpart is deemed unlikely.

Upcoming disruptions for small businesses

The small-business article focuses on upcoming health plan cancellations for small businesses - and not just individuals, as was first thought. People receiving health insurance through their small-business employer should receive notices in October of 2014 because businesses renewed their plans for 2014 before a deadline that would have forced them to pick new plans. (This could affect millions of people, since 18 million to 24 million currently have health insurance through an employer with less than 50 employees.)

WaPo explains: "Some of the small-business cancellations are occurring because the policies don’t meet the law’s basic coverage requirements. But many are related only indirectly to the law; insurers are trying to move customers to new plans designed to offset the financial and administrative risks associated with the health-care overhaul. As part of that, they are consolidating their plan offerings to maximize profits and streamline how they manage them."

MIT economist Jonathan Gruber, who has served as a technical consultant to the Obama administration when it crafted the Affordable Care Act, justifies the premium increases to the WaPo reporter by explaining that they are due to the end of discrimination against people who are sick (because they previously had  to pay more). The thing is, while using the d-word must have tested well in focus groups to justify the policy, I don't think that is the real issue. Before the reform, insurers adapted to information revealed over time on their customers. Now they can't adapt anymore, so everybody has to bear the brunt of the large healthcare costs. For me, that is the real problem: the fact that mandatory enrollment and cost containment are happening on vastly different time scales. Specifically, mandatory enrollment is happening before meaningful and sustainable cost decreases have been put in place, so healthy people are suddenly realizing how enormously expensive it is to get care - something that was previously so hidden from view healthy people only had the faintest idea of the cost involved. 

The WaPo article provides examples from New Jersey, New Hampshire, Vermont, DC and the Pennsylvania/Delaware/West Virginia area - for instance in New Hampshire, enrollees in the small-group plans offered by Anthem will have to sign up for new plans "similar to those sold on the marketplace created by the health-care law [plans which] have drawn fire from consumers because they include only 16 of the state’s 26 acute-care hospitals". Maybe the other acute-care hospitals will decrease their costs and then be included in the next iteration (next year) of the insurance policies. (One of my research projects is on reference pricing for healthcare procedures and there is hard data out there about real-life implementation showing a decrease in price quoted by providers who had previously charged amounts higher than the reference price. So in Anthem's case, the exclusion of some hospitals may not last long. Or the consolidation of customer streams to fewer hospitals may generate economies of scale and other benefits.) Maybe, as information on new, high-uncertainty individual enrollees is revealed over time, insurers will consider adjusting their premiums downward. But if that is the case, the insurance companies would be well-advised to make their case far more convincingly to the public.