Artificial Intelligence medicine coming to America!

Medical Doctors will always be Doctors! Artificial Intelligence will only be another tool enabling physicians to better treat the sick! Oh yeah…It will save all a boat load of money!

IBM's Watson is better at diagnosing cancer than human doctors

By IAN STEADMAN

WIRED

Monday 11 February 2013

IBM's Watson -- the language-fluent computer that beat the best human champions at a game of the US TV show Jeopardy! -- is being turned into a tool for medical diagnosis. Its ability to absorb and analyse vast quantities of data is, IBM claims, better than that of human doctors, and its deployment through the cloud could also reduce healthcare costs.

The first stages of a planned wider deployment, IBM's business agreement with the Memorial Sloan-Kettering Cancer Center in New York and American private healthcare company Wellpoint will see Watson available for rent to any hospital or clinic that wants to get its opinion on matters relating to oncology. Not only that, but it'll suggest the most affordable way of paying for it in America's excessively-complex healthcare market. The hope is it will improve diagnoses while reducing their costs at the same time.

Two years ago, IBM announced that Watson had "learned" the same amount of knowledge as the average second-year medical student. For the last year, IBM, Sloan-Kettering and Wellpoint have been working to teach Watson how to understand and accumulate complicated peer-reviewed medical knowledge relating to oncology. That's just lung, prostate and breast cancers to begin with, but with others to come in the next few years). Watson's ingestion of more than 600,000 pieces of medical evidence, more than two million pages from medical journals and the further ability to search through up to 1.5 million patient records for further information gives it a breadth of knowledge no human doctor can match.

According to Sloan-Kettering, only around 20 percent of the knowledge that human doctors use when diagnosing patients and deciding on treatments relies on trial-based evidence. It would take at least 160 hours of reading a week just to keep up with new medical knowledge as it's published, let alone consider its relevance or apply it practically. Watson's ability to absorb this information faster than any human should, in theory, fix a flaw in the current healthcare model. Wellpoint's Samuel Nessbaum has claimed that, in tests, Watson's successful diagnosis rate for lung cancer is 90 percent, compared to 50 percent for human doctors.

Sloan-Kettering's Dr Larry Norton said: "What Watson is going to enable us to do is take that wisdom and put it in a way that people who don't have that much experience in any individual disease can have a wise counsellor at their side at all times and use the intelligence and wisdom of the most experienced people to help guide decisions."

The attraction for Wellpoint in all this is that Watson should also reduce budgetary waste -- it claims that 30 percent of the $2.3 trillion (£1.46 trillion) spent on healthcare in the United States each year is wasted. Watson here becomes a tool for what's known as "utilisation management" -- management-speak for "working out how to do something the cheapest way possible".

Wellpoint's statement said: "Natural language processing leverages unstructured data, such as text-based treatment requests. Eighty percent of the world's total data is unstructured, and using traditional computing to handle it would consume a great deal of time and resources in the utilisation management process. The project also takes an early step into cognitive systems by enabling Watson to co-evolve with treatment guidelines, policies and medical best practices. The system has the ability to improve iteratively as payers and providers use it." In other words, Watson will get better the more it's used, both in working out how to cure people and how to cure them more cheaply.

When Watson was first devised, it (or is it "he"?) ran across several large machines at IBM's headquarters, but recently its physical size has been reduced hugely while its processing speed has been increase 240 percent. The idea now is that hospital, clinics and individual doctors can rent time with Watson over the cloud -- sending it information on a patient will, after seconds (or at most minutes), return a series of suggested treatment options. Crucially, a doctor can submit a query in standard English -- Watson can parse natural language, and doesn't rely on standardised inputs, giving it a more practical flexibility.

Watson's previous claim to fame came from it winning a special game of US gameshow Jeopardy! in 2011. For those unfamiliar, Jeopardy!'s format works like this: the answers are revealed on the gameboard and the contestants must phrase their responses as questions. Thus, for the clue "the ancient Lion of Nimrod went missing from this city's national museum in 2003" the correct reply is "what is Baghdad?". Clues are often based on puns or other word tricks, and while it's not quite on the level of a cryptic crossword, it's certainly the kind of linguistic challenge that would fox most language-literate computers.

Watson's ability to parse texts and grasp the underlying rules has had its drawbacks, though, as revealed last month when IBM research scientist Eric Brown admitted that he had tried giving Watson the Urban Dictionary as a dataset. While Watson was able to understand some of the, er, colourful slang that fills the site's pages, it also failed to understand the different between polite and offensive speech.

Watson's memory of the Urban Dictionary had to (regrettably) be wiped.

Can President Trump enable the Government to run a Pharmaceutical company (Successfully)?

This a good idea to lower the price of a single drug for a single disease. Problem is the government cannot “run” a successful business (government cannot even run the government correctly). If ever an American President was able to run business it is President Trump, but it would take years to fire the incompetent Bureaucrat populating the Hall of our Government!

Trump Can Lower Drug Prices By U.S. Government Purchase Of Drug Companies

John LaMattina, CONTRIBUTOR

FORBES     JAN 18, 2017 @ 08:04 AM

Major mergers in the biopharmaceutical industry are driven by a variety of factors, but the major one tends to be the acquisition of new assets to fuel growth of the acquiring company’s pipeline. I was personally involved in such processes a few times during my Pfizer tenure. When the possibility of a Warner-Lambert merger with American Home Products arose back in 1999, Pfizer stepped in and executed a hostile takeover with the express purpose of having sole access to what was becoming the biggest-selling drug of all time–Lipitor. Similarly, when Pfizer was facing a revenue gap in 2004, it acquired Pharmacia, not just for control of the COX-2 pain medication franchise, but also for a variety of other Pharmacia products that blended well with Pfizer’s drug portfolio.

Whenever a company is contemplating an acquisition or merger, it goes through extensive analyses to justify such a move first to its board of directors, then to its shareholders. These deals generally run into the tens of BIILIONS of dollars as one must pay not just the current value of the desired company but also a significant premium over that price in order to make the bid sufficiently attractive to the board and shareholders of the takeover target. To justify such an acquisition, the acquirer needs to show not only the long-term revenue potential of the desired products, but also ways to strip out costs–the dreaded “synergies” that arise from redundant efforts–as well as jettisoning specific assets that the acquiring company isn’t interested in retaining, such as major divisions (e.g., chemical or agricultural) or specific products. Such analyses can generally be used to justify paying the price necessary to close the deal.

Dr. Peter Bach of Memorial Sloan-Kettering Cancer Center, a longtime advocate of affordable drug pricing, and Dr. Mark Trusheim of MIT’s Center of Biomedical Innovation have taken the concept of biopharma acquisitions and applied it intriguingly into a plan, laid out in a post for FORBES, for the U.S. government to obtain access to important drugs. The drugs in question are the hepatitis C cures Harvoni and Sovaldi, both sold by Gilead. They propose a plan that not only saves the government money, but also would enable millions of patients who still have hepatitis C to get cured as soon as possible. These patients are currently caught in a bind because the high costs of these drugs--even at the rebated price of $42,000/patient for a course of treatment–is too much a burden for the government to bear all at once.

Essentially, Bach and Trusheim have done an analysis that any big company would do for a major acquisition. Gilead’s current market cap is about $100 billion. Taking into account the need for a 30% premium as well as the assumption of Gilead’s $26 billion debt, the price rises to $156 billion. However, the authors believe that divesting Gilead’s HIV franchise for $52 billion, other pipeline assets for another $10 billion, and divesting the ex-U.S. hepatitis C business for $17 billion, the cost of the deal is down to $77 billion. The government would also gain the $31 billion that Gilead has stashed in overseas cash and, with other savings, the cost comes down to about $40 billion, a price that amounts to a per patient cost of about $15,700 for wiping out hepatitis C, a disease that causes liver failure and liver cancer. As the authors say: “That’s a 63% savings, a no-brainer even before the corporate jet is sold.”

While this sounds pretty enticing, there are issues in trying to do this. For one thing, the government would become a competitor with U.S. businesses that, theoretically, the government would like to see thrive. Both AbbVie and Merck have drugs that compete with Gilead’s drugs. Bach and Trusheim believe that, since Gilead’s drugs amount to 80% of the hepatitis C business, the market has spoken as to their value. However, having the government as a competitor would damage AbbVie and Merck’s efforts and could force drug companies out of R&D in key fields threatened by potential government invasion.

The U.S. government would be challenged to execute such a plan. What agency would be responsible to analyze such deal opportunities? Who would manage it once it was acquired? After all, the drug would need to be manufactured, quality monitored, distributed, etc. The government could contract this work out, but it would add another layer of bureaucracy. Theoretically, the government could use this tactic for other drugs. I have no doubt that there are rare or orphan disease drugs currently sold by biotech companies much smaller than Gilead. Should the government become a procurer of such firms? Finally, my guess is that, if large pharma companies got wind of Gilead being in play, suitors with deep pockets might enter the bidding process for Gilead. Should the government be involved in such bidding wars?

Nevertheless, the Bach-Trusheim proposal in intriguing. Some will undoubtedly attack this plan as the beginnings of governmental nationalization of the biopharmaceutical industry. I don’t think that’s the case. Such a takeover of Gilead would mirror a similar takeover by a big company. The deal wouldn’t go through unless Gilead’s board and shareholders approved it, just like any other deal. Furthermore, my guess is that this sort of move may appeal to President Trump’s business sense. He’s looking to bring down drug prices and for different ways for the government to impact the process. This plan certainly does that.

After ObamaCare expect a better system! This one will work!

Here’s what happens after ObamaCare is gone

The American people will be better off! Develop programs that are affordable for those that want a choice, and give those with pre-existing conditions a separate program. Should work just fine!

By Michael Tanner NY Post

January 13, 2017 | 8:46pm

Republicans are wrestling with how to repeal and replace ObamaCare. It turns out that legislating is much more complex than campaigning. Still, ObamaCare as we know it is unlikely to be with us much longer.

So what happens after it’s gone? On Friday, we looked at some of the most likely provisions of any ObamaCare replacement. They would expand consumer choices, by expanding the use of health-savings accounts and allowing the purchase of health insurance across state lines.

Still, there are some people who would face challenges if the law were repealed. This includes those with low incomes and those with pre-existing health conditions.

ObamaCare did expand the number of Americans with health coverage by some 20 million people. Most of those, however, received coverage not through the program’s subsidies for private insurance but through the expansion of Medicaid.

There is ample evidence to suggest that Medicaid provides little if any benefit. One notable experiment in Oregon found no improvements in health outcomes from Medicaid enrollment. But regardless, repeal of ObamaCare is unlikely to have any short-term impact on Medicaid.

The same can’t be said for those Americans receiving subsidies to purchase insurance through ObamaCare’s exchanges. Those subsidies will almost certainly be cut back or eliminated, so some people could end up paying for the full cost of their premiums.

Of course, that also means less of a burden for taxpayers overall, since they were picking up the cost of those subsidies. Besides, even with subsidies, the rising cost of premiums under ObamaCare was leaving many Americans struggling to afford insurance.

There will undoubtedly be winners and losers, but by bringing down the cost of insurance, the Republican plans will leave most Americans better off.

The question of pre-existing conditions is a much tougher nut to crack. Pretty much all the problems with ObamaCare flow from the decision to require insurance to cover people with pre-existing conditions — that is, people who are already sick — without charging them more than healthy people.

Because insurers will lose money on those sick individuals, the cost has to be offset by enrolling young and healthy individuals, who pay premiums but require few benefits. Since the young and healthy are reluctant to buy insurance on their own, ObamaCare included the unpopular individual mandate in order to force them to do so.

A mandate meant the government had to define what qualified as insurance, hence the minimum benefits package and the elimination of low-cost catastrophic policies. People who liked their policies found out they couldn’t keep their policies. The dominoes fall.

The number of truly uninsurable people is actually quite small, and will decline further under Republican plans to reduce insurance costs and make it easier for people to keep their coverage if they lose their job.

Still, any replacement plan will have to include some provision to make sure health insurance — or at least health care — is available to people whose medical condition makes them otherwise uninsurable.

Some GOP plans preserve the pre-existing-conditions requirements as long as a person maintains continuous coverage, or signs up during a limited open-enrollment period.

But people would still game the system, jumping to more comprehensive plans or those with the best specialists after they become sick, knowing that insurers could not refuse them or increase their premiums. If Republicans simultaneously eliminate the mandate, this will only accelerate the adverse-selection death spiral already besetting ObamaCare.

The only workable answer is to take otherwise uninsurable people out of the traditional insurance market altogether and subsidize their coverage separately.

This may be done through the expansion and subsidy of state high-risk pools, much the way states handle auto insurance for high-risk drivers. Or sick individuals may be taken out of the insurance system altogether, with their health care paid for through a reformed Medicaid program.

However these changes play out, it’s important to realize that no one is going to have their health insurance suddenly snatched away. Some people may have to get their health care in different ways, and some, who can afford it, may have to pay more.

But the predictions that replacing ObamaCare will mean uninsured Americans dropping dead in the street are worth little more than fake news.

Healthcare VPs, and Managers pay is on the rise, Physician salaries is dropping, Obamacare cost are rising!

This started happening in the mid-90s. Third party payers made a push to manage healthcare, so the bean-counters made sure that Physican salaries would decrease. Health systems began hiring “practice managers”, “regional managers”….managers this and managers that….so as physician salaries dropping the cost of Healthcare is increasing. Why? Read the article below!

Medicine’s Top Earners Are Not the M.D.s

     By ELISABETH ROSENTHAL  MAY 17, 2014  New York Times

THOUGH the recent release of Medicare’s physician payments cast a spotlight on the millions of dollars paid to some specialists, there is a startling secret behind America’s health care hierarchy: Physicians, the most highly trained members in the industry’s work force, are on average right in the middle of the compensation pack.

That is because the biggest bucks are currently earned not through the delivery of care, but from overseeing the business of medicine.

The base pay of insurance executives, hospital executives and even hospital administrators often far outstrips doctors’ salaries, according to an analysis performed for The New York Times by Compdata Surveys: $584,000 on average for an insurance chief executive officer, $386,000 for a hospital C.E.O. and $237,000 for a hospital administrator, compared with $306,000 for a surgeon and $185,000 for a general doctor.

And those numbers almost certainly understate the payment gap, since top executives frequently earn the bulk of their income in nonsalary compensation. In a deal that is not unusual in the industry, Mark T. Bertolini, the chief executive of Aetna, earned a salary of about $977,000 in 2012 but a total compensation package of over $36 million, the bulk of it from stocks vested and options he exercised that year. Likewise, Ronald J. Del Mauro, a former president of Barnabas Health, a midsize health system in New Jersey, earned a salary of just $28,000 in 2012, the year he retired, but total compensation of $21.7 million.

The proliferation of high earners in the medical business and administration ranks adds to the United States’ $2.7 trillion health care bill and stands in stark contrast with other developed countries, where top-ranked hospitals have only skeleton administrative staffs and where health care workers are generally paid less. And many experts say it’s bad value for health care dollars.

“At large hospitals there are senior V.P.s, V.P.s of this, that and the other,” said Cathy Schoen, senior vice president for policy, research and evaluation at the Commonwealth Fund, a New York-based foundation that focuses on health care. “Each one of them is paid more than before, and more than in any other country.”

She added, “The pay for the top five or 10 executives at insurers is pretty astounding — way more than a highly trained surgeon.”

She said that executive salaries in health care “increased hugely in the ‘90s” and that the trend has continued. For example, in addition to Mr. Del Mauro’s $21.7 million package, Barnabas Health listed more than 20 vice presidents who earned over $350,000 on its latest available tax return; the new chief executive earned about $3 million. Data released by Medicare show that Barnabas Health’s hospitals bill more than twice the national average for many procedures. (In 2006, the hospital paid one of the largest Medicare fines ever to settle fraud charges brought by federal prosecutors.)

Hospitals and insurers maintain that large pay packages are necessary to attract top executives who have the expertise needed to cope with the complex structure of American health care, where hospitals and insurers undertake hundreds of negotiations to set prices.

Ellen Greene, a spokeswoman for Barnabas Health, said Mr. Del Mauro’s retirement package was “a function of over four decades of service and reflects his exceptional legacy.” Nearly $14 million was a cumulative payout from a deferred retirement plan, she said, and the remainder included base compensation, a bonus and an incentive plan

Ms. Greene also said Barnabas’s compensation program follows I.R.S. rules and is established by an executive compensation committee with “guidance from a nationally recognized compensation consultant.”

In many areas, the health care industry is home to the top earning executives in the nonprofit sector.

And studies suggest that administrative costs make up 20 to 30 percent of the United States health care bill, far higher than in any other country. American insurers, meanwhile, spent $606 per person on administrative costs, more than twice as much as in any other developed country and more than three times as much as many, according to a study by the Commonwealth Fund.

As a result of the system’s complexity, there are many jobs descriptions for positions that often don’t exist elsewhere: medical coders, claims adjusters, medical device brokers, drug purchasers — not to mention the “navigators” created by the Affordable Care Act.

Among doctors, there is growing frustration over the army of businesspeople around them and the impact of administrative costs, which are reflected in inflated charges for medical services.

“Most doctors want to do well by their patients,” said Dr. Abeel A. Mangi, a cardiothoracic surgeon at the Yale School of Medicine, who is teaming up with a group at the Yale School of Management to better evaluate cost and outcomes in his department. “Other constituents, such as device manufacturers, pharmaceutical companies and even hospital administrators, may not necessarily have that perspective.”

Doctors are beginning to push back: Last month, 75 doctors in northern Wisconsin took out an advertisement in The Wisconsin State Journal demanding widespread health reforms to lower prices, including penalizing hospitals for overbuilding and requiring that 95 percent of insurance premiums be used on medical care. The movement was ignited when a surgeon, Dr. Hans Rechsteiner, discovered that a brief outpatient appendectomy he had performed for a fee of $1,700 generated over $12,000 in hospital bills, including $6,500 for operating room and recovery room charges.

It’s worth noting that the health care industry is staffed by some of the lowest as well as highest paid professionals in any business. The average staff nurse is paid about $61,000 a year, and an emergency medical technician earns just about minimum wage, for a yearly income of $27,000, according to the Compdata analysis. Many medics work two or three jobs to make ends meet.

“It’s stressful, dirty, hard work, and the burnout rate is high,” said Tom McNulty, a 19-year-old college student who volunteers for an ambulance corps outside Rochester. Though he finds it fulfilling, he said he would not make it a career: “Financially, it’s not feasible.”

Bye-Bye Obamacare...Hello Hospital offered Health Insurance Plans!

Not a bad idea! Let Health Systems (you know the people that actually give care) develop and offer insurance plans. CUT OUT THE MIDDLEMAN!

More health systems launch insurance plans despite caveats

http://www.modernhealthcare.com/article/20150404/MAGAZINE/304049981

Modern Healthcare

By Bob Herman  | April 4, 2015

Premier Health, part-owned by Catholic Health Initiatives, took its first step into the insurance business last year. After acquiring a state insurance license in 2013, the system in Dayton, Ohio, offered its own health plan for its 17,000-plus employees and their family members.

Premier's employee benefit plan was a laboratory for expanding its capacity to manage the health of enrolled populations, said Mike Maiberger, CEO of Premier Health Plan and chief value officer of the five-hospital, $1.9 billion system.

This year, Premier Health Plan is moving beyond its employees. It now covers 7,100 Medicare Advantage members and 2,000 individuals and families, most of whom signed up through the federal insurance exchange in Ohio. “For us, the insurance business is just a vehicle to cover as many lives as we can in our service area with our population health initiatives,” Maiberger said. “We're not out to be one of the large national players in the insurance market.”

Provider-owned health plans like Premier's continue to spring up or get larger as more hospitals and physician groups are moving to take on financial risk for their patients under value-based and capitated payment contracts. Providers see the financial and quality advantages of controlling premium dollars from beginning to end and steering patients toward their services. It frees them from having to share with insurance companies any savings they generate from improved quality and efficiency.

“If you can demonstrate that you offer more quality at an effective price point, you can take (market) share,” said Joseph Marinucci, a health insurance analyst at ratings agency Standard & Poor's.

But for every potential advantage of starting a health plan, there is an “equally robust list of cons,” said Chris Myers, a director at consulting firm Navigant Healthcare. 

Once hospitals “get into product design and pricing and all of the nuanced areas, you can get into trouble reasonably quickly,” said Greg Maddrey, a director at the Chartis Group, a consulting firm.

Leaders of established provider-owned plans say it's a long slog to positive margins. Plans need to watch out for attracting too many sicker members who may be drawn to the system's providers. And many hospital executives are leery of antagonizing insurers whose provider networks they want to participate in by competing with them for insurance customers. As an alternative, some health systems such as UCSF Medical Center in San Francisco are seeking partnerships with insurers.

Consequently, many health systems are taking a cautious approach to entering the insurance business, at least partly because they don't want to repeat hospitals' financial losses in the 1990s, when many jumped into the risk business. Recently, Partners HealthCare in Boston and Fairview Health Services in Minneapolis have suffered sizable losses with their health plans. 

Cleveland Clinic has considered applying for an insurance license but has not yet done so. Any talk of launching a health plan is “very premature,” a Cleveland Clinic spokeswoman said. 

“We are going to do our insurance products through established health plans” such as Anthem, said UCSF CEO Mark Laret.

Dignity Health in San Francisco is exploring a limited state license to accept full-risk payments from health insurers, but it does not intend to create its own health plan. “I think that's ill-conceived,” Dignity Health CEO Lloyd Dean said last year. “I think it's ultimately not going to be successful.”

The safest option for provider systems for now, some experts say, may be offering insurance products that serve a narrow population, such as a Medicare Advantage or Medicaid plan, or creating loose partnerships with insurance companies. Some hospitals have co-branded, limited networks with national insurers.

“The average organization does not necessarily want to start out (with) their own health plan,” said Frank Williams, CEO of consulting firm Evolent Health. His organization advises provider systems on how to operate plans. It's partly funded by 2.5 million-member UPMC Health Plan in Pittsburgh, which is owned by the not-for-profit UPMC health system. “But to move to a population health model, they have to have enough scale.”

There were 698 hospitals that had an equity stake in an HMO in 2013, up 11% from 2012, according to the American Hospital Association. But because that figure includes many hospitals within the same health system, the total number of provider-sponsored plans is more likely to be about 90, Navigant's Myers said.

Financially, provider-owned plans are doing as well as other health insurers or better. They had a 3.2% average profit margin in 2013, and that margin has hovered above 3% since 2010, according to a February report from ratings agency A.M. Best Co. The entire health insurance industry had a similar 3.2% profit margin in 2013, but that was down considerably from 2010, when the average margin was near 4.5%.

Premiums collected by provider-owned plans rose faster in 2013 (5.5%) than at publicly traded insurers (2.4%), Blue Cross and Blue Shield plans (2.5%), and others in the industry (3.2%).

The A.M. Best analysis looked at about 150 provider-owned plans, which included several subsidiaries within the same insurer. Many of these statistics, however, may be skewed toward the well-established provider-owned plans such as Kaiser Foundation Health Plan and UPMC Health Plan.

Provider-owned plans cover less than 10% of the entire privately insured market, but their membership is growing. Total enrollment jumped to 19.1 million people in 2013, a 4% increase from 2012 and a higher growth rate than for other types of plans. This is especially the case in the Medicare and Medicaid markets, where in 2013 Medicare beneficiary membership in provider-owned plans rose 8.2% and Medicaid beneficiary membership grew 15.3% compared with 2012, according to A.M. Best.

For instance, Presbyterian Health Plan, owned by Presbyterian Healthcare Services in Albuquerque, increased its Medicaid membership by 18% to 193,000 in 2014. It was one of four health plans selected to manage care for New Mexico's Medicaid population, which grew because that state expanded eligibility under the Affordable Care Act.

Paul Levy, former CEO of Boston-based Beth Israel Deaconess Medical Center, said hospitals are starting health plans because handling both sides of the premium dollar helps them better understand the enrollment risk pool and medical cost trends. They're also doing it to gain dominance in their market. “I just don't think most of them are thinking about getting into insurance for the sake of better patient care,” he said.

A few health systems have struggled in the past year with their insurance divisions. Neighborhood Health Plan, owned by not-for-profit Partners HealthCare, lost $110 million in fiscal 2014 and had to book another $92 million in reserves for 2015. Executives said the losses resulted from higher-than-expected medical claims, high costs related to hepatitis C drugs and low Medicaid payment rates.

PreferredOne, jointly owned by Fairview, North Memorial Health Care, Robbinsdale, Minn., and a physician group, lost $21 million last year. Red ink from the individual market alone hit $139 million. Preferred-One had become the dominant insurer on Minnesota's insurance exchange in 2014 by offering the cheapest premiums. But that large market share came back to haunt the plan, which attracted a high proportion of sicker people and made medical costs “not sustainable,” according to the plan. PreferredOne exited the state exchange for 2015.

Maiberger said that because health insurance is heavily regulated and based on complex actuarial predictions, providers should not expect to quickly turn a positive margin. “You're on a five- to seven-year journey until you're really going to see profitability,” he said. He declined to provide financial projections for Premier Health Plan, and documents have not yet been filed with bondholders.

SelectHealth, Intermountain Healthcare's 30-year-old health plan based in Salt Lake City, illustrates the long wait for profitability. “It took us six years to break even back in the '80s,” said Greg Poulsen, Intermountain's chief strategy officer. “And if we hadn't believed there was a really important reason to do this, I don't think we would have continued to take the losses.”

Hospitals starting or acquiring their own health plans also run into what S&P's Marinucci calls “channel conflict” with legacy insurance companies. Starting their own health plan directly competes for insurers' premium dollars and can create tension when providers negotiate to be included in an insurer's network.

For example, after Catholic Health Initiatives in Englewood, Colo., entered the insurance business in seven states, including Nebraska, Blue Cross and Blue Shield of Nebraska ended its contract with CHI last fall. “We don't know for sure it's because we entered the market and got a license approved, but the fact is we're in a pretty rough, intense negotiation with them in terms of the network,” CHI CEO Kevin Lofton said.

Similarly, Dan Wolterman, CEO of Memorial Hermann Health System in Houston, said that health insurers are “not happy” about his organization starting an insurance arm, but it has maintained contracts with the insurers because they need his system.

“We try to be open to everybody, as long as it is a fair two-way discussion,” Wolterman said.

America's Health Insurance Plans argues that if providers want to get into the insurance business, they have to be willing to deal with many complex government requirements including maintaining hefty reserves and paying the ACA's health insurance tax.

“It is not likely that doctors' offices and hospitals will want to take on all of these responsibilities,” AHIP spokeswoman Clare Krusing said.

The potential for conflict with insurers is at least partly why many health systems are more interested in small-scale startups, experts say. Providers are particularly eyeing the Medicare Advantage business because they feel they know how to manage seniors' care.

Medicare's Pioneer and Shared Savings ACOs are giving providers the experience to manage risk, making fully capitated Advantage a logical progression, said Eric Hammelman, a vice president at consulting firm Avalere Health. With Medicare's Next Generation ACO program, announced in March, providers will be able to shift into full-risk contracts.

Providers already operate many of the highest-quality Advantage plans in the marketplace, based on the CMS' star ratings system. Most of the 16 plans with five-star ratings for 2015 are run by providers or integrated delivery systems, including plans owned by Kaiser Permanente, Providence Health & Services in Oregon, Gundersen Health System in Wisconsin and Group Health Cooperative in Washington state.

Medicare Advantage is a “relatively easy market” for provider-sponsored plans to enter because Advantage plans are marketed directly to individual beneficiaries, said Brigitte Nettesheim, a principal with the Chartis Group. An added attraction for providers is the ability to convert Medicare ACO members into Medicare Advantage enrollees. She said some of her clients are having discussions with the CMS on doing this.

But experts caution that it's essential first to invest in the insurance expertise, infrastructure and information technology needed to succeed in the health plan business. “It's years of trial and error,” said Lisa Goldstein, a senior vice president at Moody's Investors Service. “Even the ones that are established, they are still learning."

—With Melanie Evans and Beth Kutscher

Obamacare crashes State’s budgets…It’s gonna be bad!

The system will fall apart within the next year as states find out Medicaid will be a 2017 budget buster! Worse yet, The American Citizen and tax payer will be footing the bill for illegal aliens that are flooding the U.S. So Americans go broke, and illegals get medical treatment!

The worst of ObamaCare is yet to come

By Post Editorial Board

NY POST

October 25, 2016 | 8:41pm

Word that ObamaCare premiums will soar 25 percent in the 39 states that operate off the federal healthcare.gov system is only the tip of the iceberg: The so-called Affordable Care Act is inflicting damage all across America’s health-care sector — with no end in sight.

Just as critics warned from the start.

Premiums are rising in nearly all the states that run their own exchanges, too. And if you get other coverage, you’re also paying: ObamaCare taxes non-exchange health plans to help pay for the subsidies that make its policies (somewhat) affordable. (It also cut tens of billions from Medicare.)

This, on top of the regulations that impact policies across America — boosting costs by mandating added coverage, whether you want it or not. The move forced insurers to cancel coverage for 6 million-plus people — even as tens of millions found that, no, they couldn’t keep their doctor after all.

More, the law also pushed consolidation — penalizing doctors who stay in independent practice, rewarding hospitals that merge. All because the liberals who wrote the law saw such competition as destructive.

Oh, and the nonprofit “insurance cooperatives” created with tens of billions in federal funds have nearly all failed.

Still ahead: Budget crises in the states that accepted temporary federal bribes to massively expand their Medicaid rolls. More premium hikes on the exchanges, as ever fewer healthy people sign up for coverage — prompting even lower enrollment, and more price hikes, in a sharp “death spiral.”

The “Cadillac tax” will kick in soon, too — so if your union has won great health coverage at the bargaining table, that plan will pay a penalty to Uncle Sam.

The legal challenges aren’t done yet, either.

How did it come to this? Voter fury in the wake of the 2008 financial crisis gave Democrats huge majorities in Congress — and President Obama took the opportunity to chase a decades-old liberal dream, universal health insurance.

The law’s fallen far short of that goal, as it’s faltered on every other front, because it was never really written to work, but assembled from the wish-lists of various left-wing wonks and ideologues — hastily stitched together and passed before the voters could stop it.

The Democrats didn’t even blink when Massachusetts, of all states, elected a Republican to Ted Kennedy’s Senate seat in a giant cry of “stop”: They passed the law before Scott Brown could take office.

Now ObamaCare is collapsing, and presidential frontrunner Hillary Clinton vows to “fix” it with new spending and even more Washington control of the market. If she gets Democratic majorities in Congress, she’ll keep that promise — and the madness will grow.

STICKER SHOCK AS OBAMACARE PREMMIUMS SKYROCKET IN 2017!

As Insurers drop Obamacare patients rates increase, deductables rise at least 10%! Good Going Barry!

OBAMACARE PREMIUMS MAY RISE BY 10% IN 2017—HERE'S WHY

BY SEAN WILLIAMS ON 8/14/16 AT 6:50 PM

This article was originally published on the Motley Fool. 

Get ready, because the 2017 enrollment period for Obamacare—officially known as the Affordable Care Act—is right around the corner.

Slated to begin on Nov. 1, 2016, the enrollment process for Obamacare could come with a sticker shock this year. Based on early rate request indications from individual state press releases, and an analysis conducted by the Kaiser Family Foundation of 14 major cities in mid-June, the average Obamacare healthcare premium in the U.S. could be headed higher by at least 10 percent in 2017.

It's hard to pick out a single culprit, as nearly every state that's reported insurer rate hike requests thus far has an average or weighted increase north of 10 percent. In virtually every state a big premium hike appears likely. Here are the four reasons why your Obamacare healthcare premium is probably going up by at least 10 percent next year.

Not enough young adult enrollment

The first big problem for Obamacare is that it hasn't attracted the most sought after customers: healthier young adults. Since young adults are less likely to go to the doctor, or to need expensive medical care, their premiums are used—and needed—to offset the costs to treat older and often sicker individuals. Although young adult enrollment improved in 2016 from the previous year, there are still not enough young adults enrolled in Obamacare to make a favorable difference for insurers.

Two factors explain the weakness in young adult enrollment. To a lesser extent, the "invincibility" factor is playing a role. Young adults who feel healthy and/or don't visit their doctor regularly would just as soon not be insured. Reaching this "invincible" crowd of young adults could prove tough for Obamacare.

But I believe the bigger factor is that the Shared Responsibility Payment, or SRP, isn't an adequate incentive to coerce young adult enrollment. The SRP is the penalty you pay for violating the individual mandate and not buying health insurance. In 2014, the SRP averaged only $150 per noncompliant person based on data from  H&R Block. In 2016, the Kaiser Family Foundation believes the average SRP could rise to $969. While a lot higher, $969 is still far less than the cost of the cheapest bronze marketplace plan in any given state. Until the SRP is more closely reflective of annual bronze-level plan costs, a sizable number of young adults could stay on the sidelines.

Obamacare enrollees are sicker and costlier

Secondly, insurers have discovered that Obamacare enrollees tend to be both sicker and costlier than most other types of enrollees.

According to a study conducted by the Blue Cross Blue Shield Association in April, after analyzing the medical claims of roughly 25 million employer-based group members, the average cost per member was $457 a month through the first nine months of 2015. Comparatively, analyzing 4.7 million individual Obamacare enrollees produced a monthly cost of $559 over the first nine months of 2015. That works out to a 22 percent increase over employer-based membership.

The reason insurers are coping with substantially higher costs for Obamacare enrollees is actually pretty easy to understand. Prior to Obamacare's implementation, insurers had the ability to handpick who they'd insure. This meant people with pre-existing conditions, who were potentially costly for insurers to treat, could be legally denied coverage. However, under Obamacare insurers aren't allowed to deny coverage based on pre-existing conditions. When Obamacare became the health law of the land, Americans who'd been ostracized from the healthcare network for having pre-existing conditions flooded back in, leading to adverse selection for insurers. Compounded with too few young adults enrolling, this has led to high medical costs, and even losses, for many insurers operating on Obamacare's marketplace exchanges.

The risk corridor was a failure

Thirdly, the risk corridor proved to be an utter failure.

The risk corridor represented a type of risk-pooling fund among insurance companies operating on the Obamacare marketplace exchanges. Here's how it worked: Insurers that were excessively profitable would be required to put some of those excess profits into a fund. In turn, insurers that were losing excessive amounts of money because they priced their premiums too low would be able to request funds from this risk corridor in order to stay afloat. In effect, the risk corridor was designed to promote competition, especially among new insurers in the individual market, and give insurance companies a year or two to find the sweet spot when it came to pricing their premiums.

Unfortunately, the risk corridor ran into plenty of issues. Just $362 million wound up being added because most insurance companies weren't overly profitable. In contrast, insurers wound up requesting $2.87 billion from the risk corridor to cover big losses. With only 12.6 percent of requested funds being paid out, many smaller insurers were forced to close up shop, including 16 of Obamacare's 23 approved healthcare cooperatives, or co-ops. Co-ops are run by the people, for the people, and they're a nice low-cost alternative to perceived-to-be profit-hungry national insurers. With these low-cost options disappearing at an alarming rate, insurance premiums have begun to adjust higher.

The other risk corridor issue stems from the federal government purportedly changing its stance on funding the risk corridor. In an ongoing suit against the federal government, insurance provider Highmark contends that the federal government initially offered to fund the risk corridor even if excess profits from insurers didn't meet loss request demands. The government supposedly changed its stance on this point, and instead ran the risk corridor as a budget-neutral program, meaning the only money paid out is what was collected from overly profitable insurers.

Long story short, the failure of the risk corridor decimated the low-cost co-ops and discouraged new entrants into the individual market.

There are fewer choices among insurers

The final reason your premiums are soaring relates to a declining number of insurer options to choose from. As noted above, the failure of the risk corridor has eliminated more than two-thirds of the available healthcare cooperatives, and there may be more failures to come. But it's not just low-cost options that are bowing out.

UnitedHealth Group announced earlier this year that it could lose up to $500 million from its Obamacare plans in 2016. This comes after more than $400 million in losses from its Obamacare plans in 2015. Finding Obamacare to be more trouble than it's worth, UnitedHealth is departing from 31 of the 34 marketplace exchanges in 2017. Obamacare only accounts for a small single-digit percentage of annual revenue for UnitedHealth, but leaving the exchanges should have a positive impact on its margins. Of course, it'll also leave hundreds of thousands of people on the hunt for a new health plan in 2017.

Humana is following a similar path. The national insurer recently announced that it would be reducing its individual coverage from 19 states to just 11, at most, in 2017. But this superficial figure doesn't tell the real story. In terms of counties, Humana is scaling back from offering coverage in 1,351 counties in 2015 to just 156 in 2017. That's a nearly 90% decline, and it's all on account of Humana dealing with excessive losses tied to Obamacare.

Just last week Aetna also went on the offensive following word that U.S. regulators plan to fight its attempted takeover of Humana. Originally, Aetna planned to expand its Obamacare offerings. That was assuming its merger with Humana went through, and the new entity took advantage of substantial cost synergies. With that merger possibly not happening, Aetna's new stance is to hold off on expanding, or potentially even cut its offerings.

The end result is this: competition is decreasing, which is bad news for the consumer, and insurers are losing money and needing to hike premiums in order to offer a sustainable product over the long-term.

Most states are still negotiating with the initial rate requests for 2017 in the hope of pushing them lower and making healthcare insurance more affordable. However, if I were a betting man, I'd suggest there's a better than 50-50 shot that we're going to witness Obamacare premium inflation top 10 percent as an average across the country in 2017.