Category Archives: Health care

Would the Suicide Epidemic Get More Attention if the Victims Were Women and Minorities?

Graphic credit: Wall Street Journal

Graphic credit: Wall Street Journal

When does a suicide epidemic become a national crisis? When women and minorities end their lives in greater numbers than men and whites, thus confirming the dominant narrative of a racist, patriarchal society that discriminates against all manner of oppressed groups… Until that time, the rising suicide rate will get only passing attention. Depending on the age group, according to new data, American men kill themselves at a rate four to ten times the rate of women. Whites also end their lives at three times the rates of African-Americans, Latinos and Asians.

In a society stained by “white privilege,” and “male privilege,” a strikingly large number of white males seem to think otherwise. Rather than basking in their advantages, they’re checking out in ever greater numbers. Reviled in the dominant narrative of our age as the oppressor, white males are the one group whose cultural mores reject the idea of victimhood and grievance mongering. Rather than interpreting the inevitable setbacks and vicissitudes of life through the lens of race, class, gender, the so-called “angry white male” is far more likely to direct his anger inward by means of suicide or outward in explosive, mass shootings and death-by-cop incidents.

Graphic credit: American Foundation for Suicide Prevention

Graphic credit: American Foundation for Suicide Prevention

While the right-thinking people are all caught up in the latest victimization drama — the trauma of transgendered people unable to use the bathroom of their choosing — the suicide epidemic receives very little notice. Sure, the problems of transgendered people are real, but c’mon, so are the problems of people whose lives suck so badly that they kill themselves.

According to the American Foundation for Suicide Prevention, Virginia’s suicide profile matches that of the nation (which should come as no surprise, because our demographic profile matches that of the nation). There were 1,122 suicides in Virginia in 2015 — 12.86 per 100,000 population, a hair below the national average. Suicide is the 11th leading cause of death in the state; more than three times as many people die by suicide here than by homicide.

Does anybody care?

— JAB

Virginia Obamacare Update

Anthem Healthkeepers, with 190,000 enrollees in Virginia, is filing for an average 15.8% hike in its 2017 Affordable Care Act premiums.

Innovation Health, with 61,000 enrollees, is seeking a 9.4% increase.

United Health, with 6,900 members, wants a 17.9% increase.

The overall weighted average increase request in Virginia, according to Investors Business Daily, is 17.9%.

I thought the cost curve for health care was supposed to bend downward, not upward.

–JAB

What Went Wrong with Long-Term Care Insurance?

Long-term care insurance information, form, Folders and stethoscope.

Long-term care insurance information, form, Folders and stethoscope.

by James A. Bacon

I am one of those schlubs who takes out insurance policies to protect against bad things happening. One eventuality I worry about is the need for long-term care. The longer you live and the more chronic conditions you develop, the greater the odds – about 50/50 for a 60-year-old today — that you’ll wind up bed-ridden at home or in a nursing facility. Feeling strong and fit at 53 when I took out a policy ten years ago, I was betting that I’d live longer than the average Joe and be more likely than not at some point in my life to benefit from having insurance. Signing up at a relatively young age would lock me in at an affordable rate. Or so I thought.

About two months ago I received a letter from my insurer, New York Life Insurance Company, informing me that my long-term care policy, which had remained stable ten years, was scheduled to increase 20%, costing me, in rough numbers, an extra $300 per year after a three-year phase-in. Three hundred bucks won’t bust the Bacon bank, but I was miffed — it was the principle of the thing. I had not been led to understand that my insurance rate would go up. And I bet there were other policy holders for whom $300 per year would cause real hardship.

Well, a look at my insurance policy indicated that, sure enough, New York Life was entitled to raise my fees. My bad. I should have read the fine print. Even so, any rate increase had to be approved by Virginia’s Bureau of Insurance, and I wondered — as I suppose an estimated 80,000 other long-term care insurance policy holders are wondering — what is the justification for jacking up our rates?

The letter referred vaguely to “longer life expectancies and an increased need for long-term care benefits.” Did the insurer mean to tell me that the people who are the world’s experts in demographic trends failed to anticipate that life expectancies would increase? And they miscalculated what percentage of the population would need long-term care? Really? That sounded lame to me, and I wondered if there was more to the story. In particular, I wondered if years of Quantitative Easing and low interest rates had depressed New York Life returns on insurance premiums below what the company had anticipated when it formulated the rates ten years ago. Could my higher insurance fee represent another $300 a year in tribute to Uncle Sam, just one of many ways in which low interest rates are invisibly transferring wealth from American citizens to its grotesquely swollen and indebted government?

One of the advantages of being a blogger is the ability to pick up the phone and call anyone with a decent chance that someone actually will answer. When I called New York Life to find out what the heck was going on, company spokesperson Terri Wolcott put me in touch with Aaron Ball, vice president and head of the Long Term Care business, who, as coincidence had it, lives in good ol’ Richmond, Va.

Low interest rates were a factor in the rate increases, Ball says, but not a decisive one. He candidly admits that the industry screwed up key underwriting assumptions.

We Underpriced the Policy. Sorry about That.

“When you apply for coverage, it can be 20, 30 or 40 years before you make a claim,” says Ball. “We set up reserves to pay claims 20 to 40 years in the future. We’re earning interest on those investments, and we assume what those interest rates will be.” Ten years ago, carriers were assuming earnings in the 5% to 6% range (conservative assumptions that were lower than what most pension funds were assuming at the time). “Today, they’re assuming in the 3% to 4% range. The low interest rates have put pressure on the portfolios.”

Higher returns on the company’s investment portfolios might have offset the negative experience, tempering the need for a rate increase, Ball says, but the bulk of the blame goes to actuarial miscalculations regarding other key variables.

Morbidity. The first the key variables is morbidity — how sick will policy holders get, and what will be the appropriate venue for treating them? When projecting 40 years into the future, getting this assumption correct can be harder than it looks. The things that put people into long-term care change over time. Ten years ago, frailty issues predominated — hip fractures, cardiovascular problems, and the like. Today, the driver is cognitive claims — Alzheimers and other forms of dementia. Also hard to predict is the setting in which people will be given long-term care. “Back in 1988, there was no such thing as an assisted living facility,” says Ball. As it turned out, New York Life’s morbidity assumptions were close to the mark. Other insurers got these assumptions wrong, and they’ve had to make upward adjustments in their premiums.

Voluntary lapse. When people buy policies, some continue to own the policy and eventually collect benefits, while others let their policies lapse voluntarily. The “lapsers” pay premiums that don’t get refunded, effectively underwriting the cost of the policy for others. When long-term insurance was getting off the ground about 20 years ago, there was no basis for determining how many policy holders would let their policies lapse, so carriers made the best guess they could. In most cases, those guesses were wrong.

New York Life assumed in pricing its premiums that policies would lapse at an annual rate of 2% after four years, but actual experience showed that the rate trended downward to about 0.5%. More people hung onto their long-term care insurance policies than the company expected.

Mortality. The rate at which policies lapse due to the policy holder’s death is another major variable. “We now expect twice as many people to be alive at age 90 compared to what was assumed when the product was priced,” says Wolcott. “Longer life expectancies generally result in additional claims because more people utilize long-term care services at older ages.”

The explanation made sense. I didn’t like it, but it made sense.  New York Life blew two of its key assumptions (though not as badly as many other insurers did) and low interest rates depressed investment turns. Accordingly, to maintain the actuarial viability of the policies, the company had to jack up rates.

But the explanation raises a new set of questions. If policy holders sign a contract with an insurance carrier to provide a certain set of benefits for a certain price, why isn’t the carrier obligated to eat the difference when they make bad decisions? I’ve never heard of carriers filing to reduce premiums if their assumptions turn out to be too optimistic. Maybe it happens, but I haven’t heard of it. No, they keep the profit. Given the way the incentives are structured, aren’t insurance companies encouraged to low ball premiums, knowing that they can come back later and jack up rates? Continue reading

How Many Millions Have Died from This Failed Scientific Orthodoxy?

fat_hypothesis_chart

Graphic credit: Washington Post

One of the most rigorous scientific experiments on the effects of fatty foods in the diet took some 40 years to complete, but the results are now in. Reports the Washington Post:

Collectively, the fuller results undermine the conventional wisdom regarding dietary fat that has persisted for decades and is currently enshrined in influential publications such as the U.S. government’s Dietary Guidelines for Americans. And the long-belated story of the Minnesota Coronary Experiment suggests just how difficult it can be for new evidence to see the light of day when it contradicts widely held theories.

The special diet given to mental patients in Minnesota did succeed in its intent to reduce cholesterol levels. What no one anticipated was that participants were more likely than patients on a conventional diet to die earlier.

Bacon’s bottom line. First question: By regulating and brow-beating food processors to reformulate their packaged foods and by pushing Americans into embracing the new nutritional guidelines, social engineers succeeded in altering the American diet. How many millions of Americans have died as a result?

As an aside, given the obsession with race and class today, one is tempted to ask also if minorities and the poor were disproportionately impacted. Did the nutritional social engineering of the 1970s lead to more obesity, more hypertension, more coronary blockage, and more diabetes than would have occurred otherwise? How many millions suffered death and disability as a result?

Second question: Will the social engineers ever own up to this calamitous public health failure and their complicity, however well intended, in the premature death of millions of Americans? Will Black Lives Matter point an accusing finger at the nutritional policies that arguably have snuffed out a thousand times more African-Americans lives than unjustified police killings?

Third question: What can we learn about what happens when science, politics and scientific funding intersect? As the WaPo summarizes why early results of the study were buried when they conflicted with orthodoxy:

The Minnesota investigators had a theory that they believed in — that reducing blood cholesterol would make people healthier. Indeed, the idea was widespread and would soon be adopted by the federal government in the first dietary recommendations. So when the data they collected from the mental patients conflicted with this theory, the scientists may have been reluctant to believe what their experiment had turned up.

Could the same thing be happening in some other sphere of public policy? Could contradictory scientific evidence be ignored or suppressed? Just asking.

— JAB

Disrupting Education and Health Care

steve_case

Steve Case

by James A. Bacon

Education and health care are the two most moribund economic sectors in the U.S. economy, plagued by lagging productivity and poor outcomes. Not coincidentally, both sectors are joined at the hip with government. Democrats are determined to preserve the status quo, while Republicans offer no clear market-based alternative. Is there any reason to think anything will change?

Steve Case, the legendary co-founder of AOL who now runs investment firm Revolution LLC, thinks that a “third wave” of Internet innovation will transform both sectors from the bottom up. He writes the following in the Wall Street Journal today:

While the presidential candidates discuss the merits of abolishing or expanding the federal Education Department, entrepreneurs are revolutionizing how instructors teach and students learn. Venture capitalists see what’s coming. Funding for EdTech startups hit $1.85 billion last year, according to EdSurge, up from $360 million in 2010. Former teachers are leading companies that are unleashing—finally—personalized and adaptive learning. While the pundits debate education policy, the innovators are in the trenches improving classrooms all across the country.

Or look at health care. As the candidates pitch plans to abolish or build on the Affordable Care Act, the real action to improve America’s medical system is coming from entrepreneurs. They are inventing better ways to keep us healthy, and smarter ways to treat us when we get sick. The revolution in health care is being led by the innovators who are working tirelessly to improve outcomes, enhance convenience and lower costs. And again, investors sense this: Last year health care companies raised a record $16.1 billion in venture capital, this newspaper reported, an increase from 2014 of 34%.

But there is no divorcing government from the process, argues Case.

Third Wave innovators … won’t be able to go it alone; they’ll need to go together. They’ll need to engage with governments, as regulators and often as customers. And they’ll need to recognize that revolutions often happen in evolutionary ways. Success will require many alliances, as well as constructive dialogue with regulators.

This entrepreneurial revolution offers Virginians an alternative to the stale and polarized alternatives of the past. Virginia may or may not be where these new companies originate and create product-development, back-office and headquarters jobs. But our approach to public policy will influence where these entrepreneurs do business first. The more flexible and open we are, the greater the likelihood of attracting investment and re-energizing our education and health-care sectors. This is a once-in-a-generation opportunity. Will we take it or squander it?

Fat Virginia: Better than Average but a Few Pounds to Trim

Source: WalletHub

fatness_and_health

Rankings based on composite metrics of fat prevalence, fat-related health issues, active lifestyle and healthy food in 100 largest U.S. metropolitan regions. Memphis ranks as the No. 1 metro with fat-related issues, Honolulu as No. 100.

— JAB

Another $100 Million for Venture Capital? Who Is Accountable at Inova?

Inova CEO J. Knox Singleton (left) with Governor Terry McAuliffe and George Mason University President Angel Cabrera announcing Inova-GMU strategic partnership. Photo credit: The Connection.

Inova CEO J. Knox Singleton (left) with Governor Terry McAuliffe and George Mason University President Angel Cabrera announcing Inova-GMU strategic partnership. Photo credit: The Connection.

by James A. Bacon

In February Inova Health System announced its intention to create a $100 million venture fund dedicated to precision medicine, an initiative timed to coincide with an Obama administration event highlighting the nascent science, and designed to support Inova’s own $300 million plan for a center for personalized health just outside Tysons Corner.

From an economic development perspective, such a fund is just what the doctor ordered for a Northern Virginia economy overly dependent upon defense, intelligence and homeland security funding. The giant health system has signaled its willingness to spend what it takes to build a nationally recognized medical R&D hub centered on preventing disease by understanding patients’ unique genetic make-up, and there are plenty of interests, from George Mason University and Virginia’s biotech industry to the McAuliffe administration and real estate companies hungry for the next development play, who want to see Inova succeed.

“We think it’s transformational, something that can really propel this region,” Josh Levi, vice president of policy for the Northern Virginia Technology Council told the Washington Business Journal. “It’s not just the money. It’s the acceleration, the incubation of partners. The thing they’re really bringing is the expertise.”

When questioned by the WBJ, Inova officials declined to provide the most basic details about the fund. Who will manage it? What kind of companies will Inova back? Most importantly, where will the money come from? The company says that it will share more information as it becomes available.

From what I’ve seen, it appears that the WBJ is the only Washington-area media entity asking questions. And the scope of its questions are very narrow, befitting the focus of a business publication.

But there are even bigger questions that no one is asking. Is this an appropriate business for Inova to be in? Is it appropriate for a health system to be allocating such a large sum to an enterprise (a) in which it has no experience, and (b) is so divorced from its mandate of delivering health care services to the citizens of Northern Virginia?

I am truly of two minds on this issue. On the one hand, I can see a great future for the Center for Personalized Health as a job and wealth creator. On the other hand, the initiative seems to be barreling ahead with no questions whatsoever. The only skepticism I’ve seen are in the comments section of this blog, when Reed Fawell has asked what massive commercial development in the Merrifield area of Fairfax County implies for traffic along the already congested Interstate 66. I’ll let Reed continue to examine the traffic/land use implications in the comments section. In the meantime, I will continue to ask how appropriate it is for Inova as a not-for-profit entity serving the community to undertake this initiative at all — not because I am adamantly opposed to what Inova is doing but because the enterprises seems to be making multi hundred-million dollar commitments without any pushback whatsoever, and somebody has to ask the questions.

As I observed in December:

The not-for-profit Inova, which exercises near monopoly dominance in the Northern Virginia health care market, generated operating income of $218 million in 2014 on $2.7 billion in operating revenue. That’s a profit margin of about 8%, more than twice the profitability that non-profits normally need to maintain healthy operations. That translates into about $109 million in what one could classify as excess profit.

Unlike a for-profit company, Inova is not obligated to maximize profits. To the contrary, insofar as the company is exempt from taxes and has a community mission, one could argue that it is morally obligated to (a) reduce charges to patients afflicted by ever-escalating medical bills or (b) provide more care to low-income patients not covered by Medicaid.

How has Inova been allowed to morph from a community hospital system into a budding underwriter of Northern Virginia economic development? Perhaps we can find some clues by examining the NoVa board, a Who’s Who of the Northern Virginia business and political establishment. Here is a list of the men and women who are, in Inova’s own words, “responsible for oversight of Inova’s finances, strategic planning and management”:

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