Obamacare

Smart Apps vs. Obamacare

The Affordable Care Act locks in the status quo, but new technology is making health care cheaper and more individualized.

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Health care costs in the U.S. have been rising so steadily for so long that containment barely seems possible. Even optimists don't dream of cutting the price tag. As its official name-the Patient Protection and Affordable Care Act-suggests, Obamacare aims for affordability, not radical reduction.

But at a time when we're all walking around with more computing power in our pockets than NASA used to send Apollo 11 to the moon, perhaps we should be setting our expectations higher. Is it really so hard to imagine, in 10 years or so, the advent of advertising-sponsored health care? Or at the very least, bulk-purchased cardiology readings for a Netflix-like $8.99 monthly subscription?

The device that could potentially enable such scenarios already exists. The Alivecor Heart Monitor, approved for over-the-counter use by the Food and Drug Administration in February 2014, is a shell that fits over iPhones and Android devices. It converts electrical impulses from a user's fingertips into ultrasound signals, which are then picked up by the phone's microphone and processed using Alivecor's app. Users can email the single-channel electrocardiogram (ECG) produced by the Heart Monitor to their physicians, or they can pay a small fee to Alivecor directly through the app for analysis by a cardiac technician or board-certified cardiologist within 24 hours.

Reason

Currently, the heart monitor costs $199. The ECG analysis ranges from $2 to $12 a pop. In comparison, two researchers who published a study in the February 2014 issue of JAMA Internal Medicine queried 20 Philadelphia area hospitals about the fee they charged for an ECG-and found prices ranging from $137 to $1,200.

So Alivecor's fees are already quite nominal. But imagine if, say, Google or Amazon decide to incorporate such functionality more seamlessly into their devices. ECG analysis would likely be offered for free or near-free, in return for opt-in consent to share this information with advertisers and other third parties. When you have a heart attack in the future, the beta-blocker coupons will arrive faster than the ambulance.

In 1997, Harvard Business School professor Clayton Christensen introduced the concept of "disruptive innovation," the process by which a "simplifying technology" combined with a "disruptive business model" upsets established markets and radically broadens access to goods or services. The Model T is a classic disruptive innovation. The PC is another. In a September 2013 white paper published by the Clayton Christensen Institute (CCI), Ben Wanamaker, executive director of CCI's health practice, and Devin Bean, a research associate at CCI, examine the disruptive potential of the Affordable Care Act.

In their estimation, some aspects of Obamacare encourage disruptive innovation, at least theoretically. To accommodate the millions of new consumers that the individual mandate has created, the "already-burdened" health care system will potentially turn to "new care delivery models that leverage less-credentialed practitioners to deliver care for more routine health concerns." Similarly, employers who are mandated to provide care for their employees will look for the least expensive options available, creating "opportunities for new and disruptive entrants" to offer cheaper alternatives to traditional forms of coverage from established providers.

But while Obamacare creates new health care consumers, it also dictates the kind of health care these consumers must purchase, which severely inhibits innovation. As the CCI white paper suggests, minimum "essential" benefits that can only be purchased through tightly regulated insurance exchanges "put a floor on the low end of coverage." Because of these policies, Obamacare simultaneously "overshoots the needs of many customers while preventing innovation that could fundamentally lower the cost of care by requiring that insurance plans mimic the legacy state insurance markets."

Obamacare, in short, puts the weight of law behind the status quo. To illustrate this fact, Wanamaker and Bean offer an historical hypothetical. If Obamacare had existed in the 1940s, insurers would have had to offer sanitarium care for tuberculosis treatment, because that was the standard level of care back then. And even when antibiotics emerged as a cheaper, more effective form of treatment, health care options that didn't include sanitariums would not have been permitted-at least until legislators got around to removing that service from its mandated package of minimum essentials.

In addition to "lock[ing] customers into outdated, expensive treatment options," Wanamaker and Bean maintain, Obamacare-compliant health plans will, "by virtue of the benefits they cover," funnel most care into "traditional venues of care-the hospital and doctor's office." So ultimately all the entities that have been in charge as health care costs have soared achieve further entrenchment via Obamacare. Washington loves an incumbent!

"When you are young and healthy, you may not think you need health insurance. But life is unpredictable," goes an Obamacare recruiting pitch at NYC.gov. "Health care is expensive. Making sure that you are covered is very important." Granted, even one percenters who can afford concierge genetic sequencing can't foretell car crashes or autoerotic asphyxiation mishaps. But new technologies are making our medical destinies far more predictable than they once were. And the high price of health care isn't nearly as predestined as the Obamacare pitch insists.

In reality, we are heading toward a world of highly distributed and comparatively cheap diagnostic tools that will allow patients to self-collect health data more assiduously than a team of ICU nurses. The Cellscope Oto turns your smartphone into a digital otoscope for viewing the inside of a person's ear. The Scanadu Scout, a small, puck-shaped device scheduled to hit the consumer market in 2015 with an estimated retail price of $199, is an attempt to approximate the tricorder of Star Trek fame-a sensor-rigged device that can quickly monitor your temperature, blood oxygenation, respiratory rate, and more, then make an automated diagnosis using intelligent algorithms.

In addition, simple but ingenious innovations, such as "smart pill bottles" that track whether or not you've taken your medication, or predictive analytics programs that identify which patients are least likely to stick to drug therapy regimens and thus need more intervention from caregivers, promise to significantly improve outcomes.

Eventually, all of the data that devices like the Scanadu Scout produce will be stored, shared, and compared as never before, producing more accurate patient histories, more closely tailored diagnoses, and better predictive insights. The transition to this new world won't always go smoothly, of course. Making powerful diagnostic tools available to people who remain completely stymied by the self-checkout line at CVS promises to be a recipe for both comedy and tragedy.

But health care is on the verge of becoming far more individualized, far more contextualized and collaborative, and most of all, far more ubiquitous. And as this happens, the Affordable Care Act will start to look more and more anachronistic, a 20th century solution imposing itself onto a rapidly shifting set of 21st century conditions.

Indeed, imagine if, in the late 1990s, the federal government decided to ensure our right to affordable music by making every American purchase a monthly subscription to the Columbia House Music Club or Tower Records. That would have been great for the Columbia House Music Club, Tower Records, and, say, Sisqo, but would it have been great, in the long run, for the American people?

If you want to pay hundreds of dollars for a traditional ECG, many health care providers will accommodate your desires. But as the Alivecor Heart Monitor suggests, cheaper alternatives exist.

Obamacare doesn't prohibit consumers from pursuing these new cheap alternatives. Nor does it prohibit companies from offering products and services that could radically reduce prices. But unfortunately it will be a long time before you can expect an iPhone a day to keep doctors and insurance agents completely at bay.

As long as those $2 ECGs from Alivecor can detect a pulse, you're going to have to keep paying substantial premiums to Aetna or Blue Cross each month. Essentially, Obamacare establishes an obsolescing way of doing business as a pre-existing condition. 

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  1. That would have been great for the Columbia House Music Club, Tower Records, and, say, Sisqo, but would it have been great, in the long run, for the American people?

    The answer to your obviously rhetorical question is “Yes. The Thong Song would have brought us closer together as a nation and would have ushered in a new era of peace and prosperity.”

    I will duel anyone who speaks to the contrary.

    1. I’m sorry, but you’re just wrong-wra-wrong-wrong-wrong.

  2. “This CEO is out for blood”
    “Elizabeth Holmes founded her revolutionary blood diagnostics company, Theranos, when she was 19.”
    http://fortune.com/2014/06/12/…..od-holmes/

    We have an app for that.

  3. 29% of Mississippi voters troll smart-ass pollsters –

    http://politics.suntimes.com/a…..014-1127am

  4. This is just crazy-talk.

    Everybody in the medical industry tells me that, unlike every other industry, new technology causes costs to go up rather than down. Every time I try to explain the BCG experience curve to anyone in the medical industry, they are dumbfounded. Everybody else seems to get it without difficulty.

    It seems that when government dominates an industry either by direct payment, as in defense and postal services, or via a third-party payment mechanism, as in medicine and education, the BCG experience curve — a truly profound benefit of free markets — simply does not apply.

    1. +1 Certificate of Need

    2. ia a third-party payment mechanism, as in medicine and education, the BCG experience curve — a truly profound benefit of free markets — simply does not apply.

      Though, there are those of us in the education industry who are doing our damnedest to break that.

      The two educational “technologies” that are going to do it are the Internet and competence-based mastery learning. Few people realize how much the Carnegie Unit drives everything in education from K to university. Everything. It’s the fabric from which all is woven.

      1. I wish them the best of success in their battle against the teachers unions that dominate the Democratic Party.

        The Carnegie Unit essentially guarantees employment of AFT and NEA-represented instructors. The unions will never relent on a requirement that is so vital to their survival. They will, however, allow the introduction of technology as long as it is administered under a late-19th Century regime.

        1. You ain’t kidding brother. The book’s (main) author is on the board of trustees for the university I work at. We’ve been one of the recognized innovators when it comes to implementing these technologies.

          Thus, Slate sought it fit to write up a hatchet job on our efforts.

          1. The article wasn’t all that negative. At least, my takeaway from the article wasn’t negative.

            1. There were several things that the author twisted to make it seem as if the school’s business model was “predatory” toward non-traditional students.

              Oh, and I did I mention that the author of the article is also a tenured professor at UCLA? Conflict of interest? What’s that?

          2. I didn’t feel like that tickle was that negative but whoa boy, one of those commenters was pissed about the “lousy pay and no benefits” him and a couple others went on and on about that how the adjuncts needed to unionize and how it wasn’t fair that he got fired for complaining about those things on his own blog.

            No wonder so many kids get out of college as socialist.

    3. There is a certain truth to it.

      In the US, regulations require that a new medical device perform either the same as or better than current devices. This means that you cannot get the full effect of markets in this area; if there exist medical devices which cost far less than alternatives but perform even slightly worse, the consumer and/or the hospital is not allowed the opportunity to substitute it for the much more expensive (but marginally “better”) device.

      To analogize to the computing world, this would be as though every new computer that came out had to have the same or better processing power as a Mac Pro, thus making it impossible for, say, a Chromebook to offer less processor power for far less money.

  5. http://www.amazon.com/CardioCh…..heck+meter

    This neat device measures HDL/total cholesterol and triglycerides as well as glucose and ketones.

  6. Here’s a fallacy-laden piece that I would only expect from NPR:

    States That Raised Minimum Wage See Faster Job Growth, Report Says

    From the derpentariat:

    I knew this would happen and said so 100 times in threads on this subject. Evidence will only build regarding the value of employing morality as the baseline for a capitalist system in the form of a living wage as the absolute minimum for an honest day’s work.

    Once these increases are in full effect they MUST be protected by full annual inflation adjustments or the benefit will fade away as it has in the past.

    1. Once these increases are in full effect they MUST be protected by full annual inflation adjustments or the benefit will fade away as it has in the past.

      It works so well in the workers’ paradise that is Venezuela!

    2. Check out these myths regarding the minimum wage, compliments of the Department of Labor.

      http://www.dol.gov/minwage/mythbuster.htm

      1. Myth: Raising the federal tipped minimum wage ($2.13 per hour since 1991) would hurt restaurants.

        Not true: In California, employers are required to pay servers the full minimum wage ($9 per hour beginning July 1) – before tips. Even with a minimum wage boost coming this summer, the National Restaurant Association projects California restaurant sales will outpace the U.S. average in 2014.

        Well, I’m sold!

        1. Because we all know that restaurant sales == jobs.

          Sales couldn’t possibly be going up cause they will be charging more for their food. Idiots.

    3. Bo ? 6 minutes ago
      Aside from the obvious economic benefits (that it did NOT cause people to lose their jobs), it’s the right thing to do. As Jim Gordon said earlier below, implementing morality in our economy has the net effect of making it stronger. They philosophies that taught us that morality and humanistic values have no place in economics should be purged from our textbooks. Why? Economics is a HUMAN social system. Like any other, the absence of doing the right thing runs counter to the definition of the system.

      Raise the minimum wage so that people can have dignity. That IS profitable economics.

      Likewise, the philosophies that taught us that morality and humanistic values have no place in chemistry should be purged from our textbooks.

      The philosophies that taught us that morality and humanistic values have no place in biology should be purged from our textbooks.

      The philosophies that taught us that morality and humanistic values have no place in aerospace engineering should be purged from our textbooks.

      1. As Jim Gordon said earlier below, implementing morality in our economy has the net effect of making it stronger.

        Ayatollahs everywhere agree!

      2. so zyklon B, weaponized anthrax and Icbm’s are all morally neutral?

          1. well ar least you admit you favor industrialized genocide.

            1. Flaming Ballsack|7.19.14 @ 1:17PM|#
              “well ar least you admit you favor industrialized genocide.”

              Well, at least you admit you can beat on a strawman.

              1. cant help it if thats what you build your arguments with

                1. Flaming Ballsack|7.19.14 @ 1:26PM|#
                  “cant help it if thats what you build your arguments with”

                  Right, asshole. No one noticed you carrying it in.

        1. That’s a matter of application. What the poster seems to think is that we can alter economic realities just by the strength of our morality and positive thinking.

          Anthrax and the process that creates it isn’t going to stop being what it is because you start a Twitter hashtag campaign against it.

        2. Indeed they are. They are inanimate substances or objects. They are not moral agents. Morality attaches to moral agency, not to dirt and stones.

          Zyklon B was a pesticide. Surely you can imagine morally beneficial uses for pesticides, no?

          NBC weapons, like all weapons, have moral and immoral uses. Our NBC stockpile since WWII has arguably had the enormous moral benefit of preventing another great war.

        3. Icbm’s are all morally neutral?

          So what’s your plan to stop the asteroid? Sending some kind of scratch crew of oil workers to drill into it and insert a nuclear bomb?

      3. Purged. For the good of the collective. Lol.

      4. They philosophies that taught us that morality and humanistic values have no place in economics should be purged from our textbooks. Why? Economics is a HUMAN social system. Like any other, the absence of doing the right thing runs counter to the definition of the system.

        Exactly! That’s Hayek’s argument in a nutshell.

        1. That irony occurred to me too. Although again, his view seems to rest on the assumption that government fiat and enough positive, feel-good rhetoric from his side of political spectrum will suddenly eliminate the reality that all economic decisions come with trade-offs and opportunity costs.

          If you really want to piss off a progressive, call their understanding of economics the equivalent of Young-Earth Creationism. Perhaps they can set up their own little museum in some quiet corner of Maryland where the Soviet Union, Cuba, and Venezuela are shown to be happy and prosperous nations.

          1. Your observation is even more profound as I have argued before that progressive economics run counter to everything we understand about how chaotic systems are able to achieve order without directed influence. To argue for progressive economics is to argue against the very foundations of evolutionary theory. Of course, if they could grasp the concept of spontaneous order at a level deeper than just the factual, then they would have realized that already.

      5. Whenever I hear all the benefits to employers of giving people higher wages, I wonder why, if it is so great, do we have to force employers to do so? You would think that an employer would be a fool not to reap the benefits of reduced turnover and higher productivity a higher minimum wage would supposedly bring.

        Or maybe cherry-picked data doesn’t tell us the real story?

        Further, I’m always impressed how the media interviews the one sad-stack story that raising-min. wage advocates are able to find for them, some unfortunate soul who has worked the same menial job for 20 years at minimum wage and has kids, and how we are all supposed to cheer how the wage raise will suddenly make her affluent and a credit to the world. For one, they never point out that an across-the-board wage raise will just raise prices so the sad sack will be no better off than before.

        Secondly, they never ask this person just why they were never able to do better in twenty years. Are they barely competent at their position? Is the boss keeping them on just as a charity case? it would be amazing to see a follow-up story about one of these full-timers after a huge wage hike, when they no longer have a job because their boss couldn’t afford (or didn’t think they were worth) the new hourly wage.

    4. Honestly, they lost me with the first eight words:

      New data released by the Department of Labor

    5. Lemme guess: they used a selective time period, and prior to this time period the high-min wage states lost lots of jobs so they had a low baseline to bounce back from.

    6. In the 13 states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85 percent from January through June. The average for the other 37 states was 0.61 percent.

      So they found a 0.24% difference in job creation.

      I’m too lazy to run the statistics, but I’d wager with a similarly lazy statistician that this difference is not statistically significant at the 95% confidence level. (Curiously, the article doesn’t publish the standard deviations of the two subpopulations that would resolve this question.)

      Regardless of whether the difference is statistically significant, the basic measurement of the number of jobs is fraught with estimating errors.

      In other words, the whole article is almost certainly specious.

      1. Not even the a priori economist would claim that raising the minimum wage would necessarily result in higher unemployment. There are plenty of situations where it wouldn’t–an inflationary economy and one where the employer could cut benefits, for one and two–and it’s not impossible to imagine a circumstance where raising the minimum wage wouldn’t result in an increase in employment.

        But all things being equal, the minimum wage raises costs for employers and encourages them to find new cost-cutting measures to maintain their margins. Anyone who imagines that a minimum wage hike would have a generally positive influence on employment on the basis of studies that are necessarily limited in geography and time is a loon and a half.

    7. Evidence will only build regarding the value of employing morality as the baseline for a capitalist system in the form of a living wage as the absolute minimum for an honest day’s work.

      Nothing speaks to morality more than outlawing contracts with the threat of violence.

  7. For those who are willing to listen, a comparison of the high tech industry to the health care industry offers a great argument for unfettered capitalism. High tech is arguably freest from government regulation and and health care one of the most regulated (along with the banking & finance industries). The results are instructive. High tech is very competitive, innovative: product performance & capabilities go up while prices go down.

    Health care is just the opposite. Imagine what kind of value we could get from health care if it were de-regulated. Life spans would immediately go up, technologies improve faster while prices dropped. It boggles the mind. Yet people fear freedom, especially commercial freedom and we all will suffer. Literally.

    1. You can also compare outcomes in other markets:
      Water, electricity, (land-line) phones are considered ‘necessities’ (by those who consider all sorts of things ‘necessities).
      In most of the countries in Africa, they are government-run, expensive and unreliable.
      Cell phone tech, OTOH, is considered a luxury so it remains (mostly) outside government control. It is cheap and always available.

    2. Health care is just the opposite. Imagine what kind of value we could get from health care if it were de-regulated. Life spans would immediately go up, technologies improve faster while prices dropped. It boggles the mind. Yet people fear freedom, especially commercial freedom and we all will suffer. Literally.

      Not only is there fear, there is downright hostility to anything considered from the “profit-making world” in medicine. I know this only too well at the large medical center where I work. Pharmaceutical sales reps are banned from our campus, because it is thought any contact with such individuals will make physicians unable to resist the lure of a commercial product. And when I was recently at a Pharmacy Formulary committee meeting, where it is decided which drugs the hospital will have available, I heard the Chair of the committee actually say, “I don’t trust new drugs. The drug companies only create them to make money.”

      So, surprise, it’s very hard to get new drugs on our formulary. Better to use generics from 15 years ago, where no one is tainted by profit! But if a newer drug might work better with fewer side effects, or even save your life? “That’s what their marketing department wants people to think. And the (peer-reviewed double-blinded placebo-controlled published) studies supporting it can’t be trusted, because they were done with a grant from the drug company”.

      1. The trouble is compounded by the mealy-mouthed PR by the drug companies. Also their total self-immolating acquiescence to regulators. They friggin act guilty and most people assume they all are. They need a Steve Jobs to stand up and show pride in their products and what they do.

  8. I love these new devices, but I am concerned about QC. How can they be calibrated and checked? Recalibrated? Can I just send it in to a QA branch every year to tune the device?

    1. Pretty sure they’ll get reps REAL quick and the market will sort it out.
      Check the reviews on L.B’s linked device.

  9. Is it just me or did a post get disappeared above this one?

    1. I guess reason doesn’t like it when I point out that White liberals love to put words in my and other minorities’ mouths.

      1. I meant on the main page, not on this one. Or did you comment on the now-disappeared post?

        Also, check your email.

        1. Huh. I see.

          I’ll check my email.

  10. I have worked as a software engineer, helping build sites for the new state health insurance CO-OPs. I saw opportunities for innovation big and small everywhere. The healthcare industry is rife with dated, inefficient, standards and practices; de facto and de jure. The worst of these were, not surprisingly, ones established by federal legislation (e.g. WEDI & HIPAA) and bureaucrats at Centers for Medicare & Medicaid Services. These standards and practices would be seen as backwards (and at times completely nuts) to any software developer familiar with current software development best practices. They were essentially the result of a committee attempting to do the job of engineers. However, these standards do a great job of generating contracts for a handful of large vendors. It was discouraging to say the least.

    1. “However, these standards do a great job of generating contracts for a handful of large vendors. ”

      Mission Accomplished!

  11. Simply showing an example of a new technology isn’t “making healthcare cheaper”and any responsible journalist should recognize this fact.

    The naivety of the milleinial generation (and Reason editors) to believe technology solves all problems never ceases to amaze me.

    1. Some combination of increased supply, increased quality, and/or lower cost has been the trend since the emergence of capitalism.

      Technology may not solve *all* problems, but Man’s ingenuity has proven quite remarkable at eventually overcoming the problems it aims to solve.

      If this one technology were an outlier you would be right, but it isn’t. There are countless individuals and groups making similar incremental advancements all the time. Historically, it is only through the absence of a profit motive or distortions of price signals that this process is stalled.

      1. I generally agree with your comments. My objection was based-on the lack of any evidence regarding actual cost-reduction (as implied in the article title) and the penchant for “apps” of the current population.

        The acceptance that a significant portion of medical diagnosis and treatment are actually algorhythmic is a giant step forward (military medicine has successfully used this approach as a means to provide low-cost healthcare in the past (now abandoned).

        From a healthcare perspective, I am aligned with a more personalized approach – including, self-diagnosis and historically-utilized delivery systems (local medicine).

  12. Health care is fundamentally information technology – whether generating the data through sensors, or analyzing the data through computing power. The price/performance ratio of such technologies have been improving at an exponential rate.

    Health care should be getting cheaper, very fast. It’s not. It’s getting more expensive. Why? “We’re from the government, and we’re here to help.”

    If we lived in a free country, we’d already be in a world of inexpensive and increasingly powerful health care diagnostics. It only hasn’t happened because health care is the *best* industry for a government run shakedown – literally, it’s your money or your life. Are our muggers likely to reduce their shakedown cut? No way in hell.

    Why evidence does Reason have that this is going to change?

    23andMe used to give me health advisories based on the SNPs they read, and the latest research. But no more. The FDA shut that down.

    Our health care future is the same as our health care present – a shakedown by vested interests to extract as much money as possible out of our health car needs.

    The only technology that will fix this is Freedom.

  13. I love most of smart app. As you are here comparing ObamaCare and Smart App, I like the concept as you presented. You are trying to collect people’s view about upcoming elections.
    I like Show box app most to entertain myself. thnx

  14. Very informative post. There are so many smart apps available for human benefit, but the thing to appreciate is that now there are so many apps available for pc, just like you use whatsapp for pc.

  15. I agree. Health Care is very important.

  16. Very good information. We should also consider using SHAREir for pc. It is here for our benefit.

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