Ideas

A Health Care Haven No More

Despite its access to brainpower and financial backing, it had turned out to be harder than expected for Haven to disrupt the health care market.

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In January 2018, a powerhouse trio of megacorporations—Amazon, Berkshire Hathaway, and JPMorgan Chase—announced a new health care venture. It didn't have a name or a CEO or a specific product, but it did have a mission: to fix America's health-care mess and, in particular, to bring down costs, especially for companies and employees facing ever-rising medical bills.

"The initial focus of the new company will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost," the companies said in a joint press release, promising that the venture would be backed with extraordinary resources and "free from profit-making incentives and constraints." The cost of providing health care represented "a hungry tapeworm on the American economy," said Berkshire Hathaway CEO and famed investor Warren Buffett. The company's goal was to put that tapeworm on a diet.

The first steps were to give it a name, Haven, and a CEO, the well-known Harvard health policy and management professor Atul Gawande. Nearly a decade earlier, Gawande had penned an influential article for The New Yorker on "The Cost Conundrum."

While researching that article, Gawande traveled to McAllen, Texas, a small city near the southern border that was one of the country's most expensive health care markets on a per-capita basis. In McAllen, he noted, Medicare spent more than twice the national average on enrollees: almost $15,000 per person, a substantial increase from the early 1990s, when the city's per-capita Medicare spending ran close to the national average. Why, he wondered, was McAllen now spending so much more?

The main reason for the cost inflation, Gawande decided, was a surfeit of unnecessary procedures: tests, scans, surgeries, and appointments that served no medical purpose and sometimes were actively harmful. Residents of McAllen were getting more care. But that didn't make it better care.

From there, Gawande drew a theory of health policy reform: America needed to expand coverage, which was distributed unequally, and it could do so by reducing spending on unnecessary services. The country could have it both ways: more coverage and less spending—and perhaps even better care in the process.

When it passed a year after Gawande's article, the Patient Protection and Affordable Care Act, widely known as Obamacare, was based at least partly on this theory. The law expanded coverage through Medicaid and subsidies for heavily regulated private insurance. A goal was "bending the cost curve down."

By one measure, Obamacare slowed the growth of national health care spending from 5.6 percent a year between 2003 and 2010 to 4.4 percent a year between 2010 and 2018. But adjusted for general price inflation, the growth rate is essentially unchanged. And overall health spending increased from $2.6 trillion in 2010 to $3.6 trillion in 2018, representing an increased share of the country's gross domestic product. Buffett's hungry tapeworm had kept on eating.

Which brings us back to Haven. In May 2020, Gawande, who reportedly had served as more of an intellectual leader than a hands-on manager, left the company, citing a desire to focus more on policy and advocacy—not an auspicious sign for a company that set out to serve as a model for health care delivery. And despite the extraordinary resources at its disposal, the company's actual work had been modest: a handful of pilot programs, according to The Wall Street Journal, including one that offered JPMorgan employees in two states a menu of health care services at a flat rate.

Despite its access to brainpower and financial backing, it had turned out to be harder than expected to disrupt the health care market. Haven would not get to try much longer. In January, the company announced that it would shut down entirely. The original dream—"simplified, high-quality and transparent healthcare at a reasonable cost"—had proven too vast and too difficult for even the most powerful players.

Haven's failure is a genuine disappointment. Like Obamacare—which has sputtered along, frustrating the public with continued high costs and regulatory inflexibility—it serves as a lesson in the arduousness of ambitious health care reform. Regulatory and practical pressures, combined with the resources, innovative thinking, and ground-level administrative competence that are necessary, make major improvements very difficult to achieve. It might be possible to starve the tapeworm. But so far, no one has figured out how.

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45 responses to “A Health Care Haven No More

  1. Wurst!

    Could it simply be pie in the sky?

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  2. > It might be possible to starve the tapeworm. But so far, no one has figured out how.

    Well private insurance does it by denying people needed care and charging huge co-pays and deductibles. That’s how private insurance makes it’s profits.

    There is also just the general problem of human beings getting sick and need medicine/care and how do we allocate medical resources to them without 3rd party middlemen trying to make “profits”.

    Single-payer would do this but you’d have to drop the market fetishization/government hate for two fucking seconds and realize that everything, but especially healthcare, should not be controlled by robber barons. Not holding my breath

    1. Single-payer would do this but you’d have to drop the market fetishization/government hate for two fucking seconds and realize that everything, but especially healthcare, should not be controlled by robber barons.

      Which is why I wish we had government bread stores, I’m so goddamn sick of the robber barons at Kroger gouging me on the price of bread.

    2. Yeah Gov controls 90% of Healthcare and its one of the worst industries. What we need is to give them 100% control! The Gov always looks out for what’s best for the people and never does anything shady.
      Second point when it comes to medicine the government is a 3rd party middleman, the only difference is they have no interest in health only vote getting and looting.
      Last profits are good, in a free market they show that you provide a valuable good or service, however in a distorted market they can show that you have the political clout to steal. Who do you think is responsible for the second scenario?

    3. You assume if we had a free market healthcare that it would still be so expensive that insurance would be needed.

      Maybe you should check out the Free Market Medical Association as a real world example.

    4. You’d have to drop your knee-jerk market hatred for long enough to recognize that everything scarce must be allocated, rationed, or otherwise limited, whatever phrase you want. Either markets do it or wise men with government paychecks do it. I know which one produces better results every single time, and it ain’t government.

      I bet you hate private schools and home schooling too. You probably cannot differentiate government funding, which helps poor people, with government control, which turns schools into indoctrination centers. Same principle applies to medical care and insurance, but your closed mind will never admit that.

    5. Get up off of your damn knees.

      1. This. It cannot be reiterated enough.

    6. What I don’t understand about single payer proponents is where they think all this new care is going to come from. If you want single payer, you’re going to have to remove the artificial new doctor cap and remove certificate of need laws.

      Since you have to do that ANYWAY, why not do that NOW and start the process in a free-market way?

      1. No reason to think all those smart hard-working MDs wouldn’t happily take less than a government lawyer makes to continue their more equitable practice under single payer, is there? Heck, maybe we even forgive their school loans, then the best and brightest will surely line up.

  3. Who could have imagined that a big top-down management project led by an intellectual would have failed?

  4. How about this plan?

    1. Remove routine, minor treatments and fees from insurance funding. Most people can and should pay for these out of pocket. Let them shop for best prices and service.

    2. Use insurance for what is does best: pooling resources for unusual catastrophic losses. Let people decide on coverage, deductibles, etc. from a national market. Make sure plans include incentives for people to spend cautiously.

    3. Let everybody know that we can’t all expect to spend more on health care than we all produce.

    4. When a patient approaches end of life, especially at old ages, give them or their family a debit card that they can spend on medical care–or not.

    1. Real close.
      But there are two “problems”, hinted at in your solution; Medical care, and Medical insurance. To introduce price pressure into medical care, we need to remove the influence of government and insurance companies that lead to multiple “prices” for the same service. In essence, make “in network” non-existent. If medical care providers charge everyone the same, price comparison becomes possible. I once asked my doctor what he charged for the routine office visit I was having. He said “I have no idea, you need to check with the office staff.” I asked the office staff, they said “Well, it depends on you insurance coverage, and if you have certain medical conditions or not, and this year’s federal regulations. (and me with private insurance!).
      The second is as you referred to in item two, insurance is supposed to cover unexpected large expenses. What we now call medical insurance is more like prepaid health care. And the individual seldom purchases the insurance, most policies are purchased by large corporations for their employees, so that the individual’s choices is usually just “yes” or “mo”, with a few allowed to select from two or three options. Until we can split the selection of insurance from employment, there is no real way forward.

    2. Idk about that last point, but everything else is completely logical. Something does need to be done about end of life care. I seem to recall hearing that 80% of all health spending is burned on the last 3-5 years. I certainly don’t advocate death panels, but maybe as a society we should agree to not burn the majority of our resources on such low quality of life prospects. I’d rather spend a million on a child’s cancer treatment than 40k to replace an 85 year old’s hip.

      1. We devastated our economy for the past year for the sake of “low quality of life prospects.” Not gonna happen.

        1. New York PA and NJ didn’t. They went out of their way to lower social security, and end of life care

      2. Agree; Throw out #4 and call it the LOCAL welfare office.
        If you’re are poor, starving and dying; there’s always been a place to go… Funny how that place got forgotten after the government decided to auto-enroll EVERYONE on welfare.

      3. Actually this is what I did my PhD dissertation on. Due to longer life expectancies, meaning more time with more health problems, it is less than 1/3 of average lifetime medical costs per person are in the last 3 or so years of life. Medicare, however, pays nearly 25% of it’s yearly budget on people in the last year of life, who, in a given year, represent about 5% of the over 65 population in the US. The one problem with trying to determine whether it is worth spending money on people dying is that it is hard to predict whether the spending will be worth it beforehand. But this is why the free market solution is best, let patients decide what is worth it and they can spend their own money on potentially pointless treatments.

    3. 5. Reverse the WW2-era tax laws that treat employer-provided health care premiums as a deductible expense but customer-purchased health care as non-deductible.

    4. Welcome to 1973 Blue Cross “Major Medical” (for 1,2,3)

  5. It begins with two very simple realities:

    Healthcare is not a natural right.

    Government has neither the moral nor the Constitutional authority to interfere in the delivery of healthcare services.

    One you understand this you will understand why further disturbance of an already-screwed-up market only makes things worse.

    There isn’t a thing in the world stopping Warren Buffet from getting out his checkbook and running as many charitable programs he wants.

    1. ^THIS +10000

  6. 40-Reasons why Healthcare doesn’t work in the USA?

    1-HHS, 2-CDC, 3-CMS, 4-NIH, 5-FDA, 6-HRSA, 7-AHRQ, 8-OSHA, 9-EPA, 10-IOM, 11-NIOSH, 12-CCID, 13-NCPDCID, 14-DHQP, 15-HICPAC, 16-NCIPC, 17-NCIDOD, 18-CEQ, 19-ONDCP, 20-ONAP, 21-PCS, 22-OHR, 24-ASA, 25-ASFR, 26-OASH, 27-ASL, 28-ASPE, 29-ASPR, 30-ASPA, 31-OCR, 32-DAB, 33-AHRQ, 34-ATSDR, 35-IHS, 36-NIH, 37-SAMHSA, 38-DEA, 39-ATF, 40-VA

    Exactly the same reason everything the government touches is stupid expensive and UN-attainable. There are ZERO competing healthcare governments thus it is a 100% monopoly (i.e. Tyrannical Dictation).

    U.S. Constitution – Amendment X
    The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

    1. You are conflating DOESN’T WORK with IS ILLEGAL. Your last item has nothing to do with DOESN’T WORK and is long past being actionable any more.

      The rest of your rant is mere examples, nothing to do with principles or explanations.

      The real reason is that government paychecks or job titles do not endow ordinary (or even extraordinary) people with access to information that the general public or market specialists don’t already have better, nor with the wisdom to handle all that information better than markets.

      All scarce resources must be allocated; some will not get what they want at a price they are willing or able to pay. Distributing scarce resources is otherwise known as markets; governments can’t ban them any more than they can ban gravity, but just as government dams and levees disrupt rainfall, governments disrupt markets.

      Subsidizing the poor is one of the few problems government taxes and redistribution can attack, although always incompetently, unlike medical care itself or health insurance which pays for it.

      1. Say, I have an idiotic idea…. Lets provide more ‘scarce resources’ by paying thousands of people to implement 40-Gov-Gun toting agencies specifically to bully/harras anyone who says “Healthcare”.

        Ya, Ya; That’ll fix it /s.
        And to think how horrible it was in the 1600s to call on the local self-proclaimed ‘doctor’ who would show up at your door for the price of a pizza… Surely; That didn’t work. Just imagine the horror of getting healthcare as simple as stopping at the gas station for fuel.

  7. Haven, the Silicon Valley healthcare disruption startup launched in 2018 by Amazon, Berkshire Hathaway and JPMorgan Chase

    Silicon Valley powerpoint jockey’s got so brash they thought they could fix healthcare.

    Stick to what you do best, lads, apps which impose staches on selfies.

  8. The first steps were to give it a name, Haven, and a CEO, the well-known Harvard health policy and management professor Atul Gawande.

    It’s like you could see the headlights of failure barreling down the road towards them.

  9. Which brings us back to Haven. In May 2020, Gawande, who reportedly had served as more of an intellectual leader than a hands-on manager, left the company, citing a desire to focus more on policy and advocacy

    This is telling. What better place to be a policy-maker? You have an opportunity to not only make policy, but have your policy enacted directly in the space you created to delivery healthcare, without that policy going through the churn of politics and the legislative process. The fact that he preferred the latter vs the former tells me everything I need to know about him: He knows his policies are nothing more than pseudo-intellectual bloviations that are never intended to see the light of day.

    1. Some people, I am one of them, have no interest in management and prefer to focus on what they really want to do. You could not pay me enough to wear a suit and tie and sit in meetings all day. What a nightmare.

      I do not see a reason to berate this person because he walked away from someplace he did not wish to be involved with.

      1. Lots of CEOs at startups step down from the CEO role and take on roles internal to the company to pursue the core mission. I don’t believe for a second that Gawande stepped down because he didn’t like wearing a tie. I’d bet a sum of money he stepped down because he saw the writing on the wall: that “doing this healthcare thing” is a fuckton harder than it seemed when he gladly took the role, and thought his legacy would be better served leaving before it cratered.

        1. So it is your role to choose and judge what path this individual walked.

          1. I have every reason and capacity to judge why the events leading up to a failed healthcare startup may have failed, especially when such a renowned luminary of healthcare policy was at the helm.

  10. negotiated cash payments to doctors who are allowed to negotiate and accept cash payments to be doctors.

    1. Doctors mostly have no interest in negotiated cash payments. They hardly know even what they charge and get in return.

      This is not a box of cornflakes.

      1. “Doctors mostly have no interest in negotiated cash payments.”

        ORLY?

        ‘Be specific and cite evidence.’

  11. The sole means to provide the best quality health care to the most people at the lowest cost is free markets for health care and the means to pay for it.

    Failure to extract government completely is just jingling the car keys to distract the public from what works…

  12. Maybe if people were in charge of the spending there wouldn’t be as many pointless procedures done?

    1. Which pointless procedures are you referring to?

      Be specific and provide evidence.

      The patient always has the right to say “no”.

      1. The exact ones that the super smart people who started this thing identified as a problem.

        My entire point is there’s little incentive to say no when it’s not your own money.

        1. There is also little incentive for the TOP MEN to accomplish anything when there are effectively no consequences for failure.

          If anything their reputations have been burnished for having been a part of such a colossal waste of resources.

          Yet, despite all the heartache, the dream of progressives never die. Right Suderman?

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