On a special Saturday edition of Health in 2 Point 00, Jess and I talk about her amazing forecasting and the huge scale of one deal. Yes, the Tiger pounces and Hinge Health takes its total raise to $1 billion. There’s also an complex combo deal for Femtec, raising $38m buying Birchbox and more, and we give a quick mention to the brief history of public companies Science 37 & Augmedix – Matthew Holt
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Today on Health in 2 Point 00, Jess and I talk about the importance of a good company name. Some deals today: Truepill gets 142 million in a Series C bringing their valuation to 1.6 billion with 300 million ARR; Stride Health gets 47 million gets, bringing up their total to 86 million; Bardavon Health Innovations gets 90 million, bringing their total up to 109 million; Wider Circle gets 38 million, invested in by AmeriHealth Caritas. – Matthew Holt
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By @roguerad
I first clashed with authority when I was eight. Every Saturday bunch of brown kids, children of Indian immigrants to Britain with an identity crisis who longed for the culture they left behind, attended a class in the temple about “our culture” taught by a joyless scholar of Hinduism – a pundit – whose major shtick was punctuality. When I turned up late, even by a minute, he’d make me stand outside, even if freezing. Some kids called him “Hitler,” or “Hitler uncle,” the qualifier “uncle” indicated that because he was as old as our fathers, he deserved respect.
Then, I believed that Hitler meant authority. I preferred calling the pundit “wanker” or “asshole” but the foul language would have gotten me afoul with my parents, my authority figures. “Hitler” amply conveyed disdain for our pot-bellied teacher who exercised his authority whenever he could, without tarnishing our nubile vocabulary.
Eventually, I understood the significance of Hitler, and of World War 2, the Nazis, and the Holocaust. Though related neither morphologically to the perpetrators nor ethnically to the victims of this ghastly period in human history, I developed a reverence, a sensitivity if you will, to such allusions. The Lord of the Old Testament instructed Moses that his name be not used in vain, lest every blocked sink or traffic jam evoked “oh my God.” I resolved never to use Nazi as an epithet frivolously.
I was surprised how common Nazi name-calling was in American political discourse across the political spectrum, which peaked during the Trump Presidency. Some likened migrant detention facilities to “concentration camps.” Many saw in the rise of white nationalism during Trump’s reign parallels with the Third Reich. The former White House strategist, Steven Bannon, was compared to the Nazi propagandist, Goebbels. Bannon is loathsome, detestable, a wanker. Goebbels is a mass murderer – no adjectives are needed to describe him further.
Since the pandemic, hyperbole has become the Lingua franca of the medical community. COVID-minimizers have “blood on their hands.” Lockdowns are fascist. Misinformation kills. Peddlers of misinformation are “mass murderers” and COVID skeptics “enable” the murders. The average citizen has the ignoble choice between fascists and mass murderers. The twist is that fascists can become mass murderers and mass murderers can become fascists.
We’re drowning in hyperbole. Mask mandates have been compared to women forcible veiled by the resurgent Taliban. Childhood masking has been likened to child abuse. On a related note, Richard Dawkins, the author of God Delusion, was my intellectual hero for his articulate scientific atheism, until he said that teaching children religion is child abuse. The line between being peak wisdom and deep absurdity is thin. I’m no fan of God, but comparing compulsory Church attendance to child abuse is moronic.
Even close scientific debates such as the net societal benefits of vaccinating teenagers are refereed by hyperbole. Skeptics of universal vaccinations are called “immoral. The skeptics, in turn, believe they’re truth warriors facing persecution, like Galileo, Semmelweis, and Kepler. Galileo, thrown in a cold, rat-infested, prison, was stopped from throwing his toys off the Leaning Tower of Pisa. Modern-day heretics get ratioed – this is when random people are drawn to your provocative tweet like horse flies to fresh excrement. Your notification box explodes and you’re subjected to repetitive dull, righteous, scolding from a herd of mirthless dimwits. Having been ratioed a few times in my illustrious Twitter career I can attest that it’s not fun. My thumbs hurt. I feel helpless as the pile on accrues. And my wife yells at me for being glued to my phone. As unpleasant as that is, I don’t think it’s the same as Torquemada pouring molten oil on your gonads for heresy. I’ll take incivility over death, thank you.
We’re supposedly in an age of censorship. Scientific discourse has never been in more danger. Yet the channels for bloviation have never been more abundant. Anyone can have a podcast or a Youtube channel, and many do. For every podcast you’re aware of there are ten thousand you have never heard about. Then there’s Tik Tok where you’re allowed 90 seconds of incontinent self-expression. That Tik Tok, which has enriched itself on capacious American “me”ness, is Chinese-owned is delightful irony. Everyone fancies themselves as entertainers, Socrates, Galileo, Gandhi, Keats, Orwell, and their opponents as Nazis or morons. If greatness has been democratized, evil has become plebian.
If science is being censored it’s not being censored by authority, but noise. There is too much nonsense everywhere. The great poet Ovid was banished from Rome. The e-Ovids are muted or blocked on Twitter and banished from by-invitation-only echo chambers. Discourse is dead because it’s hard distinguishing between the good faith interlocutor and the troll. Even the sincerely curious can get tedious. It’s also hard to be convinced of anything when everyone around you is trying to convince, rather than be convinced. Too many teachers, not enough students. Everyone is hectoring.
More ominously, there are campaigns to get you fired for expressing views the noisy, energetic, minority don’t like. Employers, particularly corporations with overpaid PR personnel with too much time on their hands, petrified of bad press on social media, reprimand offenders using a mix of good old-fashioned scolding – the sort your parents dished out for telling Auntie Indu that her cooking was awful. And detention. Not the Breakfast Club type of detention – that’d be too much fun. Nowadays detention means taking online modules on empathy and sensitivity.
Once, someone complained to my employer. I had used an unflattering adjective to describe him. I said “twit,” or “tosser,” I can’t recall. But it was considered “unbecoming of a steward of such a great institute” (his words, not mine). The media department asked me to declare in my Twitter bio that my adjectives were my own. I wrote, “my employer’s views don’t reflect mine.” Our discomfort was mutual. But what the incident showed me is that our greatest enemy isn’t a Stalin-style tyrannical government, but each other.
We’ve always been petty, self-centered, sensitive, with an overgrown sense of self-importance. And nasty. Social media has scaled our nastiness. The KGB (*) through its labyrinthine auditory network was a patch on the screenshots offered by products of capitalism. Post a screenshot of a passionate conversation you had with a drunk friend with a command of Punjabi expletives, five years after the conversation, just as your estranged friend is about to ascend the pinnacle of their career. As long as you don’t post the post-hangover apology the next day, you could ruin their career. That’s the power we have over each other. We truly are our brother’s keepers.
Maybe everyone will have their fifteen minutes of shame. Incidentally, an old friend who used to DM me ten times a day suddenly stopped. I asked why. She was concerned that because I was a “high-profile personality,” my phone might be hacked and our conversation leaked to Twitter. I know you’re chuckling at me for falling for an imaginative excuse of the “dog ate my homework” genre. But it sounded imminently plausible.
Hyperbole is endless. Mike Godwin coined Godwin’s Law, which is that the longer an argument on the internet proceeds, the more likely someone is going to make a Nazi analogy. Having been in a few internet arguments I understand the exasperation of fighting strawman arguments and misrepresentations – the frustration of not being able to convince or be convinced. Ideally, you’d end the argument graciously with “let’s agree to disagree” or “at least we agree that Philadelphia Eagles will blow it again.” But the frustrated internet warrior loses goodwill. When you call your opponent a Nazi you’re really saying the topic is beyond debate and your opponent is immoral. You might as well say “whatever.” Or “moron,” if you’re less charitable.
Recently, Twitter celebrity physician, Vinay Prasad, warned that the pandemic is ushering dark days for democracy. He was concerned that over-zealous public health measures, egged on by a scientific community with the credentials to alarm the proletariat, could lead to such abundant state power that it could lead to fascism.. He likened our present to the brewing storm in the early days of the Third Reich. Prasad was ratioed. He was accused of insensitivity, historical ignorance, and sensationalism. Many asked his employer to fire him for comparing our public health measures in the pandemic to Nazism.
Aside from the historical inaccuracy, my major problem with Prasad’s thesis was its unoriginality. Et Tu Prasad? Nazi comparisons are dime a dozen. Anything can be a short step to Nazism. Bioethicist and Holocaust expert, Arthur Caplan, called Prasad’s essay “imbecilic, ignorant, and dangerous.” My preferred terms would have been “impetuous” and “disillusioned.” Prasad feels disillusioned by the response to the pandemic which he believes has worsened the disparities he has spent his life fighting to reduce. Whatever the merits of his disillusionment, as one can rebut that it’s the virus that worsened the disparities not the response to it, Prasad is principally guilty of the naiveté of a true believer. I never saw the purity of progressivism that Prasad bucolically recalls. Progressivism always seemed an expedient mix of opportunism, careerism, and hypocrisy, which is how it got stuff done.
Multiple factors led to the rise of Nazis, notably anti-Semitism. The anti-Semitism didn’t arise overnight. It took centuries to perfect. Which is why Hitler could persuade Pope Pius Pacelli XII to persuade the Christians in Germany to vote for him. The deeply flawed Pope saw in Hitler an opportunity to avenge Jesus of Nazareth’s crucifixion. The frivolous comparisons of any polity we dislike to Nazis reeks of historical ignorance. History is complex. Holocaust was a culmination of historical evil. As Sven Lindqvist argues, the holocaust was the sequel to the African genocide by the European colonialists, notably Belgium’s King Leopold.
To believe that mask and vaccine mandates could lead to the same eventuality as the German hyperinflation caused by the Treaty of Versailles betrays an alarming level of judgment. It is, however, merely a sign of our times where hyperbole is the language of public discourse. Thus, the frivolity with which Nazi comparisons are made is reflective more of our exasperation than anti-Semitism. I disagree with Caplan. I have no doubt that Prasad is in no way anti-Semitic. Accusing him of anti-Semitism devalues the gravity of the charge. In fact, Prasad is likely fervently anti-anti-Semitic which is precisely why he used the Nazi analogy to express his frustration with the pandemic response.
The Third Reich is too easy a historical metaphor for these times. We should go further back in history. A more apt analogy is the Roman empire which reached depths of churlishness before reaching its own depths. For instance, Emperor Caligula appointed his horse, Incitatus, as consul. He was struggling to find a qualified Roman. When asked his opinion on policy, Incitatus defecated and kicked his feces on his fellow senators. The joke wasn’t on the horse. Historical parallels are never exact. But we have struggled to find an FDA commissioner. We don’t spray horseshit these days but we do take horse paste very seriously. Ivermectin has become the sepulcher of sanity.
We’re no longer just irritated with each other, we’re “appalled,” “disgusted,” “saddened.” Words have lost all meaning because no meaning was attached to them in the first place. If our vocabulary has been devalued, the issues over which we fight have become marginal. Galileo’s belief in heliocentricity was literally earth-shattering. Today’s Galileos fight over one or two vaccine doses in teenagers, whether the risk of vaccine-induced myocarditis is 1/1000 or 1/10, 000. Nothing encapsulates our pettiness more completely than our probability wars.
It’s tempting to conclude that we’ve lost all fucking perspective. But lack of perspective isn’t the whole story. The reality is that we’re thoroughly bored – a side effect of affluence. This is why we have revolutions in our heads and fight wars on our devices. We storm the Bastille without moving from our couches. Instead of calling each other Nazis, we could just as well say “whatever,” press the mute button and roll our eyes.
(*) I’m aware of the irony of comparing the KGB to I-phone screenshots in a piece decrying hyperbole
@RogueRad is a Twitter commentariat who aspires to be canceled
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Joining Matthew Holt (@boltyboy) on THCBGang Thursday at 1pm PT are policy consultant/author Rosemarie Day (@Rosemarie_Day1); Queen of all employer benefits related issues Jennifer Benz (@Jenbenz); ; fierce patient activist Casey Quinlan (@MightyCasey); and Suntra Modern Recovery CEO JL Neptune (@JeanLucNeptune).
With bills in Congress and billions in VC floating around health care, there’s plenty of fodder for the future.
You can see the video below live and the audio will be on our podcast channel (Apple/Spotify) from Friday — Matthew Holt
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By JESSICA DaMASSA, WTF Health
Bayer’s $98M co-development-plus-investment in One Drop from August 2020 has yielded its first new product: a highly-personalized, AI-powered digital program aimed at preventing cardiovascular disease. While the solution itself is impressive in terms of its predictive analytics and integration into One Drop’s chronic condition precision health platform, what’s really remarkable about this milestone is that it demonstrates what’s possible when a pharma co and health tech startup are truly aligned as businesses, from R&D to go-to-market.
Bayer Pharmaceuticals’ CIO and Head of Digital & Commercial Innovation Jeanne Kehren and One Drop’s CEO Jeff Dachis take us inside their collaboration, with a very candid conversation about how their two orgs have not only developed a new product here today but how they’ve established a solid foundation for a working relationship that’s poised to revolutionize chronic care and define a new market around precision health.
We talk strategy: for Bayer-One Drop… for what the “digital disruption” will bring to pharma… and for “putting a lab on everybody’s arm” via One Drop’s sensor that’s under development. This chat reveals how the thinking behind incumbent-disruptor partnerships has truly evolved, and what it will mean for bringing digital technologies into healthcare in a big and meaningful way. For me, hearing Jeanne say, “it all starts with pharma being ‘self-aware’” and that they need to “we stop slicing things into therapeutic areas and consider the individual” AND recognize that “not everything is going to be process-oriented and shaped like we do for drugs” is a sea-change from what we were hearing only a few years ago from pharma execs about partnering with health tech companies. Things are changing! Tune in to hear so much more.
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Today on Health in 2 Point 00, Jess and I talk about Andreessen Horowtiz’s new ventures and the reemergence of Tiger Global in Health Tech. Some big deals for Episode 237: Medable receives 304 million in Series D bringing their total up to $521 million; Zerigo health gets $43 million, bringing their total up to $67 million; Click Therapeutics receives 52 million, but with side deals their total rises to $100 million; Workit Health gets $112 million, bringing their total to $138 million. Among Horowtiz’s new ventures, Patina gets 57 million despite not having launched yet, and Marley Medical gets $9 million. – Matthew Holt
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Today on Health in 2 Point 00, Jess and I catch up after HLTH 2021. Some massive deals in Episode 356: Oak Street acquires Rubicon MD for 190 million, 130 in cash; 23andMe acquires Lemonade (a virtual care and drug delivery company) for 400 million – 300 million in stocks and 100 million in cash; Babylon Health’s SPAC deal, 4.2 billion in market cap now; Everlywell acquires Natalist – their third acquisition in 6 months. – Matthew Holt
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By JESSICA DaMASSA, WTF HEALTH
Healthcare startups serving the Medicaid population are FINALLY catching the attention of investors and, this time, it’s for improving access to mental health services. Brave Health’s CEO Anna Lindow and I catch up in-person at HLTH 2021 – under super-secret embargo – to talk about Brave’s $10M Series B funding which was just announced today.
We get into Brave Health’s virtual-first approach to therapy, psychiatry, and outpatient addiction services, its tech underpinnings (which Anna hopes makes her services feel like “magic” to patients and providers alike), and the best-and-most-challenging parts about working with Medicaid plans.
This funding round, which takes Brave Health’s total funding to over $20M, should help with surmounting one of Anna’s biggest challenges: the extra effort required to expand to new states and the new set of Medicaid requirements and regulations that meet her every time she crosses state lines. Still, Brave Health has already expanded into 10 states in two years and, when utilized by Medicaid case managers, providers, and plans, is making a real impact on outcomes and cost of care. We dive into the details about meeting the mental health needs of a population that has typically been misunderstood and marginalized, and talk more about the nuances of supporting innovation and investment in solutions for people with Medicaid.
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By KIM BELLARD
Six hundred years ago, Swiss physician/scientist/philosopher Paracelsus disclaimed: “Medicine is not only a science; it is also an art.” Medicine, most people in healthcare still believe, takes not just intelligence and fact-based decision-making, but also intuition, creativity, and empathy. This duality is often cited as a reason artificial intelligence (A.I.) will never replace human physicians.
Perhaps those skeptics have not heard about Ai-Da.
Now, I have to admit, “she” wasn’t on my radar either until recently, when she was imprisoned/impounded at customs by Egyptian authorities on her way to an art exhibit at the Great Pyramids of Giza, where she was scheduled to show her work. Egyptian authorities first objected to her modem, then to the cameras in her eyes. “I can ditch the modems, but I can’t really gouge her eyes out,” said her creator Aidan Meller. After a 10 day stand-off, she was released late last week.
Let me back up. Named in honor of famed 19th century mathematician/programmer Ada Lovelace, Ai-Da is “the world’s first ultra-realistic humanoid robot artist.” She was created in 2019, and uses AI algorithms to create art with her cameras/eyes and her bionic arms. She can draw, paint, even sculpt, and had her first major exhibit – Ai-Da: Portrait of the Robot — this summer at London’s Design Museum.
The description of her exhibit says:
As humans increasingly merge with technology, the self-titled robotic artist, Ai-Da, leads us to ask whether artworks produced by machines can indeed be called ‘art’…Ai-Da can both draw and engage in lively discussion…These features, and the movements and gestures that Ai-Da is programmed to perform, raise questions about human identity in a digital age.
Her website elaborates:
…current thinking suggests we are edging away from humanism, into a time where machines and algorithms influence our behaviour to a point where our ‘agency’ isn’t just our own. It is starting to get outsourced to the decisions and suggestions of algorithms, and complete human autonomy starts to look less robust. Ai-Da creates art, because art no longer has to be restrained by the requirement of human agency alone.
Here’s a video:
Lest anything think Ai-Da is a one-off, I’d also point to Xiaoice, a Microsoft-built, China-based AI chatbot that is “a poet, a painter, a TV presenter, a news pundit, and a lot more.” Microsoft spun it off in 2020, the company maintaining the name while renaming chatbot Xia Yubing. Xia is now creating traditional Chinese paintings, having already mastered Western-style painting during its Microsoft time.
Xia appears to have passed an art version of the Turing test; according to China Daily: “In 2019, works of art produced by Xia were submitted for an exhibition of postgraduates’ work at China’s Central Academy of Fine Arts. When Xia’s paintings were presented beside those of humans, nobody realized they were generated by AI.”
There are other AI artists besides Ai-Da and Xia. London had “the first international AI art fair” this month – deeep, featuring “the world’s largest collection of AI created art.” One reviewer found the works “are equal parts hypnotic, unsettling, and produce an outlook quite alien to traditional styles.” If step one for AI art is to create art that we can distinguish from human art, then step two is to create art that only AI could create. We may already be there.
If AI-produced art isn’t impressive enough, earlier this year AI was used to finish Beethoven’s famous unfinished 10th symphony, synthesizing all his other works and his notes, and using them to create something he might have written. It succeeded: “We challenged the audience to determine where Beethoven’s phrases ended and where the AI extrapolation began. They couldn’t.” The completed symphony had its world premiere earlier this month.
If you’d like to listen: https://www.youtube.com/watch?v=OeVzbGEFEyU
In fact, for all you know, this article could have been written by an AI, such as Rytr, which, according to The Next Web, “brings the skill of a talented freelance writer to the digital realm, generating copy that can give flesh-and-blood writers a run for their money.”
Healthcare certainly hasn’t been ignoring AI. Every day it seems there are more announcements about AI-powered innovations, as well as funding for AI-based companies with a health focus.
Just week, researchers at the University of Utah Health/Rady Children’s Hospital reported they’d used AI to parse massive amounts of genetic data to diagnose rare pediatric disorders, in a way humans never could have. AI is already also increasingly important in drug discovery, and numerous health systems are implementing their own AI-based initiatives, such as a Stanford University Medical Center/Microsoft project on medical imaging datasets and a Mayo Clinic/Google AI algorithm for treatment of brain diseases.
Last year alone the FDA approved 100 AI/ML (machine learning) devices, with radiology being the big leader, according to a Politico analysis; as Dr. Eric Topel likes to say, it is the “sweet spot of AI.”
Lenovo’s Sinisa Nikolic believes: “AI is set to transform the future of healthcare,” although he offers the usual cautions: “In all aspects of healthcare, you will always need human-human contact and interaction. Humans have empathy; machines cannot replace that. AI will help us be better, stronger, and healthier.”
Not everyone is as conservative. Kai-Fu Li, author of AI Superpowers, predicts: “I anticipate diagnostic AI will surpass all but the best doctors in the next 20 years.”
Healthcare has come a long way with its acceptance of healthcare, from initially rejecting it, of course, to the now common mindset that, yes, it could be a great help, helping automate common tasks and augmenting clinicians. But crossing that line between augmenting and replacing is hard for many to accept.
We can accept AI being good at the “science” part of medicine, but we’ve yet to be convinced it could be good at the “art” part of it. But, as Ai-Da and other AI artists are illustrating, it’s something we’re going to have to face.
Ai-Da’s website warns: “If Ai-Da does just one important thing, it would be to get us considering the blurring of human/machine relations, and encouraging us to think more carefully and slowly about the choices we make for our future.”
Let’s hope healthcare thinks carefully – but not too slowly — about the choices AI offers us for the future.
Kim is a former emarketing exec at a major Blues plan, editor of the late & lamented Tincture.io, and now regular THCB contributor.
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By ROSEMARIE DAY and DAVID W. JOHNSON
Within the current political reality, how can America implement policies that increase access to health insurance while also reducing premium costs and enhancing responsiveness to consumer priorities and needs?
Large-scale healthcare reform appears off-the-table for the Biden Administration. Yet, given the impact of the COVID pandemic on people who have lost (or have worried about losing) their employer-based insurance coverage and the intensifying pressure to reduce overall healthcare costs, solutions that increase health insurance access and affordability have become more important than ever. A significant answer to this complex puzzle can be found at the state level.
Enabled by the Affordable Care Act (ACA) in 2010, state-based marketplaces (SBMs) currently operate in 14 states and the District of Columbia. Another six states operate as SBMs using the federal government’s HealthCare.gov technology platform. Three states, Kentucky, Maine, and New Mexico, will become full SBMs by 2022.
While federal measures to improve insurance access have stalled or been reversed over the past eight years, SBMs have quietly implemented programming modifications for stabilizing local markets that improve the quality and marketability of health insurance offerings to the benefit of consumers.
In Part 2 of our series on marketplace health plan innovations, we examine how SBMs have operated as experimental policy laboratories. They’ve taken their own paths to expand consumer choice, increase access to vital healthcare services, and lower premiums.
OPTIMIZING SBM OFFERINGS
Despite significant political and economic upheaval over the past decade, state-based marketplaces have had ongoing success reducing premium costs and maintaining higher levels of enrollment for local consumers.
To make their marketplaces more efficient and effective, SBMs have implemented a range of mechanisms. These modifications include:
Going forward, SBMs can become even more active facilitators of innovation, driving improvements internally while adopting successful tools, approaches, models, and goals from other states.
Here are four ways states can improve their SBMs:
SBMs can become true marketplaces and one-stop-shopping destinations if their offerings are made more competitive. Such a marketplace could expand current offerings to include Medicare Advantage plans, ICHRAS (Individual Coverage Health Reimbursement Arrangements that enable employers to pay for individual market premiums), and a Medicare public option should one become available.
SBMs can also curate offerings more actively by selecting which health insurance carriers and plans they allow and setting standards for participation, competition, quality, access, and affordability.
2. Increasing Premium Affordability Through Risk and Cost Reduction
SBMs are already working to reduce premiums through cost-sharing reduction measures, reinsurance programs, and active purchaser approaches. They also can increase affordability through enhanced subsidies (as embodied in the American Rescue Plan) or with wraparound subsidies (covering additional benefits beyond cost-sharing) like those employed in Massachusetts.
Moreover, SBMs can reduce premiums by developing healthier risk pools. This happens when marketplaces increase enrollment by attracting younger and healthier individuals. In addition, as value-based payment reforms advance, health insurers will have incentives to achieve better healthcare outcomes at lower costs. SBMs could become a powerful vehicle for expanding the adoption of value-driven payment models. Their market power could push and incentivize more providers to adopt value-based care.
3. Expanding and Deepening Consumer Engagement
SBMs have the opportunity to engage with consumers during and after enrollment. Many SBMs have expanded marketing to increase enrollment with modest success.
At present, most SBMs have little interaction with consumers beyond the open enrollment period. ultimately, SBMs could become a “coverage home” for consumers, offering continuity and security through different stages of life and employment. Students could enroll for their health insurance. Professionals could enroll during a period of unemployment or when launching an entrepreneurial venture. Seniors would find it easier to select plans and benefits through a marketplace they already know well. Such a system would also create longitudinal data for health plans to tailor offerings to consumer needs and preferences, and offer plans the opportunity to “secure” members over a lifetime.
4. Improving State and Population Health
COVID has exposed profound gaps in healthcare access, service delivery, and effectiveness in medically underserved communities. SBMs can address these gaps through program design, outreach, educational exchange, and advocacy. They also can collect and analyze marketplace data to inform policy debate among state agencies, legislative bodies, and key stakeholders.
AS CALIFORNIA GOES, SO GOES THE NATION?
Covered California is the nation’s largest state-based marketplace with over 1.6 million enrollees. It is also among the most robust, active, and innovative SBMs. As an active purchaser, Covered California has taken steps to grow its enrollment and build a balanced risk pool that helps restrain premium growth while holding its contracted health plans accountable for improving care delivery and quality. Its success is a function of effective policy and marketing choices.
Covered California devotes about 1% of premium dollars (approximately one-third of its annual budget funded by an assessment on health plans) to marketing. Furthermore, by playing the role of an active purchaser, it limits the number of health insurers who can sell plans in its marketplace. It then works closely with its member carriers to shape benefit design and expand program enrollment. For example, Covered California requires participating carriers to invest in marketing and support private insurance agents in boosting community outreach and expanding the pool of potential enrollees.
On the policy front, California implemented an individual mandate in 2020. This contributed to a 40% increase in enrollment with a year-over-year premium increase of just 0.9%. The state is currently studying the feasibility of implementing a unified financing system, including, but not limited to, a single-payer financing system, that provides healthcare coverage and access for all Californians.
Peter Lee, the Executive Director of Covered California, believes that state-based marketplaces should help consumers do the following three things:
To increase access to high-quality, affordable coverage, California expanded subsidies in 2019 for people with incomes up to 600% of the federal poverty level. This made it the first state to provide subsidies above the 400% “cliff” in the ACA, even before such policy measures were adopted under the American Rescue Plan. It also caps some prescription drug out-of-pocket costs, bans the sale of short-term health insurance plans, and limits association health plan offerings.
To help consumers select the right level of coverage, Covered California offers a financial tool that spells out the total annual cost of care, not just premium costs. Covered California also curates plan offerings on behalf of its enrollees. Carriers must offer the same patient-centered benefits at each pricing level (gold, silver, bronze, etc.). They must also offer identical products at the same price “off-exchange” so that unsubsidized, price-sensitive consumers benefit from Covered California’s negotiating leverage.
In 2021, eleven carriers serve Californians but those plan offerings and carriers vary by region in accordance with local needs. This means 75% of consumers have a choice of four or more carriers and dozens of easily comparable products.
Reflecting a deep understanding of behavioral economics, Covered California intentionally limits the number of plan offerings. Lee notes, “After four to five choices, value declines significantly for the consumer. With apples-to-apples comparisons of targeted offerings available to consumers, carriers know they need to price to get enrollment.”
Finally, to encourage the right care, Covered California employs an array of contractual requirements on its carriers and applies data analytics to assess care needs across racial, ethnic, and other lines. Dedicated full-time staff includes a Chief Medical Officer and experts focused on alleviating health disparities. Consultants oversee that work and assess how care is delivered statewide. The goal is to work with member insurers to influence the healthcare delivery system and improve how care is delivered.
Covered California’s approach works. An expanding enrollee base and a more stable risk pool entice health plans to participate with competitive offerings. As a result, prospective enrollees have clear choices based on price and service provision. Lee believes that encouraging consumerism and curating options engages enrollees in their health, drives better health outcomes, and improves community well-being.
CONCLUSION: MEANINGFUL PROGRESS IN A TURBULENT ERA
Healthcare policy has dominated American politics for decades. Despite the intense policy debate, providing better, tailored healthcare services for more people at lower costs is not controversial. Properly designed and managed, SBMs can achieve these aims.
States have an inherent advantage over the federal government in responding to their citizens’ needs because they can be more nimble in designing programs and making changes. There are multiple models for states to follow and plenty of lessons to build upon.
Using these lessons, states that already have an SBM can improve upon what they’ve built. To date, SBMs have only realized a fraction of their potential to deliver affordable access to comprehensive health insurance. With relatively minor improvements, SBMs can become a powerful force in optimizing public and private resources while addressing the most vexing problems of American healthcare. It’s time for more states to consider creating their own SBMs.
Rosemarie Day is the founder and CEO of Day Health Strategies (www.dayhealthstrategies.com), a consulting firm dedicated to transforming the US healthcare system.
David Johnson is the CEO of 4sight Health, a thought leadership and advisory company working at the intersection of strategy, economics, innovation, and capital formation.
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