I spent the moth of November (2018) diving into the U.S. healthcare system. I read over 50 long-form articles, played with a bunch of Medicare datasets, and read one book. Below are a few random thoughts from my learnings.

There is no 80/20 rule
We all know U.S. healthcare is messed up. Compared to other countries … the outcomes are not superior and the costs are higher. And no one thinks the experience is a lot of fun.

Going into my deep dive, I thought I would come away with one big thing we could do to fix healthcare. To my surprise and disappointment, I did not see any silver bullets (even ones that could never pass Congress).

Instead healthcare needs hundreds of very small improvements
There are hundreds of important things we can do to improve U.S. healthcare … but no one thing will likely have more than 5% improvement. Which means this is going to be a really hard problem to solve. Really hard.

Does the U.S. spend too much money?
On the one hand, of course it does. We spend roughly double per capita on healthcare than the next leading country (without better outcomes). On the other hand, we spend more per capita on almost everything. We live in way bigger houses, we have bigger yards, we drive bigger cars. We also spend WAY more than 2x per capita on higher education.

So if you look at the ration of healthcare/higher-education (I know this is a weird ratio, but stay with me), we are the lower spending G20 country (by a wide margin).

So do we spend too much on healthcare? The answer is still yes but it is not nearly as bad as people think.

U.S. consumers significantly subsidize European consumers
One of the most interesting things I learned about is the wealth transfer from the U.S. to other very wealthy countries. Many countries pay dramatically lower for the same drugs than the average U.S. price. That’s because these countries negotiate as one market … but also because the marginal price of a drug is essentially zero so the drug companies have a prisoner’s dilemma game to play with the countries and often make the calculation that some money is better than no money.

A simple solution to this (from the U.S. perspective) would be to create a law that drug prices to U.S. government buyers (like Medicare, Medicare, Veterans, Military, etc.) must not be higher than any price to any first world country (it would still be ok to sell drugs for low prices to poor countries in Africa … but not to rich countries in Western Europe). That means that the U.S. government would never pay a higher price for a drug than the market price. It would also mean that prices for drugs would be standardized since all other first world countries would follow suit and create the same rule. That shift would result in U.S. drug prices falling and European drug prices rising — ended the billions of dollars that the U.S. is currently transferring to Europe.

Summation: a month of deep dive, I know less than I did when I started the journey. Healthcare is complicated. Nothing is as it seems. People in it are really smart but also generally really conflicted.

Note: I had dozens of tutors but I want to especially thank Travis May (CEO of Datavant) and Joel Quadracci (CEO of Quad Graphics) for their guidance.

With all this talk about health care reform, here is one entrepreneur’s thoughts on how to choose a health care plan that fits the needs of your employees.

Understand your employees
The type of health care plan you’re looking for depends on who your employees are. If they are generally healthy, you might need a different plan than if they are more prone to illness and health needs.  If your employees have higher salaries, (like at an Internet company) you can offer a more flexible health care plan than if your employees are lower-salaried or paid hourly.

Group policies are usually more expensive than individual policies
There is a huge myth that employers pay less than individuals for health care.  That’s only true for people with chronic illnesses or people who are very large consumers of health care.  For a relatively healthy person, a group policy plan costs roughly twice as much as an individual policy plan. (If you hire an employee who is used to paying for health insurance herself, she might be bewildered what the company pays for her.)

The reason why employers pay more for group plans is to offset the insurance company’s risk for future hires. Because insurance companies guarantee their premiums no matter who a company hires, they will charge more to cover the future employee with high health-care needs and in doing so, raises the premiums for everyone.  This is especially true for small companies who do not have tons of employees to lower the average cost from one potential high-cost employee.

HSAs are awesome
Health Savings Accounts (or HSAs) are essentially flex-spend IRAs that helps individuals save approximately $3000 per year tax-free on anything medical spending (including contact lenses, eye doctor and dentist visits, etc.). And unlike their ugly cousin, the Medical Savings Account (or MSA), you don’t have to spend the money you put into an HSA in that calendar year — anything you don’t spend rolls over to the next year.  The main issue with HSAs is that they are only legal with certain (usually high-deductible) health care plans. However, their benefits more than warrant the effort in finding a plan that makes HSAs a reality.

Tip: sometimes it is hard to know which expenditures are health related and which ones are not.  For instance, is an aspirin purchase health related?  Sites like drugstore.com make the decision is made for you – you enter in credit card info for both your HSA and normal credit card and they will automatically deduct them accordingly. 

“Health care” or “health insurance”

Do you want to get a plan that covers all the little health related issues, or do you want insurance that covers just high-cost things?  I personally think insurance is much better for people at a high-tech company where salaries may be higher, especially since little of the insurance costs are covered by employees themselves.  These plans are generally called “high deductible plans” since the employee has to cover the first $3000 – $5000 of expenses in the year.  While that may be a lot to cover, insurance plans come with massive flexibility – you can go to almost any doctor or specialist you want without having to go through referrals or waiting.  And if anything bad happens, the insurance covers ALL costs over the deductible.  So if your employees are well-paid, this is a good plan because it has maximum flexibility, is much lower cost, and can be paired with HSAs. 

Companies with more hourly workers will have to make a different calculation.  In their case, health “care” might be more appropriate because the hourly worker might not be able to afford a $300 doctor test.

Summation: look closely at your employees and make a health plan accordingly. 

(Special thanks to Michael Hsu and Jenny Oh for helping edit and research this blog on health care)

One of the hardest things to do in management is not strategy, actions, or implementations … it is asking the right questions.

Recently many people have been asking tough and thoughtful questions about our role in Afghanistan.  These are important questions that need to be asked.

But we should also be asking other questions about our military like:

– Are the South Koreans capable of defending themselves?  If not, why not?  (South Korea is a massive economic power). 

– Does it make sense to have tens of thousands of American troops stationed in South Korea (which is arguably the most dangerous place in the world)?

– Could the military be modernized faster?

– Could we have smarter financial controls over military spending?

– Is it possible to win in Afghanistan before the American people tire of it?

As we ask smarter questions, we will get a much better

The thing I hear often from Republicans is that "Democrats don't play fair.  They cheat."  And the thing I hear often from Democrats is that "Republicans don't play fair.  They cheat."

Who's right? 
(I have no idea)

However, we can devise a simple research project to see which side cheats more.  Just look at recounts of federal and state races.  

Recounts are conducted when the race is too close to call.  In the midst of a recount, many votes can be tampered with, found, manufactured, and challenged.  I propose that some researcher look at the last 500 federal and state recounts of races between Democrats and Republicans.  If Democrats and Republicans cheat equally, then you'd expect them to win recounts 50/50.  If one party wins over 60% of the recounts, they are more likely to be the greater cheater.  If one party wins over two-thirds of the recounts, they are most surely the cheating party.

There have been many famous recounts in recent memory.  Minnesota just had a grueling recount of its U.S. Senate seat.  And who could forget the famous 2000 Presidential recount in Florida.

Unfortunately I don’t have time myself to do this exhaustive study, but it might be really interesting if a researcher took it on — I guarantee whoever did the study would get their 15 minutes of fame.  

This
year has seen more people voluntarily quitting the senate before their term
runs out than any other year in recent memory. 
For years people have said that being a Senator is the best job in
America.  But it is obviously not the
case as a whole bunch of people are leaving before their term ends.

Barack
Obama and Joe Biden left the Senate this year. 
But they, at least, had a really good excuse.  They became President and Vice President –
definitely a promotion.  Hilary Clinton,
too, left the Senate to become Secretary of State … also a promotion.  But a bunch of people left the Senate for
lateral moves.

Ken Salazar
left to run the Department of the Interior. 
No slight to the Interior, but it doesn’t seem as impressive as the being
the senior Senator from Colorado – especially one that has only had the job for
four years.  And Judd Gregg from New
Hampshire tried to leave the Senate to become Secretary of Commerce before
having a dispute about the census.

And now
there’s Mel Martinez from Florida.  He’s
just leaving after four years for no stated reason.    

according to the Wall Street journal today, Hillary Clinton was formerly a board member of Wal-Mart.

that was the first I’ve heard of this.   i did some digging and, sure enough, Mrs. Clinton serves on the Wal-Mart board of directors from 1986 to 1992 (not long before she became first lady).

During those six years, Wal-Mart was one of the fastest growing companies in the world.   This experience must have been one that us useful to Senator Clinton.

Price Roe sent me this fascinating study on college students. It is a detailed survey of 263,710 students at 385 4-year colleges. That’s comprehensive!

Study:
The American Freshman: National Norms for Fall 2005
By Sylvia Hurtado & John H. Pryor
(the 2006 study should come out next month)

they have been doing these studies since the mid-sixties and the results and trends are fascinating.