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Let’s Check the Math on Health Subsidies

By KIM BELLARD

It’s December 3, and, to no one’s surprise, Congress still has not acted on extending the expanded health care premium tax credits for ACA. To Congress, the subsidies don’t expire until the end of the year, so they figure they have until at least then to act, or maybe sometime after that, given the way they handled the recent government shutdown.

On the other hand, consumers who are renewing or shopping for ACA plans face a more immediate deadline; they have until December 15 to enroll for January 1st. They’re already seeing huge increases that result from a normal renewal increase plus the loss of the generous subsidies; Kaiser Family Foundation estimates that their premiums will more than double without them. They can’t wait while Congress plays politics.

There seems to be agreement that something will be done about the subsidies, but less clarity about what that something is. Some centrists argue to extend the enhanced subsidies but with some tweaks, such as lowering the upper income levels and/or requiring everyone to pay at least some minimum premium. To me, that’d be a reasonable compromise. But some Republicans, including President Trump, are calling for a more radical change: instead of giving the expanded premium tax subsidies to those “fat cat” insurers, give them directly to consumers through health savings accounts (HSAs). Put individuals over insurers, they argue. 

I’m here to tell you: the math does not work.

I am not an actuary, but long ago I was a group underwriter, setting rates for employer groups’ health insurance, and, also long ago, I was involved in the early days of so-called consumer directed health plans (CDHPs), including HSAs and high-deductible health plans. I don’t disagree that HSAs and high-deductible plans can play a role, but one has to understand the math that drives health care spending.

The central fact of health care spending is that it isn’t evenly distributed. It is a perfect example of the Pareto principle: 80% of spending comes from 20% of people. The flip of that is that about 15% of people have no healthcare spending in any given year. What insurance does is take money from everyone and use it to fund the spending of the high cost people. That’s what all insurance does.

OK, I’ve avoided doing the math as long as I could, but here goes. One proposal has called for $2,000 to be deposited in each enrollee’s new HSA. Let’s keep it simple and say there are 1,000 such people, and that their average annual health care spending is $2,000 (which, of course, is way low). So we have 1,000 x $2,000 = $2 million in both subsidies and spending. It works out perfectly, right?

Not so fast.

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Farewell to Medicare Advantage

By JEFF GOLDSMITH

This morning, after twelve years, I dumped my Medicare Advantage plan and enrolled in a Medicare Supplement policy. My smoldering discontent finally boiled over and . . . I’m gone. It was a large network style national plan with zero premium.

My decision to enroll in MA was, in part, ideological. I liked the idea of a program design that rewarded healthy behavior. But I discovered that none of the alleged MA perks were actually reachable-my health club was out of network as was my dentist. When I got cancer in 2015, the plan did not give me attitude about my decision to fly 600 miles to the University of Chicago for my care. They merely paid the U of C about a third of what it cost them to rid me of my cancer. 

There was not a single denial of care during the entire twelve years. But they pestered my primary care doc mercilessly by insisting that he sign off on every single care decision made in my cancer fight or anywhere else I went- hours of needless “paperwork”. And I fended off sixteen offers of a “wellness visit”- a nurse coming to my house to upcode me. My relationship with the carrier was basically to be on the receiving end of hundreds of robo-calls.

I got little signs that their networks were withering. The University of Pennsylvania did not accept them, nor Cedars Sinai, nor the Hospital for Special Surgery. But when Mayo announced they were not accepting them, that was for me the last straw. Mayo is my “safety net” provider if my local Charlottesville folks are not able to meet my needs. 

From a policy standpoint, I think MA made sense when it was redesigned and rebranded in the early 2000’s. And if we had SCAN or even Kaiser here in my market, I would probably still be a member. Particularly for the multi-functionally impaired older folks or the dually eligible, thoughtful protocol driven care by a tightly linked multi-specialty medical group makes a great deal of sense. In this, my old friend George Halvorson and I agree.

But the idea that capitation or the newer version-micro-managed care run by a warm and fuzzy AI- is somehow a cure-all for what ails our society is increasingly questionable on its face. It isn’t about the incentives, folks. I ate the MA dog food for twelve years. It’s about the care system you rely on when things get scary. In twelve years, except for the frozen dinners they sent me after my cancer surgery, the carrier added no value whatsoever to my life. MA just wasn’t worth it, even if was free. 

Jeff Goldsmith is a veteran health care futurist, President of Health Futures Inc and regular THCB Contributor. This comes from his personal substack

Why Patients – And Many Innovative Doctors – Are Pursuing Health Outside the System

By DAVID SHAYWITZ

Our current system of delivering care is awful from the perspective of seemingly every stakeholder. It frustrates, enrages, saddens, and depletes patients and physicians alike. No one designed it this way. It evolved through a series of choices and contingencies that perhaps made sense at the time but now seem to have led us down an evolutionary dead end.

While there’s no shortage of examples, I was especially struck by an anecdote I heard in Dr. Lisa Rosenbaum’s brilliant “Not Otherwise Specified” podcast series for the NEJM. Her focus this season is primary care, and in one episode she speaks with a Denver family physician named Larry Green.

“I practiced in the oldest family practice in Denver, for years,” Green explains. “I was the chair of that department, I directed that residency, and I’m now a patient in that practice. I cannot call it. It’s impossible. Because when I call the practice, I get diverted to a call center…”

From the perspective of what he calls the “medical-industrial complex,” he says, longitudinal relationships are “totally unimportant in healthcare.”

Yet these relationships – developed with care over time – tend to be what many patients crave and what effective doctoring typically requires.

Green’s experience won’t surprise anyone who has tried to get care lately. In November 2023, Mass General Brigham announced it would not be accepting new primary care patients. At hospitals everywhere, it’s not unusual for patients to spend hours on gurneys in emergency-department hallways, waiting for an inpatient bed.

I don’t know many physicians who haven’t struggled to get care for themselves or a loved one – often at the very institutions where they trained and to which they’ve devoted years of their lives. If even insiders can’t reliably access timely, compassionate care, what chance does anyone else have?

The miserableness of the system has been well documented, and physician burnout has sadly become a dog-bites-man story.

Applicants Are Still Flocking to Medical Schools

What’s perhaps more surprising is how many people are still desperate to enter the system and become physicians, fueling an application process that, as Drs. Rochelle and Loren Walensky have documented in The New England Journal of Medicine (NEJM), has become increasingly competitive, expensive, and time-consuming. Premed students routinely take an extra year (or more) to tick all the expected boxes and jump through the hoops that are perceived as mandatory.

This highlights something that’s easy to forget: the ideal of medicine remains deeply attractive. I wrote about this almost thirty years ago in a New York Times op-ed, and it’s still true today.

The notion of doctoring – of being trusted at the intersection of science and human stories – retains a powerful hold on young people. If only the actual experience could live up to the hope of these applicants, the well-worn quotes from Osler and Peabody, the promise of the profession, and the expectations of patients.

Searching For A Better Alternative

The idea that there must be a better alternative is at once familiar and evergreen.

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If You Could read My Mind – Wait, You Can?

By KIM BELLARD

Over the years, one area of tech/health tech I have avoided writing about are brain-computer interfaces (B.C.I.). In part, it was because I thought they were kind of creepy, and, in larger part, because I was increasing finding Elon Musk, whose Neuralink is one of the leaders in the field, even more creepy. But an article in The New York Times Magazine by Linda Kinstler rang alarm bells in my head – and I sure hope no one is listening to them.

Her article, Big Tech Wants Direct Access to Our Brains, doesn’t just discuss some of the technological advances in the field, which are, admittedly, quite impressive. No, what caught my attention was her larger point that it’s time – it’s past time – that we started taking the issue of the privacy of what goes on inside our heads very seriously.

Because we are at the point, or fast approaching it, when those private thoughts of ours are no longer private.

The ostensible purpose of B.C.I.s has usually been as for assistance to people with disabilities, such as people who are paralyzed. Being able to move a cursor or even a limb could change their lives. It might even allow some to speak or even see. All are great use cases, with some track record of successes.

B.C.I.s have tended to go down one of two paths. One uses external signals, such as through electroencephalography (EEG) and electrooculography (EOG), to try to decipher what your brain is doing. The other, as Neuralink uses, is an implant directly in your brain to sense and interrupt activity. The latter approach has the advantage of more specific readings, but has the obvious drawback of requiring surgery and wires in your brain.

There’s a competition held every four years called Cybathlon, sponsored by ETH Zurich, that “acts as a platform that challenges teams from all over the world to develop assistive technologies suitable for everyday use with and for people with disabilities.” A profile of it in NYT quoted the second place finisher, who uses the external signals approach but lost to a team using implants: “We weren’t in the same league as the Pittsburgh people. They’re playing chess and we’re playing checkers.”  He’s now considering implants.  

Fine, you say. I can protect my mental privacy simply by not getting implants, right?  Not so fast.

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Giving Thanks – Ken Burns “THE AMERICAN REVOLUTION”

By MIKE MAGEE

Give thanks for our America, blemishes and all. Ken Burns says as much, making it clear, we are a mess of contradictions, and that is (in part) what makes us a uniquely American.

Consider that in a single week, we have had to endure Trump’s “Things happen” as he defended the Saudi crown prince ordering the Khashoggi killing, while also rejoice in his smack-down THE HILL headlined, “The Epstein files are a turning point in the Trump presidency, but it’s not over yet.” Perhaps Marjorie Taylor Greene said it best for all of us, “I refuse to be a ‘battered wife’ hoping it all goes away and gets better.”

In the shadow of an autocratic assault unparalleled in our modern history, Americans are searching for a silver lining. Is it helpful to our Democracy to be stress tested and our Constitutional weaknesses revealed so that we might take corrective actions in the future? Should we accept some blame for supporting a culture rich in celebrity idolatry, and one tolerant of unsustainable levels of inequity? Hasn’t unbridled capitalism diminished solidarity and good government in equal measure?

It is heartening to see many of our public servants, several of whom are first generation immigrants, display their competence, professionalism and courage in support of these United States. Our citizens want to believe that they, rather than their DOJ inquisitors, represent us.

It’s encouraging that compassion, understanding, and partnership remain embedded in the caring citizens who say NO to kings, challenged mass ICE invaders, and (with the Catholic Church) lent a powerful voice to immigrants across our land.

In times like these, I rely heavily on a book my son, Mike, published with the University of Alabama Press in 2004, titled, “Emancipating Pragmatism: Emerson, Jazz, and Experimental Writing”. The book derived from his PhD dissertation at the University of Pennsylvania, and extensively delved into the writings of both Ralph Waldo Ellison, author of “The Invisible Man”, and his namesake, Ralph Waldo Emerson.

So what did he say in his book that was so compelling that I turn to it today, on the eve of another Thanksgiving Celebration?

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Katie D’Amico, Carequest–Integrating Oral Health into Medical Care

Katie D‘Amico is the VP of Innovation at Carequest, a non-profit that supports oral health–she’s a big proponent on its integration with medical care. At HLTH in October 2025 she took me on a brief tour of innovation in dental care and oral health. We had a quick look at the ability to test collagen breakdown and how to use the dental office to refer to lab tests. I also had a brief chat with Dr Ashley Lerman from Firstgrin, which is helping kids take care of their teeth, and distributing her kits and apps via health plans and hospitals–Matthew Holt

When Drug Price Transparency Isn’t Enough

By KRISTINA SMITH & PHIYEN NGUYEN

Policymakers and advocates often promote drug price transparency to lower costs and improve equity. While transparency is an important first step toward accountability and informed public budgeting, it does not guarantee affordable prices or fair access to medicines.

Transparency Has Some Benefits

Drug price transparency helps show how and why medicines cost what they do along the supply chain (i.e., from the manufacturer to the pharmacy), which makes it easier to identify where costs can be reduced or better regulated. By making this information public, transparency allows patients, payers, and policymakers to make more informed decisions and encourage manufacturers to prices drugs more fairly. Ultimately, it supports a fairer system where patients can better afford and obtain the treatments they need, improving access to care.

States with Drug Transparency Laws

While federal policy to improve price transparency is lacking, the states have moved to make things clearer for patients and payers. Vermont was the first U.S. state to enact a drug price transparency law in 2016. Since then, many others have followed suit. At least 14 states have passed some version of transparency legislation, though the details and their enforcement of these laws differ widely.

For example, only Vermont and Maine require drug companies or insurers to disclose the actual prices paid after discounts (called the “net price”). Alternately, Oregon and Nevada require drug manufacturers to publicly report their profit to state government agencies. And Connecticut, Louisiana, and Nevada mandate pharmacy benefit managers (PBMs) to report the total rebates they receive, but not the amounts for each specific drug. Despite these efforts, no state has yet achieved full transparency across the entire drug supply chain.

Transparency is Not Enough

Even with clear pricing, Americans still pay about 2.6 times more for prescription drugs than people in other wealthy countries. Early evidence suggests that these laws have done little to curb drug prices. To date, only four states – California, Maine, Minnesota, and Oregon – have published analyses of their own laws. These reports share common concerns: difficulty tracking pricing across the supply chain and uncertainty about whether state agencies have the authority (or the will) to act when data is incomplete or unreliable. 

Most transparency laws fall short on requiring detailed cost or profit data, focusing instead on broad price trends. As a result, this narrow scope makes it difficult to identify the exact drivers of high drug prices. Even when transparency discourages manufacturers from raising prices, these policies do not directly control pricing or define what constitutes an ‘unjustified’ price increase. Manufacturers can simply adjust by setting higher launch prices or implementing smaller, more frequent increases to stay below reporting thresholds. Still, the result is a system where drug costs can vary by as much as $719 for the same 30-day prescription even when prices are publicly listed.

What can also be done?

Creating a consistent national framework could replace the current patchwork of state laws and improve oversight of how drugs are priced. For example, the Drug Price Transparency in Medicaid Act (H.R. 2450) could do just that: it would standardize reporting requirements and reveal how drug prices are set, rebated, and reimbursed. But transparency alone can’t lower costs—it only shows the problem.

To make transparency meaningful, policymakers must address the underlying contracts and incentives that drive high prices.

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Nabla — It’s been a rocketship

I met the Nabla management team two years ago. Two years later they have ridden the wave of AI scribing to be one of the leaders in the field. At HLTH this year, I caught up with CEO Alex Lebrun and COO Delphine Groll to check in on their growth (150 customers and 100K users) what the next little bit of ambient AI scribing will look like (more specialties, more integration) and whether they’re scared of Epic (no!).–Matthew Holt

Struggling UnitedHealth Group is a Huge Smoking Black Box

By JEFF GOLDSMITH

In mid-April 2025, UnitedHealth Group (UNH) reported its 1Q25 operating results, including a modest shortfall in expected earnings and lowered its 2025 earnings forecast by 12%. The company blamed accelerating medical costs and federal policy changes for their most profitable service line, Medicare Advantage. Market reaction was swift and savage. UNH stock lost more than 22% in a single day. In May, United fired its CEO, Sir Andrew Witty and withdrew its earnings guidance for 2025, with the stock declining another 15%. Witty was followed out the door two months later by President and CFO John Rex, heir-apparent to longtime Chairman Stephen Hemsley.

Turns out, UNH’s market capitalization trajectory presaged the collapse in UNH’s 2025 cashflow. UNH’s projected cashflow from operations is now expected fall to be half of its 2025 forecast- a breathtaking $16 billion shortfall. In multiple investor calls, the new/old CEO Stephen Hemsley and his new crew have not come remotely close to explaining where the $16 billion went. Struggling UnitedHealth Group is one gigantic smoking black box.

2024 was a nightmare year for the company, beginning with the massive Change Healthcare cyberattack in February and concluding with the brutal killing of their senior health insurance executive, Brian Thompson, in November. It is clear in hindsight that business fundamentals for UNH’s health insurance and care delivery businesses deteriorated sharply during 2024, and its senior leadership were scrambling to repair the damage.

Health insurers across the country are experiencing record operating challenges. However, UNH’s business model enhanced their vulnerability. UNH had spent $118 billion in just five years (2019-2023) buying profitable smaller companies, almost all of which ended up inside of their enormous Optum subsidiary. These acquisitions included: multi-specialty physician groups, ambulatory surgery and urgent care, business intelligence/business process outsourcing and claims management companies.

These businesses are closely intertwined with United’s legacy health insurance business. In order to reach estimated $445 billion in total 2025 UNH revenues, one has to eliminate $165 billion in intercompany revenue flows (Examples- purchases of services by Optum Health from its consulting arm, OptumInsight, or purchase of health services from Optum Health by United Healthcare, UNH’s insurance business).

The company’s nearly fifty year old health insurance business had been a reliable 5.5-6% operating margin generator. However, in 2025, it will produce only a 3% operating margin. However, UNH’s incremental revenues and earnings growth for the past decade have not come from health insurance, but have been produced by Optum, whose revenues were growing much faster than its health insurance business.

Several pieces of Optum have also been far more profitable than United Healthcare itself. Optum Health grew into a $100 billion business (before eliminations), and used to earn an 10% operating margin. In 2025, that margin will be more like 2.5%. Optum Insight, a $19 billion business (before eliminations), which used to earn a sizzling 28% operating margin will be lucky to earn 8% in 2025. The complex interpenetration of Optum and United Healthcare’s businesses makes it impossible to gauge the seriousness of the company’s operating problems.

Optum Health appears to be a major source of the smoke, but it is impossible to tell from the skimpy disclosures where exactly the fire is.

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Support your neighborhood scientist

By KIM BELLARD

These are, it must be said, grim times for American science. Between the Trump budget cuts, the Trump attacks on leading research universities, and the normalization of misinformation/ disinformation, scientists are losing their jobs, fleeing to other countries, or just trying to keep their heads down in hopes of being able to just, you know, keep doing science.

But some scientists are fighting back, and more power to them. Literally.

Lest you think I’m being Chicken Little, warning prematurely that the sky is falling, there continue to be warning signs. Virginia Gewin, writing in Nature, reports Insiders warn how dismantling federal agencies could put science at risk. A former EPA official told her: “It’s not just EPA. Science is being destroyed across many agencies.” Even worse, one former official warned: “Now they are starting to proffer misinformation and putting a government seal on it.”  

A third researcher added: “The damage to the next generation of scientists is what I worry the most about. I’ve been advising students to look for other jobs.”

It’s not just that students are looking for jobs outside of the government. Katrina Northrop and Rudy Lu write in The Washington Post about the brain drain going to China. “Over the past decade,” they say, “there has been a rush of scholars — many with some family connection to China — moving across the Pacific, drawn by Beijing’s full-throttle drive to become a scientific superpower.” They cite 50 tenure track scholars of Chinese descent who have left U.S. universities for China. Most are in STEM fields.

“The U.S. is increasingly skeptical of science — whether it’s climate, health or other areas,” Jimmy Goodrich, an expert on Chinese science and technology at theUniversity of California Institute on Global Conflict and Cooperation, told them. “While in China, science is being embraced as a key solution to move the country forward into the future.”

They note how four years ago the U.S. spent four times as much in R&D than China, whereas now the spending is basically even, at best.

I keep in mind the warning of Dan Wang, a research fellow at Stanford’s Hoover Institution:

Think about it this way: China is an engineering state, which treats construction projects and technological primacy as the solution to all of its problems, whereas the United States is a lawyerly society, obsessed with protecting wealth by making rules rather than producing material goods.

We’ve seen what a government of lawyers does, creating laws and regulations that protect big corporations and the ultra-rich, while making everything so complex that, voila, more lawyers are needed. Maybe it’s time to see what a government of scientists could do.

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