How much is too much?

The average family of four’s healthcare insurance and related costs are more than $31,000.

Which begs the question – how much is too much?

At what point do workers, employers, taxpayers make that call?

Because it is going to happen.

Look at your budget, your income, your future expenses…when does healthcare become unaffordable? a quarter of your income? a third?

Sure, you aren’t paying the entire $31k…

  • your employer pays a big chunk,
  • taxpayers subsidize employee benefits so
  • taxes are higher due to that subsidy,
  • but your deductible/coinsurance costs are likely several thousand dollars.

What does this mean for you?

I’d ask you to think hard about this – because we will all have to make this choice.

Sooner than we’d like.


Quick hits….

Healthcare costs for the average family of four topped $31,000 in 2023.

That’s the latest from Milliman.

Think about that – what percentage of your annual income is $31,000?

a third?

a quarter?

a fifth?

to calculate your total costs, click here.

Climate change’s impact on worker health and workers’ comp is getting more attention every day.

It is now hitting the C-Suite…

This morning, Harvard Business Review called out increasing focus by business execs around wildfires:

we are seeing a rapid rise in employer inquiries related to employee health and the best practices around air quality concerns.

The piece has excellent recommendations.

Word to the wise – whether you are an insurer, TPA, risk manager or captive manager, regardless of your view on human-caused global warming, when the C-Suite comes calling you’d best have a plan. 

Even better, you’d best have implemented it.

good news…

339,000  – that’s May’s increase in employment. That is spot on the average monthly increase for the last 12 months…

over the last year over 4 million jobs have been created. 

That, dear reader, is just terrific.

More than 1.35 million Americans have been kicked off Medicaid to date…and that’s without totals from Texas and several other states yet to report.

This will:




Can Texas Mutual help Texas’ health insurance/healthcare needs?

Texas has some rather troubling healthcare problems…and Texas’ legislators are asking the state’s largest workers’ comp insurer to help solve those problems.

First, a few Texas healthcare data points…

Of course, one of the big issues is Texas refuses to expand Medicaid for reasons I must admit are confusing at best.

And the Feds are looking to cut almost $9 billion in funding; Texas has a convoluted tax-and-transfer thing in place which CMS believes is illegal…

I’ve been digging into this of late…collecting background information, interviewing the leader of TM’s new venture and reaching out to legislators behind a bill that asked required Texas Mutual to help (details below); TM is in the process of standing up a health insurance entity that will begin operations early next year.

From the State’s website:

HB 3752 allows a subsidiary of the Texas Mutual Insurance Company to provide a health insurance product to Texans. The goal is to increase access to affordable health insurance for individuals, especially those in rural communities, and employees of small businesses.

Effective Date: September 1, 2021.

The bill would also require the company to fully explore methods to increase health insurance competition, use innovation to increase quality of care for lower costs, avoid discriminating against patients with pre-existing conditions and provide transparency when developing health benefit plans.

(3)  ensuring adequacy of benefits and access to care for individuals in this state with preexisting conditions;

(4)  issuing coverage in a manner that does not discriminate against individuals with preexisting conditions;

Not later than September 1, 2022, the company shall submit to the legislature a report explaining how any anticipated health benefit coverage offerings would comply with all considerations and guiding principles for developing health benefit coverage offerings under Subsection (a).  This subsection expires January 1, 2023.

Gotta admit, this is a head-scratcher.



More hospitals are going to close

More than a quarter of rural hospitals in Texas, Kansas, Mississippi, Alabama, Georgia, South Carolina and Tennessee are at immediate risk of closing. 

Notably these are all states that have refused to expand Medicaid and therefore have a lot of people without health insurance.

The problem is exacerbated by the end of the Public Health Emergency which means more people without health insurance will be seeking care at hospitals at imminent risk of closing. 

Check out your state’s situation here

What does this mean for you?

If you live in the rural south, stay healthy, don’t have an accident, and don’t get pregnant.


US healthcare quality is poor because…

Consumers don’t care.

Yesterday we dove into the disconnect between patient satisfaction (my nurse was sooo nice and my room…wow!) and quality of care (how likely was I to die).

Today, we focus on how this affects our healthcare. Or, as the researchers put it;

In an era of management by satisfaction survey, how does hospital competition shape the kind of medical services offered to patients? 

Leaving out the coefficients, standardized deviations, null estimates and other researchers’ esoterica, we find:

Local competition among hospitals leads to higher patient satisfaction, but lower medical quality. 

Yep, because we consumers value quiet rooms and nice nurses more than surviving an operation, health care facilities seem to focus more on quietness and niceness than on, you know, patients actually surviving.

And that’s because hospitals are competing desperately for private-pay patients, the ones insured by employers that pay three times more than Medicare. As the authors put it;

as a business strategy, investing in hospitality and hotel amenities offers a much higher return than medical quality. 

this research speaks to broad concerns about the unintended consequences of marketization…Hospitals have traditionally been conceived as an essential service to a community, but are becoming more like products in a consumer marketplace.

Those working in hospitals are increasingly expected to focus on the pursuit of customer satisfaction.

The day-to-day institutional question is shifting from “will this improve patient health?” to “will this raise satisfaction scores?” 

What does this mean for you?

Depends… life > comfort?


Patient satisfaction ≠ Quality of care

Health care quality is a huge issue in the US; despite claims that we have the best healthcare in the world, reality is far different.

Why?  I’d argue its because healthcare consumer behavior drives our for-profit system.

What makes patients happy is completely unrelated to the actual quality of medical care they receive – or how likely they are to die.

Research article is here.

the horizontal axis indicates hospital performance by deciles for each category…note patient satisfaction doesn’t vary by hospital mortality and varies just a little by medical quality, but varies a LOT by nurse communication.

The effect of nurse communication on patient satisfaction is four times larger than the effect of the hospital’s mortality rate. Yup, as long as the nurse smiles, is responsive and nice, we’re satisfied. Never mind if we’re a lot more likely to die.

Another oft-measured factor, the quietness of the rooms, has a 40% larger effect on patient satisfaction than medical quality.

This is because hospitals provide two separate and distinct kinds of services  – the technical delivery of medical care and “room and board-related” services. Patients are much better at observing and rating the “hospitality” part of their hospital stay than the medical care they get.

To quote the authors;

Hospitality is the fast track to customer satisfaction in medicine. 

What does this mean for you?

Customer satisfaction is the fast track to profits… not to good medical care.


Private Equity healthcare investment in 2022

Private Equity healthcare investment declined sharply last year as the average deal’s value and the number of transactions both fell off.

Firms invested over $45 billion in 167 US healthcare deals last year – a pretty massive decrease from 2021’s 216 deals for $107.5 billion.

While 2022 started off quite strong, deal volume halved in the second half of 2022 due to interest rate hikes, tighter credit, economic concerns and Putin’s War.

Those are the headlines from Bain & Company’s Global Healthcare Private Equity and M&A report 2023 (download for free here.)

note – I have worked with Bain entities in the past, respect the firm and the Bain people I’ve worked with. I am not currently working with Bain.

key highlights…

  • Provider sector deals accounted for about half of all transactions and dollars invested…but slowed dramatically to 7 transactions in Q4 2022
  • IPOs pretty much disappeared in 2022 (initial public offerings, when a private company goes public)
  • Value-based care and primary care were a big focus of strategic buyers…
    • Optum bought several provider groups
    • Amazon acquired One Medical
    • Humana and Welsh Carson did a joint venture, investing in a value-based primary care company.

There’s a lot on value-based care…although there’s precious little evidence that it is a panacea, investors are still betting billions …From the report:

For more than a decade, value-based care (VBC) has been positioned as healthcare’s “next big thing.” And while progress has been uneven 

The number of accountable care organizations (ACOs) plateaued at around 1,000 in recent years, while 15 of the 53 entities participating in CMS’s direct contracting program in 2021 experienced net savings losses. 

Value-based care stakeholders are doubling down on their commitment as healthcare spending outpaces GDP growth and CMS leans further into VBC models. 

What does this mean for you?

Expect PE investors to remain quite cautious until interest rates stabilize, the debt ceiling is raised (or much, much better – eliminated) and inflation trends level out.

Warning – if House Republicans don’t raise or eliminate the debt ceiling there will be hell to pay. 

Register for Bain’s webinar on the report here.


Medicaid for All – Biden goes big.

Medicaid for All is back on the table.  In a speech in Rolling Fork MS, President Biden revealed that his administration is working in concert with Progressive Democrats – and Sen. Mitt Romney (R UT) – on legislation that would allow any citizen to enroll in Medicaid.

Citing Mississippi as an example of major problems with healthcare access, widespread un-insurance particularly in southern states, rising healthcare inflation, and massive bad debt from medical bills, Biden sketched a (very thin) outline of Medicaid for All. (no details on cost, timing, or much else, a lot of soundbites about babies, insulin, nursing homes and affordability)

While this may seem like a bolt out of the blue, it is pretty clear Biden’s administration has been working this since before he took up residence in the White House. The latest was a major streamlining of the enrollment process back in August of 2022 intended to make it much easier for families to sign up for Medicaid and eliminate caps on child care coverage.

Biden has been teasing a major announcement on healthcare for a couple weeks, most recently during an event lauding the ACA’s birth…

from the Washington Examiner:

Public support for major changes to healthcare has grown alongside support for the ACA. Seeking to highlight Dems’ perceived strength in healthcare and Social Security well ahead of the 2024 elections, White House spokesperson Robyn Patterson noted:

note this is NOT Medicare for All (M4A), a concept that was widely circulated back when  the ACA was in development. Biden briefly alluded to M4A in his remarks, noting his team ruled it out as Medicare “is not comprehensive, is confusing to many, and is mostly focused on older Americans…it wouldn’t work for young families…”

Reports indicate VP Kamala Harris has been pushing this since Biden named her his VP. Sen. Brian Schatz (D HI) an early advocate of Medicaid for All, has been meeting regularly with Biden staff, other elected officials, and HHS leaderships in an effort to build support. Schatz is close with Utah Sen Mitt Romney; recall Romney led the charge to revamp Massachusetts’ healthcare system and establish “RomneyCare” over a decade ago.

We can count on a full-throated opposition from almost all Republicans, although Romney’s reported involvement will give Biden much-needed “bipartisan” cover. I would not be surprised if Louisiana’s Sen. Cassidy also signs on; he’s been a behind-the-scenes advocate for a major revamp of healthcare for years. Long an advocate for state control of healthcare, Medicaid fits his policy views far better than Medicare.

in my view, there are a host of reasons Medicaid For All makes a lot more sense than Medicare for All; here’s what I wrote about this back in 2018…

  1. Medicaid for All will spread the cost of universal coverage across states, reducing federal financing requirements.
    Medicaid is a state AND federal program; States provide a lot of the funding for Medicaid; on average the Feds contribute 63% and states 37%. This is critical, as Congress will want to spread the cost of a Single Payer solution and there’s no better way to do this than require states to pony up big dollars [State contributions vary based on a state’s average personal income relative to the national average; states with lower average personal incomes get more federal dollars.]
  2. Medicaid is already built to cover everyone.
    Medicare covers people of all ages, Medicare is very much elder-care focused.
    Adapting Medicare to handle everyone from newborns to elderly, maternity care to pediatrics will be difficult, time-consuming, and expensive. Medicaid does all this and more – today.
  3. Generally, Medicaid is less expensive than other “systems”.
    This is due to much lower provider payment and significantly lower administrative costs. Yes, this means providers are going to be paid less.
  4. Medicaid member satisfaction is pretty good; access to care is not much of an issue.
  5. Medicaid-based Exchange programs are much more successful in the Exchanges than commercially-based plans.
    The Centenes et al [Medicaid-based plans] understand the demographics of the uninsured, have lower medical costs, and already have provider networks, customer relations operations, workflows and processes set up and operational. At the end of the day, lower cost wins – and their costs are lower.
  6. Medicaid is a simple, fully-integrated healthplan.
    Medicare’s alphabet-soup of Parts A B C and D is confusing and convoluted, with different payers often covering the same individual. This increases administrative costs, member hassles, and decreases quality of care (co-ordinating pharmacy and medical care between different payers is problematic at best.
  7. Managed Medicaid plans are working.
    These plans currently exist in most states, and many have been able to deliver excellent care at lower costs through innovation and very tight focus on outcomes. One example is using paramedics to deliver care. [disclosure – I sit on the board of Commonwealth Care Alliance, a Massachusetts healthplan that serves dual-eligible members]

What does this mean for you?



Medicaid, workers’ comp claim severity, and healthcare deserts

Medicaid is the second largest payer in the US, with spending approaching three-quarters of a trillion dollars this year.

In 2023, workers’ comp medical spend will be around $32 billion – just over 4% of Medicaid.

Medicaid is a major payer for many facilities in poor and rural areas, a financial lifeline that is thin indeed.

Ten states have yet to expand Medicaid, an ethically- and financially-unconscionable failure that has major repercussions for workers’ comp, poverty, child health and healthcare access (two – SD and NC – are in the expansion  process).

Access to care

Most rural areas in those 11 states were already hospital deserts; that will get a lot worse as over a third of rural hospitals are in those eleven states.

Average operating margins, razor thin before COVID, recovered somewhat during the pandemic but will turn negative as the pending Medicaid disenrollment takes effect.

More hospitals and their emergency and trauma units will close. Today in 40% of US counties most patients are more than an hour away from a trauma center…as more rural hospitals close even more trauma patients will be further away from hospitals.

What’s known as the “golden hour” is the first 60 minutes after an injury, when healthcare can save lives, limbs, and livelihoods.

What does this mean for you?

Claim severity will increase in those ten states. 

note – reminder, Saturday is April 1…beware.


After 10 days away from the keyboard – family vacation in Mexico and gravel bike race in California – it’s back at it.

shockingly the world kept turning while I was unplugged…

The estimable Charles Gaba has just updated his analysis of US healthcare coverage by payer. Charles’ work is the best I’ve encountered to date…he includes everything from Medicare and Medicaid to Exchange programs to Healthcare Sharing ministries (between 865,000 and 1.5 million, Indian Health Services (2.6 million)…

Here’s the all-in-one view…

Despite all  those gazillions of people with insurance, many hospitals are having real/awful/terrible financial problems. Hospitals’ average margin – according to Kaufman Hall – was -3.4% for the first 11 months of 2022.

That said, things steadily improved during the year…

In the tiny world that is workers’ comp, NCCI released its review of medical inflation…among non-hospital providers (docs, PTs, etc).

Thanks to the good work of Raji Chadarevian and David Colon, we know medical inflation among these providers was…minimal.

As in 1.5% per year over the last decade.

Final note. Facility costs are increasing.

Most payers are doing a really crappy job addressing this; their bill review partners/operations are woefully ill-equipped to ensure your dollars aren’t being Hoovered up by healthcare systems and hospitals.

And yes “most payers”includes you.

To date those increases have been matched by a $2 billion decline in drug spending – which, by the way, has also reduced claim durations (way lower opioid usage = way more claim resolutions).

Physician costs are pretty much flat, drug costs are way down, and facility costs are headed up…net is you need to PLEASE stop catastrophizing about “severity increases” and other nonsense.

If I read one more survey or interview or discussion of workers’ comp execs afraid of “rate inadequacy” or medical inflation or some other incredibly uninformed and wrong-headed and ignorant fear mongering I’m going to call them out publicly.

Just. Stop.