Texas Advance Directive Planning For Important Healthcare: Fill & Download for Free

When asked why Americans only save 8% of their income[1], an oft-repeated explanation is that Americans "don't care about saving", for reasons that run anywhere from conspicuous consumption to impulsive spending.Yet over 50% of people surveyed by the Consumer Financial Protection Bureau in 2016 nevertheless plan for finances and have a habit of saving, with nearly 40% stating they have a planning horizon of 5+ years.[2]This is backed up the Federal Reserve's Survey of Consumer Finances, who report that 55% of all households surveyed in 2016 are actively saving[3].Americans clearly do care about savings, and think about their financial future long-term — so why do they end up saving so little in practice?In this answer, I want to advance evidence for the strongest explanation for this phenomenon:Wage stagnation combined with price inflation has led to large expenses as fraction of income, resulting in reduced possible savings in the modern age. [4]Note: I will not be talking about American retirement savings — only after-expenses savings. Thus, explanations for low retirement savings such as low financial literacy and impulsive spending patterns, are not explored here — see Facts on Saving and Investing by the SEC if interested in this topic.Wage Stagnation and the Death of the American DreamOver the last three decades, wages for the middle class have effectively stagnated[5].The average middle-class American household went from making 60,000 dollars a year in 1980 to just 77,000 dollars a year in 2019, falling far short of expected projections:Source: Economic Policy Institute's calculations over Congressional Budget Office dataAs the graph above indicates, income inequality has been a major factor in this slow growth of average income, manifesting in vastly different wage growth rates across US demographics:Over the entire 34-year period between 1979 and 2013, the hourly wages of middle-wage workers (median-wage workers who earned more than half the workforce but less than the other half) were stagnant, rising just 6 percent—less than 0.2 percent per year. This wage growth, in fact, occurred only because wages grew in the late 1990s when labor markets got tight enough—unemployment, for instance, fell to 4 percent in 1999 and 2000—to finally deliver across-the-board hourly wage growth. The wages of middle-wage workers were totally flat or in decline over the 1980s, 1990s and 2000s, except for the late 1990s.The wages of low-wage workers fared even worse, falling 5 percent from 1979 to 2013.In contrast, the hourly wages of high-wage workers rose 41 percent.even as socioeconomic mobility (as measured by intergenerational mobility) remained flat [6]— as much as 50% of individual incomes today can be explained by how much their parents made in the past, indicating that people really haven't moved from medium- and low-wages roles to high wages at all.In the same time period, the cost of consumer goods and services has simply grown… and grown… and grown…[7]This already paints a bleak figure for the average American — but we can do even better than quoting macroeconomic trends to explain the low savings Americans have. Let's calculate how much an American could save by looking at their average budget.Edit: there are strong caveats with the following data, so be advised this does not help improve our understanding of why personal savings are so low — only how the average American household budget works.Breakdown of the Household BudgetEvery year, the Bureau of Labor Statistics compiles a breakdown of the average household budget through the Consumer Expenditure survey.I summarize the findings of the Consumer Expenditure report for 2017 below[8]:The average income before tax was approximately 73,000 dollars a year. Taking just federal tax into account, this is about 64,000 dollars after tax.[9]The average expenditure was about 60,000 dollars a year.The single largest expense was housing, eating up about 20,000 dollars a year. The next largest was transportation, with vehicle, fuel and other maintenance, and public transportation taking up another 10,000 dollars. Food across throughout the year comes out to another 7,000, and insurance payments (pensions and social security) came out to 6000. Healthcare expenses comes fifth at 4000 dollars. In sum, these essential expenditures come out to 47,000 dollars, or about 85% of the total expenditure.The remaining 15% is scattered across different categories such as entertainment (3,000 dollars a year), apparel shopping and education (both about 1500-1800 dollars a year), cash contributions (another 1800 dollars) and things such as reading (about 100 dollars a year).Americans, after federal tax and expenditures, are left with just 4,000 dollars to save — or 5% of their income before tax.In presenting this evidence, one can easily fall into the trap of being dismissive. "No wonder Americans save so little — if they only stopped spending on all this non-essential stuff, they'd be able to save 20% after taxes and expenses!"Such reasoning would be fallacious:First, this is a picture of the average expenses, not everyone's expenses. Each item in this list varies widely from person to person, city to city and state to state, for reasons we don't know and haven't captured — thus, one cannot use this to make claims about what Americans can do to save more, only what they are doing now in aggregate, without understanding the distribution around this average picture. One can be descriptive but not prescriptive when working with averages.Next, the astute reader should note that this is still a reasonable breakdown — even a charitable definition of "frivolous expenses" (apparel shopping, eating out, personal care expenditure, tobacco shopping, household furnishing and equipment) does not explain more than 20% of all expenses. The bulk of the remaining expenses are all essential expenses and are even reasonable when compared with the average cost of each item across the States.Edit: Thirdly, the savings calculation above — average income minus average expenditure — does not actually reflect the personal savings rate! For example, in 1984, the personal savings was as high as 11%[10] yet average income minus average expenditure was negative per the Consumer Expenditure survey of 1984[11]. This is a precautionary tale of comparing across datasets — the personal savings rate (PSAVERT) is calculated by the Bureau of Economic Analysis, which uses national accounts to arrive at its figures, while the Consumer Expenditure Survey uses interviews and accounts diaries to compute its values.From this vantage point, this breakdown of expenses only serves to highlight the relative cost of things — the sheer expense involved in vehicles and housing, for example, dwarfs nearly other major expense — and demonstrates that prices are high and income is low in a way that eats at one's wallet. It complements pictures from non-government surveys that report a majority of Americans live from paycheck to paycheck[12].Tangential Remark: Are Americans Going into Debt to Live Comfortably?Americans both report that they live comfortably (nearly 75% of respondents in a 2018 Federal Reserve study say they are doing okay financially)[13], and that they wouldn't cover an unexpected 400 dollar expense through savings (40% of Americans, per the same study[14]), with the majority of these latter saying they would use a credit card or some other source instead. This discrepancy begs the question: are Americans going into debt to be financially stable?Let's look:The 2016 Survey of Consumer Finances by the Federal Reserve finds that credit card debt is the most widely held form of debt held by Americans[15], yet 58% of Americans say they use credit cards only for convenience and don't carry a credit card balance per the same study.Of the same holders in the same study, the actual value of credit card debt is relatively tiny — only 2,300 dollars (median) and 5,700 dollars (mean). In contrast, education and vehicle loans are much larger even if less widespread, running into the several tens of thousands of dollars.Americans hold only a few other forms of debt that go explicitly towards supporting a lifestyle, such as vehicle and home loans. Yet these are also not held by the majority of Americans — only 30% to 40% of Americans have these, again per the Survey of Consumer Finances.To me, this evidence shows that while some Americans are in debt to live relatively comfortably, it's not a statement true of the majority. That Americans are able to live comfortably now is much more likely to stem from their salaries (which constitutes the sole source of income for the vast majority and are just able to cover cost of living) rather than from a desire to go deeper into debt — a conclusion that puts the nail on the coffin for the "don't care about savings" hypothesis.Some Alternate HypothesesSuch an important issue is unlikely to have attracted only one explanation. I present below a few others advanced:Trickle-down consumption: Bertrand and Morse in 2013[16] theorized that the middle-class was spending more to keep up with the upper class in a form of conspicuous consumption. A brief forward citation search did yield some favourable evidence e.g. this paper[17]and it is compatible with the budget expenditure noted above. Whether it is the strongest effect, on the other hand, remains to be seen.High debt: This is the standard alternate explanation for low savings, but, as we saw above, doesn't really match up with the Survey of Consumer Finances report on how many households had debt of some kind. It is true that debt is high for many people — however, high debt only affects a sizable fraction, rather than a majority, of people.Shifts from savings accounts to investment: This is one of the arguments offered by the SEC in its 1998 publication Facts about Savings and Investments, that Americans are less likely to hold just a savings accounts and are investing more heavily in stocks and financial products than ever before. Unfortunately, though an intriguing hypotheses, I have been unable to find mention of this as a viable hypothesis to explain low savings.Overall, the direct factors of wage stagnation and price inflation, and a look at the breakdown of the household budget as well as debt allocation across households, suggests that the best explanation out of all these hypothesis is that reduced purchasing power is directly responsible for lower savings.Footnotes[1] Personal Saving Rate[2] https://files.consumerfinance.gov/f/documents/201709_cfpb_financial-well-being-in-America.pdf[3] https://www.federalreserve.gov/publications/files/scf17.pdf[4] Here's the No. 1 reason why Americans are struggling to save money—and it's not debt[5] Wage Stagnation in Nine Charts[6] Intergenerational mobility in the US[7] One hundred years of price change: the Consumer Price Index and the American inflation experience[8] Consumer Expenditures in 2017[9] $73,000 【 Income Tax Calculator 】 Texas[10] https://fred.stlouisfed.org/data/PSAVERT.txt[11] https://www.bls.gov/cex/1991/standard/multiyr.pdf[12] Most Americans Are Living Paycheck to Paycheck, Survey Shows | The Motley Fool[13] Economic Well-Being[14] Dealing with Unexpected Expenses[15] Survey of Consumer Finances (SCF)[16] Trickle-Down Consumption[17] https://scholar.google.com/scholar?start=20&hl=en&as_sdt=0,5&sciodt=0,5&cites=10484894225909538049&scipsc=#d=gs_qabs&u=%23p%3Dn3u5V0ZTWagJ

I'm not conservative (I like change!), but I'll lay out my perspective since my concerns as a Left Wing/Liberal Mixed Capitalist seem to frequently align.Here are the facts:The Patient Protection and Affordable Care Act mainly aims to secure universal health insurance coverage – but lack of coverage is only a part of the issue. Sprialing costs are the bigger issue. Aside from creating an Independent Payment Advisory Board for Medicare (which is only empowered to make recommendations to Congress) and a Center for Medicare & Medicaid Innovation which has a mandate to conduct certain demonstrations for new payment and service delivery models (but would require Congress to act on the results), the act does very little to address the rising costs of doctors, nurses, and hospitals.It adds additional layers to an already highly dysfunctional market. We already have insurance companies AND in most cases employers standing between the relationship patients and doctors. The rising cost of health care costs has increasingly forced insurance companies to become more like health subscription providers. I am a big fan of the exchange concept, but that's not the only thing that the law does; Obamacare sets coverage requirements on plans – which adds yet another layer to a business relationship that should ideally be direct pay as much as possible.Throwing subsidies and payment middlemen into the mix is a really foolish way to address cost increases. Those things historically tend to lead to MORE cost increases – which is the opposite of what we want. We want greater insurance coverage and participation – but less need for people to actually have to use their insurance coverage to pay for services.A lot of supporters like to point to the "success" of the 2006 Massachusetts Health Care Reform. While it has been successful at expanding insurance coverage, what it has NOT done is reduce the cost of care. From NPR (public radio): Health Care In Massachusetts: 'Abject Failure' Or Work In Progress?; From ABC News: Evaluating Romneycare In Massachusetts; From the Boston Globe: ‘RomneyCare’ — a revolution that basically workedUp until now, the basic reality of employer-sponsored healthcare in the U.S. has been driven by a massive carrot in the form of the employer healthcare tax deduction. Under the PPACA, employer-sponsored healthcare becomes mandatory at the Federal level (once you have more than 50 employees, and assuming that you don't qualify for any one of countless exceptions). Despite Municipalities and States already having their own local mandates, this is a pretty significant imposition on businesses at the highest level. On that note, the number of exceptions and waivers is aggravating since that alone indicates that the law is not equitably designed. (Everyone must do this! Except.... you...and you...and you and you and you...)The Medicaid expansion is a significant r̶e̶q̶u̶i̶r̶e̶m̶e̶n̶t̶ expectation placed on States with tight budgets as it is. Medicare is entirely Federal; Medicaid is State-run with Federal support. States and their citizens tend not to like it when the Federal Government orders them to spend money.That brings us to the question of the individual mandate. Those of us who live in population-dense urban environments are much more accustomed to having to deal with Government regulations and requirements in our daily lives; the underlying concept of the Individual mandate may not feel like a big deal. Government is frequently a good thing since it provides formal mechanisms for all of these people living on top of one another to not trample on one another. For those who live in more population-sparse rural settings, there is a lot less need for Government activity and intervention since there's simply less people – and more space for people to do their own thing. For them the individual mandate, requiring people to engage in a private commercial activity, is a pretty big change in the relationship between the individual and the government – and conservatives are wary of such changes. To be conservative on a given issue, you're generally invested in conserving the status quo. (Realistically, the individual mandate + penalty was a contrived series of rhetorical backflips in order to not have a "Federal Health Insurance Tax" and then allow people with insurance to waive the tax. The Democrats didn't want the word tax being hurled at them in the 2010 U.S. Elections. The gymnastics didn't help them much.)I'd personally rather step forward into something new rather than stick with an approach to providing care that is definitely broken and has been for nearly fifty years – but I can understand why some would strenuously object to changing from something broken to something else that's still broken.With regard to other ways forward.I'll borrow from a comment on Health Care Policy: What does the private health insurance industry contribute to the health care of Americans? and add a few more. What I offer here is directional – not comprehensive.Many more Retail Health Clinics/Convenient Care Clinics. Convenient care clinic,Will CVS, Walgreens retail clinics replace physicians?, Popularity of 'Walk-In' Retail Health Clinics Growing: Poll, Analysis: ObamaCare will bring flood of retail health clinics - The Hill's Healthwatch This also requires continued expansion of who can serve as primary care providers. We need to make sure that state-level licensure for Nurse practitioners and Physician assistants allows for them to do work that they are perfectly qualified to do. Pharmacies ought to be hiring Registered Nurses to take vitals, conduct a basic check-up, and draw blood for send out to labs Unfortunately, the AMA and other groups that advocate for doctors are rather protective of their turf and reserved authorities. Anyhow, let's get Walmart (company), Target, Costco, Walgreens, CVS, Publix Super Markets (company), Safeway, Albertsons, Kroger Products and Services, Sears Products and Services/Kmart, whomever wants to deal with Westfield, and so forth all competing in this area. People should be able to walk in, get a routine check-up, pay $25 - $75, and that's it. Not a $25 - $75 co-pay; $25 - $75 total. A lot of these chains are already providing vision exams, so it's not a huge stretch.An end to our system of employer-sponsored insurance coverage. The "system" is an outgrowth of the wage controls that were imposed during World War II as corporations competed for labor, but weren't allowed to raise wages. Health insurance in the United States, Employer-Sponsored Health Insurance and Health Reform As a consequence, the individual market is inflated and non-functional. As I've said elsewhere, I have solid hopes for the health care exchanges on this. The chance to unwind employer sponsored care is probably the biggest reason that I ultimately support the PPACA. (That is correct; I support the Act not just for what it seeks to fix, but because of what it might break and provide a better path forward on.)Public disclosure of negotiated rates between hospitals and insurers. There's now disclosure of the "chargemaster" rates, which is a step, but it's not an accurate reflection of the market. Procedure pricing should be as transparent as publicly traded stock prices. See One hospital charges $8,000 — another, $38,000. Also, here's a timely column from our very own Dan Munro: Healthcare Pricing Transparency Gains MomentumStandardized & portable electronic medical records that can either be self-maintained or used with a secure (and certified as such) data management service. These could be modeled after stock brokerage houses, who maintain sensitive information – but can transfer that information between one another when a client wants to change. I could also potentially see private insurance companies offering this service.Medicare reform. There are a lot of critiques out there, but ending the fee-for-service reiumbursement model is the big one and everyone already knows it. However, there's a lot of entrenched resistance to actually doing anything about this. (See #1 on my first list.)We need a mechanism to directly account for the requirements of the Emergency Medical Treatment and Active Labor Act, rather than forcing hospitals who take Medicare patients to absorb and distribute those costs. There is a really whacked out economic incentive here that is leading some hospitals to close their Emergency Rooms as they try to trim costs. States who that are looking to trim budgets – most notably Texas (state) – are also limiting Medicaid reiumbursements for "non-Emergency" Emergency Room visits. (Emergency Room Closures Hit Minorities, Poor Hardest; Factors Associated With Closures of Emergency Departments in the United States.) This is one where getting universal insurance coverage for actual emergency/catastrophic situations is important – but, to echo my point about retail health care & convenience care – we need way better, more actually affordable options for primary care.Finally, there is a big hairy social/economic issue that we need to deal with: Death and Dying. We've gotten stunningly good as a society at prolonging people's lives over the past 50 years. As a social imperative, it is moral and correct to try to preserve and prolong life...right??? (Imperative enough that the PPACA bans lifetime caps on insurance payouts.) Unfortunately, the moral imperative is very very very expensive. The most expensive care that people typically receive is in the final three months of their lives. Perhaps only people who can afford it should have every possible measure taken to extend their life... which is unlikely to strike any sane person as remotely just or the kind of society we collectively want to be. Science and medicine have gotten ahead of our ability to tackle this question as a society; we need to collectively catch up and reset our expectations. Maybe it's something like requiring certified EMR providers (see #4 in this list) to collect Advance Health Care Directives??? That at least gets people to have the conversation. This is tough Gordian Knot, and I'm currently short on brilliant ideas on how we go about slicing it. (I will note that when Republican politicians and pundits worked people into a foolish frenzy over "Death panels," it was a sad setback for this public conversation.) Humanity has had a philosophically tough relationship with mortality since the beginning; now we're at a point where it's economically tough.Bottom line: universal insurance coverage is a noble goal, but we ought to focus a lot more on the core care costs so that insurance pools can be called on less frequently to pay out for things. In principle and design, people should be buying insurance to mainly deal with serious risks – not to handle everything that ought to be routine.See also:Ian McCullough's answer to What are the most convincing arguments in favor of Obamacare?Ian McCullough's answer to What should be the next step in American healthcare?

The American health care industry wastes $1T by some estimates, and possibly as much as 30% of health care spending by others. US health care expenditures are twice the OECD average – for instance, we spend twice what the UK does on health care (as a percentage of GDP) – and American health care costs are growing at 5% a year.Healthcare presents one of the greatest policy challenges for our country because profit incentives and care for the patient are often misaligned. It’s clear that the government is going to play some role in making sure the least well-off Americans have access to medicine, but we need healthcare policies that incentivize providers and payors to educate patients to make informed, data-driven choices. Only intelligent consumer choice will stimulate functioning, competitive markets in insurance, patient care, the pharmaceutical industry, and elsewhere. Today, pharmaceutical companies, health providers, electronic health record (EHR) systems, and other actors often have misaligned incentives and fail to enable more efficient solutions that do more for the patient per dollar - indeed, often the winners in these areas are those that unnecessarily charge more. Aligning incentives will spur top technology startups to develop innovative healthcare solutions, bring down costs, and deliver superior outcomes to American patients. Here are a few necessary reforms:Medical SchoolsExperts project a total physician shortfall of between 42,600 and 121,300 by 2030.* We need more medical schools fast, but the Liaison Committee on Medical Education accreditation process takes 8 years on average and most states require new medical schools to obtain a “certificate of need” before beginning construction. In addition, medical schools are required to sustain the high overhead of medical research rather than focusing exclusively on training doctors, and inflexible requirements prevent medical schools from experimenting with new curricula. Organic chemistry and other undergraduate prerequisites are completely irrelevant to becoming a good practicing doctor, and should be optional.High medical school costs force students to become high-earning specialists, e.g. plastic and orthopedic surgeons, when our country really needs more primary care physicians (PCPs). Primary care physicians, nurse practitioners, and physician’s assistants are far cheaper than specialists, but limited medical school and residency supply as well as occupational licensing concerns keep them out of the market. In addition, foreign doctors are almost always required to complete a full residency before being allowed to practice in the United States. Given a current skills gap of 30,000 doctors, adding 30,000 new PCPs, nurse practitioners, or physicians assistants could save $2.3B, $5.1B, or $6B in salary costs alone relative to the current mix of specialists and primary care doctors.In addition, primary care doctors achieve better health outcomes for patients than specialists by engaging in long-term counselling, tracking, and preventive care. Scholars estimate that replacing specialists with primary care physicians at a density of 1 per 10,000 population could save $931 per beneficiary a year. Adding a supply of 30,000 primary care physicians would save our country about $150-200B a year.*If implemented correctly, data-driven telemedicine can ameliorate demand for physicians somewhat. Doctors should be able to digitally prescribe most drugs, and data from increasingly sophisticated wearables will enable physicians to swiftly and efficiently diagnose patients.Reform PBMsIn 2017 the Centers for Medicare and Medicaid Services (CMS) spent $175B on prescription drugs alone, and there are currently shortages of vital drugs across the country. An oligopoly of Pharmacy Benefit Managers (PBMs) generates $200B a year in revenue by forcing drug manufacturers to pay rebates and other kickbacks in order for the PBM to place their drug on the “formulary”, or list of insurable drugs. Securing a place on the formulary is a matter of life and death for manufacturers, and by one estimate the current value of rebates and other price concessions from manufacturers to PBMs increased from $59B in 2012 to $127B in 2016.After speaking extensively with politicians on both sides, we were thrilled to see the Senate recently outlaw PBM “gag-orders” on pharmacies by a 98-2 vote. We are encouraged to see that Alex Azar’s Department of Health and Human Services (HHS) is planning to subject PBM rebates to anti-kickback law, but we would go further and require full price transparency on PBM contracts in the style of Colorado HB 1260. Although some rebate money flows to insurers, we estimate that reforming the space could save America on the order of $50B.End of Life Palliative CareAlthough discredited by hyperbolic language about “death panels”, counselling patients at end-of-life is both cost-effective and humane. 30% of Medicare expenditures are attributable to 5% of beneficiaries who die each year, and acute care in the final 30 days of life accounts for 78% of the costs incurred in the final year of life. While acute-care for the dying should obviously be available to those who want it, our country must shift to a model of counselling and palliative care at the end of life.Just having an end of life discussion with the cancer patient reduces medical costs by 35.7% on average, and given that there are roughly 600,000 cancer deaths in the United States a year, would have saved $687M a year for cancer patients in the last week of life alone! In addition accountable care organizations (ACOs) have saved $12,000 per patient during the final three months of life by implementing home-based palliative care. If extended to all cancer, end stage renal disease, and congestive heart failure patients this program could save the country $11.7B a year.We all agree that we must treat families of the dying with delicacy and compassion. But introducing a program by which families will share in Medicare/Medicaid savings from palliative care would help families and patients factor the overall social cost of end-of-life care into their decision calculus. We estimate that extending proven programs and testing different incentives structures could save our country $30-50B a year.FDA ReformClinical trials are an arduous multi-year process and have become drastically more costly in the last 30 years. Phase II and III efficacy trials cost roughly $400M per new drug, which severely limits the number of drugs that make it to the final stage of Food and Drug Administration (FDA) approval. A “progressive approval” approach would allow drugs to be repurposed for other uses and possibly sold after passing Phase I safety trials, which establish that a drug has a favorable risk balance and qualifies as value-based care. Drug companies could gradually establish efficacy by logging the effects the drug has on each person who opts to use it over the next several years.The extreme costs of clinical trials and FDA approval not only stymie drug development and the application of treatments to new indications, they effectively privilege Big Pharma over other innovators, inhibiting innovation and medical progress. A data-driven approach in which doctors and hospitals verify drug efficacy over time would allow the FDA to concentrate its resources on ensuring safety, particularly as the market for new drugs becomes sophisticated at assimilating information from the progressive approval process. While ramping up the number of drugs approved may not save our healthcare system money on net, a framework which encourages innovation will positively impact millions of lives by improving quality of care.Give Medicare Negotiating PowerTo pass the Affordable Care Act (ACA), the Obama Administration made a critical concession: Medicare would not be able to negotiate the price of drugs by controlling which drugs make it onto Medicare’s formulary. As a consequence, our federal government is a “price taker” that must blindly accept whatever prices drug companies demand, and the American government winds up subsidizing drug development costs for the rest of the world. Drug prices at home are extremely high, representing 10% of total healthcare expenditures, and about $144B of federal healthcare spending.In many other developed countries, governments use their monopsony or near-monopsony buying power to force pharmaceutical companies to sell drugs at much cheaper rates. For instance, Canada spends 70% of what the US spends on brand name drugs, the UK 40% of what we spend, and Denmark only 35%. If the US federal government used its considerably larger “countervailing power” to negotiate reduced drug prices – whether on a case by case basis or by pegging the value of a Quality Adjusted Life Year at a generous but fixed rate - savings could be in the range of $30-40B, possibly even as high as $90B a year.Pharmaceutical industry lobbyists (PhRMA) argue that high drug prices are necessary to stimulate R&D which generates many new life saving drugs every year. But in fact, median R&D spending on new cancer drugs – the most difficult to develop – is only around 40% of total revenue. In addition, most R&D is funded by American universities, and manufacturers of silver-bullet specialty drugs could continue to charge high prices to a federal payor. Giving government negotiating power isn’t a novel solution, but it’s one of the correct solutions to driving down drug costs for Americans.Tort LawThe threat of malpractice lawsuits forces doctors to engage in costly defensive medicine. Although the current administration has made some progress on tort reform (making arbitration legal for federal contractors and nursing homes), Congress must insist on Texas-style reforms including capped punitive and noneconomic damages from healthcare providers, eliminating contingency fees for speculative tort lawyers, reinforced federal preemption doctrine for food and drug products, and more. Unfortunately the trial lawyers lobby – one of the biggest political donors in the country – will fight reform at every step of the way.Some studies estimate that reducing physician malpractice fears to “somewhat concerned” about malpractice would decrease costs by 14%, saving the country $100B a year. Others argue that medical liability reform could save our country up to $210B a year. Congress must protect our doctors from being attacked by unscrupulous prosecutors in order to reduce the cost of healthcare for American citizens. We all agree that we must insist on protecting patients, but unchecked tort lawsuits just punish American patients and taxpayers with an unaffordable system.Data InteroperabilityThe ACA’s “meaningful use” requirements did little to make healthcare data accessible. As of 2015, only 6% of health care providers could share patient data with other clinicians who use an EHR system different from their own. Although 21st Century Cures Act made “information blocking” illegal, big EHR vendors routinely prevent their competitors from importing patient data by disclosing health records in garbled, incoherent formats. As a result, physicians are unable to make fully informed decisions about their patients.Judy Faulkner, CEO of EPIC, famously condescended then Vice-President Biden, “Why do you want your medical records? They’re a thousand pages of which you understand 10.” The answer is that only real, semantic interoperability which makes health data available to third parties via and open application programming interface (API) will allow an innovation ecosystem of apps, medical devices, and novel insurance plans to flourish. Granular, transparent healthcare data will allow entrepreneurs – whether college students or IBM executives – to invent new solutions from the bottom up and swiftly incorporate best practices into their businesses. In addition, direct service-to-service comparisons will allow consumers to make informed decisions about how to stay healthy, stimulating market competition for their dollars.We have been excited to see CMS’s Blue Button 2.0 API program formalize the Fast Healthcare Interoperability Resources (FHIR) standard for health records, which includes programmer resources, a complete API, and gives beneficiaries full control over their data – but EHR providers are refusing to use it. While any EHR system should ensure compliance with the Health Insurance Portability and Accountability Act (HIPAA) by storing protected health information on secure servers, we need to make interoperability truly mandatory.If patients could easily share their medical records with new providers and selectively reveal their data to health apps, fitness devices, diagnostic companies, insurers, and academic researchers, our entire healthcare industry would become hugely more affordable and effective. Reliable, real-time information about which treatments work, which failed, and what they cost will enable hospitals to identify and minimize cost centers as they strive to produce care more cheaply than federal benchmarks and share in the savings.Financing ReformOvertreatment and poor physician incentives may be the main driver of health care costs. Most hospital networks are local monopolies with limited incentives to innovate or save money. Replacing this broken system with value-based care models will immediately save over $100B in total, and should grow steadily over time to $200-300B as doctors harness digital technology interventions and other new techniques to make care cheaper and more effective. We break down a few potential sources of savings below:Bundled PaymentsThe Bundled Payment Care Initiative (“BPCI”) introduced in 2013 shows serious promise in making acute care clinical workflows more efficient, particularly in orthopedic care and oncology. Results continue to improve as providers adapt to the program.After adopting a bundled payment model, the NYU Medical center reduced costs to Medicare by 10% and reduced patient stays by 25% for total hip arthroplasty procedures, and a private practice joint arthroplasty generated 20% savings for CMS per episode while decreasing readmissions. The Congressional Budget Office estimates that a voluntary bundled payments system could save Medicare $6.6B a year. If CMS makes bundled payments mandatory for both Medicare and Medicaid, achieves health record interoperability, and allows the ecosystem to iterate on data-driven incentives, we expect savings to surpass $100B.Accountable Care OrganizationsACOs are widely seen as the Affordable Care Act’s main instrument to rein in health care spending, and ultimately we expect that bundled payments will be folded into a broader ACO model. To date ACOs have generated modest savings on average, but some, such as the Memorial-Hermann ACO, have generated 11% savings for Medicare. ACO contracts are more efficient if they involve two-sided risk (rewards for savings, penalties for overages), but studies have shown that even early versions of upside-risk only ACOs are associated with a 3% reduction in Medicare reimbursement. In addition, Medicare ACOs have improved quality measures across the board, despite their old, sickly populations.Provider networks are still adjusting to the ACO model, and returns will increase in the future. Projecting savings at 5-10% and assume that all Medicare beneficiaries are enrolled in ACO providers, ACOs would save Medicare $30-60B a year. If extended to Medicare and Medicaid, full ACO enrollment could generate between $56-112B a year.Preventive MedicineThe ACA now mandates coverage for all evidence-based prevention in non-grandfathered plans, so preventative screening and vaccinations have increased since the advent of Obamacare. However we need to drastically increase the scope of preventive medicine under the aegis of value-based care. Preventable chronic diseases are 7 of 10 top causes of death in the country, and account for 75% of health care costs. Half of American adults have chronic disease, and surprisingly, chronic illness among those younger than 65 years accounts for 67% of total medical spending. 70% of American adults are overweight, and 1 in 3 American kids and teens is overweight or obese. Prevalence of obesity has tripled since 1971.Some of the most cost-effective, successful preventive health interventions include childhood immunization, youth and adult tobacco counselling, alcoholism interventions, aspirin use for people with heart disease, and screenings for common cancers, STDs, and chronic conditions like hypertension. Evidence suggests that many other preventive health interventions are cost-neutral or increase long-term medical costs (because they extend lifespans). However critics often miss the fact that preventive health measures will extend the working careers of Americans, and pay for themselves in the long-run.In kidney care, for example, the federal government subsidizes extremely costly dialysis treatments for end stage renal disease patients but has not crafted incentives to perform preventative treatments before a patient advances to this critical, debilitating condition. Rather than fill the coffers of the corrupt duopoly that runs the dialysis industry, we should give providers incentives to halt the progression of kidney disease in its tracks. As a country we spend $42B on hemodialysis. Just getting prevention right here could save our system north of $10B a year.ConclusionFixing our sprawling, tangled healthcare system is one of our nation’s greatest policy challenges. In the coming years, America should move swiftly to embrace value-based care models which align market incentives to produce a wealth of patient data and an ecosystem of new information technologies geared at preventive treatment. At the same time, we must address specific areas where poor incentives have throttled the production and delivery of medical services. Replacing bureaucratic mandates with proven Western values of entrepreneurial innovation and educated individual decision-making will yield better patient experiences and results for Americans from every walk of life while saving our country $600-$900B annually – a transformative amount of money for the well-being of our nation.