In their current form? Yes. I think there will be some last-minute agreement to provide some relief, but the extended subsidies from The American Rescue Plan and the Inflation Reduction Act that were designed to expire this year are not going to move forward in their current form.
At the federal or state level? I know all conversations are federal currently, but let’s not forget how much of what we all experience is actually happening at the state level, and more on that in a second. On the federal level, at some point the government will reopen, and anything meaningful in healthcare has to happen with bipartisan support. I think the public's appetite for another 51-vote reconciliation package is pretty low. I think this current situation is reckless, but I do think there might be a silver lining. Whether you’re for it or against it, it's clear the original Patient Affordable Care Act, foundational to this whole argument, aimed to tackle access rather than cost. Those debating it even admitted as much. The drivers of cost in healthcare are more politically fraught and complicated than access, so that’s what they did. I think what you’ll see when the subsidies expire and people start to feel the true explosion in the cost of plans, goods, and everything else…without it being refracted through employer plans and subsidies…there will be the political will to tackle cost. One thing I would do if I was in the Trump administration is I would offer a carrot in the form of loosening some of the Medicaid cuts, in exchange the elimination of Certificate of Public Need laws at the state level for the 35 states that still have them. That would open up competition in those states and drive prices down. Could be a bipartisan compromise in a world where we really need one.
Enormous. Estimates on administrative costs in healthcare hover between $1T to around $1.5T depending on who you talk to. Billing and insurance-related costs alone cost close to $800B, similar in size to the budget for the Department of Defense. Anywhere from 30% to 50% of admin cost in healthcare is waste, so anywhere from $300B-$500B, with much of it benefitting the industry. I don’t think it is nefarious, it's just where we’ve gotten, and I think it can change. AI is no panacea, and I don’t even think it’ll be the biggest catalyst for change (I think a generational shift is), but the reason AI can offer us a path out of this insanity is because it can offer clarity where there was previously obfuscation, and the profit margin for AI businesses is larger than in traditional SaaS.
Where a traditional software margin for a business might be 30%-60%, for AI is 70%-80% or better. That would allow you to operate for a lower price point, and potentially steal share faster — a bigger share of a smaller pie. Obviously it’s more complicated than that and the devil is in the details, but it’s now feasible to eliminate huge chunks of yesteryear’s business drivers.
On the table now could be anything from: (crawl/walk) - can we operate the same billing and insurance-related billing and insurance-related processes at half the cost with the same profit profile to (run) can we eliminate RCM? The growth in the cost of administering healthcare relative to waste has to go down for the country to operate. The future business winners will drive that, not add to it.
I hope not, but probably, in some form. Look no further than The Centers for Medicare and Medicaid Services (CMS) contemplating prior authorization in traditional medicare. I get it, 10 years from now sounds like an eon in the world of AI development. On the other hand, Jeff Bezos shipped his first book in 1995 and we still don’t have reliable online scheduling in specialty care 30 years later.
My opinion, but prior authorization is a motivational challenge and financial lever … not a technological one. As long as there is a “need” to gate spend, there will be prior authorization until providers, payers and employers are willing to come together and contract differently. Until recently, I don’t think the technology existed to offer them the common tools to do it, and present the “non zero sum” financial tools to make it happen. I think now, the tools do exist to offer such a pathway, but it’ll take some time to unwind the financial motivations that drive prior authorization.
I don’t really think technology that simply makes the authorization easier really does a ton to solve the issue. Prior authorization gates things payers really don’t want to pay for, so, they won’t. That has to change upfront in the negotiations. I’m not pessimistic, I actually have high hopes it will happen…in fact I’ve seen it start, but a decade in healthcare is the blink of an eye and these interests are deeply entrenched.
