The header image was part of an article by Bloomberg that was written more than two years ago (May 2014). The data itself goes back nine years. Mylan's price gouging was front and center recently, this week, but the gouging issue has been percolating for years. It has erupted before, and it will erupt again. Everyone's squawking, and legislators are “looking into it,” but it won't be solved this year — or even this election cycle. Here's why: Mylan's pricing controversy with EpiPen is the same controversy that plagues much of U.S. healthcare. As a country — and as individuals — we don’t like it when there’s a BIG, obvious imbalance between the cost of healthcare and the need for it at scale, especially for kids. Our indignation is righteous. The EpiPen delivers about $1 of a drug (epinephrine) easily and quickly to avoid a life-threatening condition (anaphylactic shock). The company that manufactures the EpiPen (Mylan) has raised the price dramatically through the years, especially relative to the cost of either the drug or the delivery mechanism. We can't really claim ignorance here; EpiPen is one of the drugs from that Bloomberg chart in the header. As hard as it may be to believe, the reason for all the increases isn't complex or complicated at all, it's simple. Mylan raise prices because it can — and the EpiPen is a BIG moneymaker for the company. But the EpiPen controversy isn’t unique to Mylan. It's the exact same controversy in that Bloomberg chart and the one sparked by Martin Shkreli last year (with the drug Daraprim). Shkreli was my pick for the No. 1 quote in my Top Ten Healthcare Quotes for 2015:

I probably would have raised the price higher … is probably what I would have done. I think healthcare prices are inelastic. I could have raised it [Daraprim] higher and made more profit for our shareholders, which is my primary duty — and again — no one wants to say it, no one’s proud of it — but you know this is a capitalist society, capitalist system and capitalist rules, and my investors expect me to maximize profits.

Not surprisingly — Shkreli was publicly supportive of Mylan’s pricing increases. However, Ralph Nader referred to Mylan as “greed on steroids.” See also: EpiPen Pricing: It’s the System, Stupid   Valeant Pharmaceuticals is another company like Mylan and Turing, and they, too, have generated similar controversies through the years with their price increases. The pattern is well-documented and easy to see. But there’s a really hard truth to these hemorrhoidal flare-ups of price gouging. We resent it, but not enough to understand it, and that’s a big problem. There's also a collective problem in trying to make real, substantive changes. Real change is difficult — and it requires a deeper understanding. We need to go beyond the headlines and understand how drug pricing fits into our whole healthcare system design. All too often, we simply throw up our hands and falsely conclude that our healthcare “system” is broken. The hard truth that we must face head-on is that it really isn’t. We think it’s “broken” because we don’t understand the evolutionary design of our healthcare system. There’s an urgent immediacy to our culture that makes history too long, too boring, too difficult — but it always bites us. As the author Michael Crichton said:

If you don't know history, then you don't know anything. You are a leaf that doesn't know it is part of a tree.

In fact, there’s another quote — by another author — that I like to use to highlight our specific challenge with that deeper understanding of our healthcare system. On the release of his book Flash Boys, author Michael Lewis was interviewed by Steve Kroft on “60 Minutes,” and a quote from that interview was both the inspiration and influence for my book Casino Healthcare:

If it wasn’t complicated, it wouldn’t be allowed to happen. The complexity disguises what’s happening. If it’s so complicated that you can’t understand it — then you can’t question it.

What Lewis was referencing was high-speed trading on Wall Street, but the quote could just as easily be applied to all of U.S. healthcare. In fact, it’s tailor-made. Our healthcare system has become so complicated that we can’t understand it. But that complexity is also by design as a way to avoid the hard questions. See also: Our Real Problem With Drug Pricing   We desperately want someone — or something — to just fix healthcare. We thought Obamacare might do so — and some truly believed it could — but Obamacare is really just a single step out of our healthcare wilderness, the same wilderness we’ve been wandering around in for decades. At different times we’re angry, lost, confused, frustrated and hurt — and it winds up being more of a ghoulish nightmare than a wilderness. But the hard truth in this wilderness is that in our Casino Healthcare (including big-side stories like EpiPen), all the players are complicit. Payers, providers, pharma, politicians and suppliers are all aligned to a primary objective: their objective. These objectives are unique to them individually, but they’re the same collectively. It’s the for-profit business of revenue, stock price, shareholders, risk capital and campaign contributions. Safety, quality and equality in our system are secondary objectives, even though there are many that push hard for the full attention they deserve (myself included). Mylan is simply doing what for-profit companies are legally required and expected to do : work in the best interests of their board, their investors, their stockholders — and, yes — themselves. Like her or not, the CEO of Mylan is doing exactly what she is paid (very well) to do. If she were fired tomorrow, any replacement would simply dial back the pricing to avoid the heat and slowly ratchet it back up when our anger and frustration moved on. It always moves on. We don’t like to hear it, but we’re complicit, too, just in a different way. We’re complicit in our ignorance because we don’t dig deeper, we don’t understand the whole design, and the media flare-ups do die down. Valeant, Turing and now Mylan are like accidents on the freeway. We slow down, we’re stunned and aghast at the horror — and then we move on. See also: How Quote Data Can Optimize Pricing   So, no, the EpiPen story isn’t rare or all that different. It's not just a delivery mechanism for epinephrine, it's an important lens into the whole healthcare debate. It just happens to be the latest in a long line of stories that will continue to repeat until we make systemic changes to the way U.S. healthcare is designed. We can make those changes. We should make those changes, but the first step for all of us is to understand that the system we have — now running at $3.4 trillion per year, more than $10,000 per capita — isn’t broken at all. It was designed this way, and we just need a whole new design. Not a partial one, not just around the edges, but at the core — one that’s not optimized for revenue and profits but one that's optimized for patient safety, quality and, yes, real equality first.

The gig economy has taken the world by storm, with more than 45 million Americans participating in it in some fashion. By 2020, one study estimates 40% of America's workforce will be self-employed through either contract work or freelancing of some sort. Previously, the biggest challenge for self-employed Americans was discovering new mediums to find work. No more. With the rise in the gig economy, these freelancers have access to millions of jobs at the click of a button. For instance, my company, WeGoLook, pairs freelance workers, or what we like to call "gig workers," with jobs across the country — and now the world — to fulfill client asset verification requirements. The rise of the gig economy isn't just a positive for these independent workers but for businesses and traditional industries, as well. The insurance industry is no different. Insurance Industry Growth and the Gig Economy According to an Insurance Institute survey, more than 40% of insurance companies plan to hire 100 or more employees between 2016 and 2017. A third of these jobs will be brand-new rather than replacements. This is becoming standard across the board as technology continues to change how the insurance industry operates. The word "outsourcing" is often misconstrued, with negative assumptions about offshore job movements and layoffs. The insurance industry, however, can easily leverage gig workers and maintain a traditional workforce. See also: 6 Points to Consider When Outsourcing   Here are five benefits to outsourcing traditional insurance work to gig workers: Worker Outsourcing Benefit #1: Looming Talent Gap A study by McKinsey & Co. revealed that 25% of insurance professionals will retire by 2018. Baby boomers are finally taking that retirement — all the millennials are applauding! This is going to leave a massive workforce gap in the insurance industry. Gig workers and outsourcing can help fill the massive vacancy left by retirees. Think gig workers aren't specialized or professional? Think again. With the rise of the gig economy, shared marketplaces and smartphone technology, gig workers are more professional, knowledgeable, trained and equipped than their freelance peers in the 1990s and 2000s. Worker Outsourcing Benefit #2: New Workforce, New Priorities Millennials are much different than their parents. They crave flexibility and experiences above all else. Sitting in a cubicle from 9 a.m. to 5 p.m. is likely not a professional priority of the typical millennial. This is why we have 53 million freelancers in America — a trend that will only increase into the future — and may be why millennials are the biggest demographic within that group. They want flexibility and the opportunity to be their own boss. This isn't to say millennials don't want full-time jobs, but the astronomical increase in gig workers in the U.S. indicates changing work priorities among millennials. By 2025, millennials will make up 75% of our workforce, so it's best we pay attention! Worker Outsourcing Benefit #3: Business Flexibility Outsourcing to gig workers will allow insurance carriers to remain flexible amid the ebb and flow of consumer demand and business requirements. More importantly for insurance carriers, on-demand workers provide flexibility because they allow companies to adjust to sudden staffing shortages when surges in demand occur. Natural disasters, for instance, place enormous pressures on claims processing and verification, right at the time when customers need it the most. Worker Outsourcing Benefit #4: Lower Costs In lieu of a full-time employee with a salary and benefits, gig workers can be leveraged to provide on-demand expertise when needed. Gig employees are much more flexible than traditional full-time employees and have more technological tools at their disposal. Now, I'm not saying an on-demand workforce replaces technical or certified field personnel, such as claims adjusters, but gig workers can augment and, in some cases, replace the full-time staffing requirement. See also: On-Demand Economy Is Just Starting   Reduced costs also emerge in the form of fleet vehicle costs, equipment maintenance, travel expenses and much more. Worker Outsourcing Benefit #5: Information Flow Now, more than ever, companies can tap into on-demand workers through various marketplaces that make up the gig economy, or what many term the “sharing economy.” The boom in the gig economy means a faster flow of information for traditional carriers because of its reliance on digital and mobile platforms. Gig workers can quickly digest information and relay it in real-time faster than a traditional employee. An insurance carrier would need to have thousands of local field agents to cover the space new sharing economy companies are covering by pooling gig worker talent. For instance, at WeGoLook we can dispatch any of our more than 26,000 “lookers” nationwide to gather information relevant to an insurance claim, asset verification, document retrieval, notary services and much more. To rival this, a traditional insurance carrier using the old employment model would need thousands of salaried positions placed strategically across the country. Or they'd require a web of complex contractors, which, in turn, would need to be closely managed by human resource professionals. This is no longer necessary thanks to the rise of the gig economy. Imagine what a workforce of 26,000 full-time employees would cost. But you can now have those employees at your fingertips just as you would if they were salaried — all by embracing the gig economy model. See also: How On-Demand Economy Can Prosper   As you can see, there are many benefits to embracing an on-demand workforce, particularly for traditional insurance carriers. This is not only because of a looming worker shortage but because hiring on-demand workers will reduce costs, increase information flow and will force the adoption of new technological trends.

The model of employer-sponsored healthcare has historically been very paternalistic. Companies would differentiate themselves and take care of their workforce with health plan offerings (and dental, if you were lucky!), employees would enroll in and use the plans they were offered, and it was very difficult for people to get the care they needed without an employer plan. Things have changed in the past 50 years, however. Insurance is no longer the differentiator it used to be. People have options in terms of where they get their coverage and the plan options they choose. Healthcare costs have risen exponentially, meaning cost considerations are more important than ever, both for employers and the employees they cover. Cost sharing is becoming more common through so-called consumer-driven health plans or high-deductible plans. Because employers can no longer afford to cover everything for their employees, they shift costs to them and expect people to be smart about their healthcare spending. But what happens when employees have to pay elevated premiums just to get the minimum of what they expect from their plans? Employees avoid care altogether. Why? Because the tools to be smart, thrifty healthcare consumers just don’t exist. Why Patients Are Bad Consumers Consumers of just about everything else compare prices and quality to determine the best solution. Healthcare consumers can’t do either of these things. Prices vary based on region, provider, potential complications and a variety of other factors, meaning that simply discovering the price of a particular treatment is difficult. Data on care quality is even harder to quantify, and the consumers who do seek comparative outcomes find themselves among groups of doctors and providers still trying to get the same information. They don’t know what things cost or what they do, but we expect them to make educated decisions anyway. Buying healthcare isn’t like buying anything else. Someone looking at healthcare options is likely ill, distracted and even scared. Not only is his health in jeopardy, but thanks to the prominence of high-deductible plans, healthcare can cripple his financial life, as well. See also: Consumer-Friendly Healthcare Model   Most healthcare consumers don’t even need all the options in front of them. The popular “80-20” rule of healthcare, an approximation that 20 percent of patients incur 80 percent of costs, exists because rarer and more complex ailments take more resources to cure. These consumers often don’t have the luxury of shopping around, so providers don’t have to cut them any breaks when the bills come due. If healthcare consumers don’t know what they’re buying or how much it costs (and don’t feel like they have any say in the matter), are they actually consumers at all? Subscriptions Are Popular for a Reason Subscription services are picking up steam across the globe. People are outsourcing things like transportation to Uber, music to Spotify, shopping to Blue Apron — the list goes on, but healthcare has not yet taken advantage of the subscription model. We need the same subscription-based outsourcing of responsibility in the healthcare space to push more of the complexity of the consumer process under the surface and provide patients with easily comparable options. Right now, people have to choose how they die (cancer insurance, accidental death and dismemberment insurance) and which parts of their bodies are covered (vision, dental, health). Not only does going broke seem to be a requirement for good treatment, but healthcare providers also aren’t doing enough to show patients what they’re paying for and what their options are. Initiating the Change The healthcare structure needs to move from consumer-driven to consumer-centric. Navigating healthcare today is like producing a movie. Patients have to find the actors, directors and sets and then figure out the financing for everything separately without knowing what anything costs until the night of the premiere. Current healthcare transparency tools really only add another layer of confusion to the process because these tools communicate ineffectively. Unfortunately, the “Uber of healthcare” doesn’t exist and likely won’t for the foreseeable future. Too many parties have too much at stake, and major companies like Apple and Tesla won’t enter this space because the barriers are too daunting. So, with the stakes so high and the options limited, what is the healthcare industry to do? In short, be more helpful. We need to help people become healthier and protect their lives and their livelihoods, taking on the burden of information that has so far been placed at the feet of the unprepared consumer. Patients don’t care whether payment behind the scenes is coming from dental insurance or standard health insurance — they just want the bill paid and the service performed. Uber and Netflix have created a generation of people accustomed to having half the decision made before the information ever reaches them, and that’s what healthcare must become for the sake of its consumers. See also: Healthcare: Time for Independence   The industry must take these steps to simplify the healthcare consumer experience:

1. Drive relevance. People won’t watch videos about how healthcare works because they don’t trust the processes behind the industry as a whole. They’re more likely to watch videos — or download PDFs, listen to podcasts and otherwise consume content — about the benefits they’re receiving. That’s what affects them. We also need to put those benefits in context, comparing them with other plans both in the U.S. and abroad, and make that information engaging and digestible.
2. Package for impact. People want to make their own benefits decisions, but the process is complicated and confusing. Netflix offers choice without overwhelming its users, by incorporating data to automate the early part of the search (the hardest part) and allow consumers to select from a range of prescreened options. As an industry, we must simplify the user experience by leveraging intuitive technology to create holistic benefits packages that are easy to understand.
3. Prioritize everyday value. Right now, many healthcare options only step in when patients get hurt or seriously ill. We need to incorporate technology to make maintenance easier. Telemedicine and concierge services can eliminate many of the unnecessary barriers between consumers and care without breaking the bank.
4. Create intuitive interfaces. People expect real-time feedback, iterative updates and responsive mobile experiences, yet the industry today largely lacks these things. Providers and insurers should shed the paper-based status quo and bring the simplicity of the 21st century into healthcare with customizable apps.
5. Offer easy payments. Part of the appeal of subscriptions like Uber and Netflix is not having to pull out the credit card with every use. Healthcare needs to combine payroll deductions, copays, deductibles and co-insurance in a simple, single-payment system so people know when and where their money goes.
6. Open the data. The data to help families become more educated and live healthier lives is out there — but it’s siloed. Data exchanges can incorporate products that address multiple facets of health and wellness, streamlining existing data to create not only savvier healthcare consumers, but also healthier, wealthier families.

It’s time for the healthcare industry to make life easier on the patients it serves. By taking on more of the information burden and improving communications, healthcare insurers and providers can give patients clearer options and easier access to the care they need.

A podcast I enjoy listening to is “Revisionist History” by Malcolm Gladwell, the author of five New York Times bestsellers, including “The Tipping Point” and “Outliers” (http://revisionisthistory.com/). Episode 6 discussed educational philanthropy and the $100 million gift by American Hank Rowan in the early 1990s to an almost bankrupt school in South Jersey, which at the time had an endowment of only $787,000. Gladwell discusses why no one followed Rowan's lead. The vast majority of the 87 gifts of $100 million-plus since then went to elite schools like Harvard and Yale, which, arguably, do not need it. What has this got to do with InsurTech? Please indulge me. Gladwell gives some insights from the book “The Numbers Game” by Chris Anderson and David Sally. The book argues that football is a weak link game—success depends not on how good your best player is but how good your worst player is. This is because, in an 11-player game, the result often depends on mistakes. It is, therefore, better to use your resources to upgrade your worst players rather than spend everything on a superstar player. Superstars like Lionel Messi finish off the efforts of teammates, but people forget about the 10 passes before the great through ball that Messi tucks away—still, those mundane passes are absolutely necessary. Basketball is the exact opposite of football—it is a strong link game. What matters in basketball is how good your best player is. To deal with Michael Jordan, you might need three players, leaving yourself wide open to movement by his teammates. See also: Matching Game for InsurTech, Insurers   The strong link/weak link framework is very useful in thinking about certain types of problems. Efficiency of air travel is dependent on how good the poorest airports, not the best ones, are, as delays in the former have a knock-on effect and can disrupt even the most efficient. Air travel is a weak-link problem. There are parallels in this framework to the accelerating amount of investment into InsurTech. Most business models I see are looking at addressing strong-link problems—i.e. taking existing products and making incremental improvements, most likely through taking out cost across what is currently a heavily intermediated insurance value chain. In contrast, business models that look at weak-link problems are focused on where that incremental dollar of investment could raise the bar, improve the average and make a real difference to society. These companies are seeking to address the unacceptable protection gap that exists today, using technology to make yesterday's uninsurable risk insurable and providing solutions to vulnerable communities to help them become more resilient to catastrophes. More football, please!

Based on when we’re born, we’re automatically a member of a generation, a group that’s generally been exposed to the same influences, events, and pressures. For those reasons, those groups, or generations, often exhibit shared characteristics. Luckily, each generation has something different and valuable to offer the workplace.

Take the youngest people in your office: They’re called millennials. They’ve never known a world without computers or smart devices, making them extremely technologically savvy. They also tend to be more socially responsible and in search of work-life balance.

At the other end of the age spectrum are silents. This group, the last of whom was born in 1945, are marked by their loyalty and work ethic, among other traits.

How will the various groups affect your company, and how can you mix them with success? Use this graphic to find out. This image was originally created by AkkenCloud and can be found here.

On May 18, 2016, the Department of Health and Human Services ("HHS") issued a final rule implementing Section 1557 of the Patient Protection and Affordable Care Act (ACA), which prohibits discrimination on the grounds of race, color, national origin, sex, age or disability in certain health programs and activities. Effective July 18, 2016, the final rule, "Nondiscrimination in Health Programs and Activities," required entities covered by the rule to comply with certain accessibility requirements applicable to their use of technology in the provision of services. See also: AI: The Next Stage in Healthcare   The rule applies to: (i) to every health program or activity, any part of which receives federal financial assistance provided or made available by HHS; (ii) health insurance plans and marketplaces; and (iii) HHS itself. The rule defines "HHS financial assistance" broadly, to include almost all types of financial benefit transfers, among them grants, loans, credits, subsidies or transfers of real or personal property (but excludes Medicare Part B payments). Key points of the rule include the following: First, the rule requires entities covered by it to make all programs and activities provided through electronic and information technology (e.g., a website) accessible for individuals with disabilities, unless doing so would impose undue financial or administrative burden. In addition, such entities must provide appropriate auxiliary aids and services when necessary to ensure an equal opportunity for persons with disabilities to participate in and benefit from the entity's health programs or activities. Auxiliary aids and services include qualified sign language interpreters, captioning, large print materials, screen reader software, text telephones and video remote interpreting services. In short, entities covered by the rule must take appropriate steps to ensure that communications with individual with disabilities are as effective as communications with others, in accordance with Title II of the Americans with Disabilities Act of 1990 and related regulations. Second, entities covered by the rule must take reasonable steps to provide meaningful access to individuals with limited English proficiency eligible to be served or likely to be encountered in their health programs and activities. This includes providing language assistance services, such as oral language assistance or written translation, free of charge and in a timely manner. Third, entities covered by the rule must comply with certain procedural requirements. Specifically, the rule requires applicable entities with 15 or more employees to have a grievance procedure, to identify at least one individual accountable for coordinating the regulated entity's compliance and to have a written process in place for handling grievances. In addition, entities covered by the rule that operate websites must post on the website notices of nondiscrimination and taglines that alert individuals with limited English proficiency to the availability of language assistance services. Such taglines must be posted in at least the top 15 non-English languages spoken in the state in which the entity is located or does business. See also: Digital Insurance, Anyone?   For healthcare providers operating in the digital health industry as well as for software and other technology vendors working with health care providers, the rule may create a number of challenges. Website accessibility has likewise been the focus of increasing litigation, and a number of high-profile settlements have emphasized the potential risks entities may face by failing to address technology-based accessibility issues. Providers would be well advised to review their websites and other customer-facing technology with counsel to determine the applicability of the rule to their activities, as well as any broader accessibility considerations and exposure. This article is from Jones Day Digital Health Law Update.  For more like this see: http://www.jonesday.com/digital-health-law-update-vol-ii-issue-4-08-08-2016/.

Drug manufacturers can’t catch a break, but are they the real culprit? Sure, we could wave our finger at Heather Bresch, CEO of Mylan, but didn’t we just do this to Martin Shkreli from Turing Pharmaceuticals and Michael Pearson from Valeant? The key question isn’t, who’s the offender du jour? Instead, it’s why do these pricing "scandals" keep happening, and is our best offensive strategy public shaming? Complaining about Mylan is pointless because, as a publicly traded company, it is doing exactly what we would expect it to do to meet the profit and growth expectations of investors. Why is it Mylan's responsibility to compete against itself? If this were the financial services industry, Bresch would be hailed as a genius. The real issue here is market failure because of the lack of effective competition. Until we solve this underlying market dysfunction, we’ll just experience the same event again and again, much like Bill Murray in Groundhog Day, just with different names and companies. Maybe the best way to explain the real problem is, “It’s the system, stupid.” So, what’s the hubbub about? The EpiPen is a decades-old technology first developed for the U.S. military and paid for by the American people. An EpiPen is a branded auto-injector that delivers a metered dose of epinephrine, a cheap and generic lifesaving drug that has been in use for more than a century. A single dose vial can be purchased for less than $2. Assume another couple of dollars for the auto-injector, add some enormous margins and, voilà, the selling price is $635. This is profitable capitalism — effectively a monopoly. See also: A Radical Shift in Pricing Cancer Drugs?   A monopoly for an inexpensive generic drug encased in plastic? Really? A fair and competitive market requires three things: 1) real supply options, 2) the freedom to choose any of these options and 3) regulations that prevent monopolies and promote the public good. Let’s analyze how the EpiPen fares on each. First, supply options. Are there alternatives to Mylan’s version of an epinephrine auto-injector? Yes. Two pharmaceutical companies, Amedra and Lineage, manufacture less expensive, directly competitive products. Next, how easy is it for us to choose these EpiPen alternatives? This is where the friction starts. Unfortunately, most physicians aren’t aware of the available options because most pharmacy benefit managers (PBM) and health plan formularies exclude them, making choice virtually impossible. To understand why, let’s consider who really makes drug-purchasing decisions. A drug purchase starts with a prescription written by a physician. So are physicians responsible for the EpiPen monopoly? Partially. Rather than prescribing EpiPens, physicians should prescribe epinephrine auto-injectors, of which there are multiple options in the market. What’s the consumer’s and taxpayer’s next line of defense? Wasn’t this why an intermediary, such as a plan or a PBM, was hired in the first place? Yes. Then, why does our advocate, the intermediary, steer us in the direction of the highest-cost option? Unfortunately, the financial incentives don’t work the way we think they do. Intermediaries don’t make decisions based on what is best for the actual payer. Rather, they participate with manufacturers in complex rebate schemes (really kickbacks, even if they don’t meet the legal definition), allowing them to collect steep profits on brand drugs. Bresch states that Mylan pays rebates in excess of $300 to intermediaries who aren’t passing them back to the payer. This isn’t altruism; instead, all drug manufacturers know the intermediaries keep large portions of their rebates. This profit incentive is the mechanism that kicks competing drugs out of PBM and plan formularies, locks out competitors, drives market share and creates monopoly (or near-monopoly) conditions. Let’s review how drug purchases are made in today’s dysfunctional system:

• Consumer: Follows the physician's choice as long as someone else is paying for it.
• Physician: Prescribes what she is familiar with. She’s not paying for it, so what does she care?
• Manufacturer: Designs incentives to maximize market share and profitability—and gets a monopoly if all works as planned.
• Intermediary: Steers consumers to drugs that maximize their profit.
• Payer: Stuck without data about what works, out-of-control drug spending and no real options.

As John Quelch from Harvard Business School & T.H. Chan School of Public Health, puts it, “Monopolistic pricing is a political issue, especially in healthcare. If the industry cannot self-regulate, increasingly empowered consumers will have their elected officials do the job for them.” I believe breaking significant healthcare monopolies is not only legal, it’s a regulatory obligation. While policymakers have responded, their strategy unfortunately seems to rely heavily on public shaming. A more useful role for them would be to break existing significant monopolies and create legislation to prevent the formation of new ones. The healthcare industry isn’t going to fix itself. Long-lasting, effective change will only occur when external economic and regulatory pressure mandates it. Are we dreaming an impossible dream? Not at all. See also: New, Troubling Healthcare Model   After we get past the completely understandable anger of millions of Americans, healthcare is no different than many other industries once driven by dysfunctional systems that resulted in similar monopolistic behavior. In fact, our path forward could be easier because of successful precedents in our recent past. Not too long ago, the travel and financial services industries were also plagued by a dearth of information available to the consumer, a lack of choice to real buying options and lax regulatory oversight. Not only was the fix possible; it happened a lot faster than anyone expected! Together, we can do the same for healthcare. See also: Keep the Humanity in Healthcare   Imagine a world where: we have a functional market because we reward companies that have innovative solutions; the people who actually pay for these products and services have true control; and the ugly veil on pricing and business model opacity is finally lifted. We need to ensure the dollars we spend directly (and through taxes) are used to solve these problems rather exacerbate them. As Quelch points out, we are either going to have to solve this problem or the government will step in. I believe it’s better we fight to fix it instead of relying on the government to make our healthcare decisions for us. The government needs to ensure a level playing field exists for all, and we need to innovate and offer better solutions for less. As much fun as it is to shame Mylan, a much better way to punish the company would be to buy the lower-cost alternatives from Lineage and Amedra. That is how a real market system works.

There are times when a blockchain is the right solution for a problem, and there are times when it is not. It is important to understand the differences because it is tempting to hypothesize about silver bullets. We also need to understand where risk can be transferred to a machine, when a simpler cryptographic method may be applied or when human authority must be retained. The following discussion was adapted from Avoiding a Pointless Blockchain Project by Gideon Greenspan and should be applied to the insurance industry adoption of blockchain. Current database technologies have decades of development and have been thoroughly tested. By contrast, blockchain technology is in its infancy. It is very important to be absolutely clear on when using blockchain is an advantage. If the project does not fulfill the majority of the following conditions, it is likely that another technology should be considered:

1. Shared databases
2. Multiple writers
3. Absence of trust
4. Disintermediation
5. Transaction interaction
6. Rules
7. Validators
8. Guarantor of assets

In the absence of any of the first five, one should consider: (a) regular file storage, (b) a centralized database, (c) master–slave database replication or (d) multiple databases to which users can subscribe. 1. The database Blockchains are a technology for shared databases, i.e., a structured repository of information such as a relational database, containing spreadsheet-like tables or file system. Every transaction on a blockchain represents a set of changes to the database. 2. Multiple writers Blockchains are a technology for shared databases with multiple writers. Blockchains are efficient where there will be multiple people modifying the database at the same time. The scalability may be enormous where people, mobile devices or even sensors (Internet of Things) may write to a blockchain. It is important to identify the writers when specifying the application. See also: How Blockchain Will Reorganize Society   3. Absence of trust Blockchains are a technology for databases with multiple non-trusting writers. This means that one user is not willing to let another modify database entries that it “owns.” Similarly, one user will not accept as gospel the “truth” as reported by another user, because each has different economic or political incentives. 4. Disintermediation Blockchains are a technology for databases with multiple non-trusting writers to be modified directly. There is already an effective solution to the problem of non-trusting parties – it is called the trusted third party intermediary – someone whom all the writers trust. A blockchain application requires no central gatekeeper or broker to verify transactions and authenticate their source. (However, the placement of specialized oracles, such as an engineering inspection to an insurance contract, is a special case where the placement of adjudicators is also decentralized) 5. Transaction interaction Blockchains truly shine where transactions created by different writers depend on one other. Let’s say Alice sends some funds to Bob, and Bob sends some on to Charlie. In this case, Bob’s transaction depends on Alice’s, and there’s no way to verify Bob’s transaction without checking Alice’s first. 6. Rules Blockchains can support a set of embedded rules restricting transactions performed. Every transaction can be checked against these rules, and those that fail are rejected. For example, a rule may state that the total quantity of each asset in the ledger must be the same before and after every transaction. This rule prevents money from being printed out of thin air. 7. Validators A blockchain’s job is to be the authoritative final transaction log, on whose contents all nodes provably agree. There are several reasons why this is important. 1. It allows a new user to start from scratch with the most updated version. 2. It does not allow two versions of the database to be in conflict. 3. Blockchains provide that a precise chronology of events can be proved by comparing two blocks (versions) in a chain of blocks. Users need to have a clear idea of who your validators are and why you trust them. See also: Can Blockchains Be Insured?   8. Guarantor of Assets What is the nature of the assets being moved around? The question is rather: Who stands behind the assets represented on the blockchain? If the database says that I own 10 units of something, who will allow me to claim those 10 units in the real world? Who do I sue if I can’t convert what’s written in the blockchain into traditional physical assets?

The progress of mankind has relied heavily on technology advancement in two key areas: transportation and communications. Communications technologies, for moving information from one place to another and presenting that information to people in new and different ways, have been instrumental to the progress of civilization. Transportation technologies, for moving people and things from one place to another in faster, safer, and more comfortable ways, have been advancing since the invention of the wheel. This blog will reflect on the latter, looking into the next decade and exploring some big implications for the insurance industry.

Driverless vehicles have been grabbing the headlines now for a few years. That’s understandable since most of us can relate to driving a car and are forming opinions on what we think about the move to autonomous vehicles. However, the effort by the major tech companies and auto manufacturers to develop and test these capabilities in cars is only one part of a much larger story – one that will greatly affect every person, business, and industry. And just as significant is the progress being made with many other types of vehicles that operate on land, sea, or in the air. Add in the evolution toward a smart transportation infrastructure, and the ingredients for massive transformation are ready and waiting. Much of what is happening in this realm seems like science fiction, but is likely to be common in ten years. Consider how much can happen in that time frame. Just ten years ago (in 2006), the iPhone had not even been introduced. There were no mobile apps. Now, we can’t imagine what life would be like without our mobile devices.

See also: Connected Vehicles Can Improve Claims  

Some of the other developments that are worth following include live trials of autonomous buses and taxis; the platooning of autonomous trucks; autonomous cargo ships, submarines, and drones; and autonomous commercial vehicles used in mining and agriculture. And don’t forget flying cars. This technology is actually gaining attention and funding. Add in the Hyperloop concept (the testing of which is now underway), supersonic air travel, and other means of high-tech transportation, and it is not difficult to imagine the kind of world we see in Star Trek, Star Wars, or other popular science fiction.

The advancement of autonomous vehicles of all sorts will be accompanied by progress in vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) technologies that allow moving vehicles to communicate with each other and their surroundings to ensure the smooth and safe flow of traffic, wherever it may be. So what does this all mean for insurance? Well, it does not take a rocket scientist to understand that virtually every type of property/casualty insurance will be affected in fundamental ways. Some of these scenarios have already been touted in the press and considered by industry strategists, but the implications may be even more far reaching than most realize. Consider implications in just three areas:

• Workforce Mobility: Information and communications technologies have already created an accelerating trend away from the central office model. New transportation technologies will result in a reduced need for workers to be clustered in major centers. Rapid transportation options will allow those farther away to travel where they need to be, and the tech for working remotely will continue to foster the work-anywhere trend.
• Manufacturing and Distribution: Opposing factors will likely disrupt the manufacturing and distribution models of the last century. The ability to transport goods much more rapidly and safely at low cost via autonomous transportation networks may lead to giant, centralized factories. On the other hand, 3D printing and the desire for custom items without waiting may favor local manufacturing with a different kind of short distance transport dominating.
• Agriculture: Automated machinery is already common in agricultural production today. The move to more fully-autonomous tractors, combines, and other vehicles will further change the industry. When sensors, biotechnology, vertical farming techniques, and other tech are considered, the very nature of the farm is likely to be substantially different ten years from now.

The list goes on, and it’s pretty heady stuff. The implications for population distribution, energy, travel, education, and virtually every aspect of the economy are huge. In all of these areas, the patterns change, the companies change, individual’s behaviors change, and the risks change. Existing risks may be dramatically reduced, resulting in large decreases in premiums. On the other hand, new risks are emerging, and the opportunities to serve customers in new ways are there for insurers bold enough and agile enough to rethink their business for this new era.

See also: Are You Ready for the Next Disaster?  

For more on the implications of emerging tech for insurance, see SMA’s research report, The Top 10 Ways Emerging Tech Will Transform Insurance.

Everyone is talking about the dangers of “opioid addiction.” It’s been a topic of conversation among pain management specialists, chiropractors and other healthcare providers for years, but constant news coverage of “opioids” has made it water-cooler talk. Thanks to the media, we’re all experts on the issue. But here’s the thing: the media – and the public – are missing the point entirely. Even the expression “opioid addiction” is completely off the mark. Because we’re not talking about “opioids” – we’re talking about addiction to heroin derivatives. “Opioid” is a much safer word than heroin – not nearly as hair-raising or dangerous. But using the word “opioid” is like putting icing on a mud pie – it’s a cover-up at best. And when you make the connection that opioids are actually heroin derivatives, you understand why the addiction has become an epidemic in this country. The problem, though, is much more sinister than we realize. For one, patients now expect their doctors to prescribe morphine or oxycodone for pain management. Second, there’s money to be made in “opioid addiction.” See also: Opioids Are the Opiates of the Masses   As reported in Risk & Insurance, a new study finds that a majority of patients still believe opioids are the most effective remedy for pain. In fact, a full two-thirds of physicians surveyed said their patients expect them to prescribe drugs. And in spite of the highly addictive nature of these drugs, doctors are still influenced by their patients’ expectations. It gets worse. Despite evidence that oxycodone and morphine are not the most effective medications for pain relief, almost all of the physicians who were surveyed - 98 percent of them – prescribe some form of opioids for pain control. What’s more, the National Safety Council reports that 99 percent of the providers prescribe opioids for longer than the three-day course of treatment the Centers for Disease Control recommends. Here’s the icing on this mud pie: nearly 90 percent of physicians say they find it difficult to refer patients to treatment for drug abuse or addiction, even when it’s clear their patients need help. It’s a vicious cycle with no easy solution. Like almost everything in healthcare, we’re overlooking the most important part of the story. The same doctor who prescribes opioids that lead to addiction can make his best money on the mandatory drug/toxicology testing he performs every month. Many good doctors recognize this as a conflict of interest – they also see that their patients are requiring higher and higher doses to feed their additions – and they intervene in the best interests of their patients. Unfortunately, there are plenty of other physicians who aren’t concerned about scruples. They are perfectly willing to pick up where others leave off. It has become a lucrative, albeit perverse, business model today. I wish that were the end of it, but we’ve only scratched the surface. The story gets much worse from here. When patients no longer can afford opioids and drug testing (which can cost them $4,000-$10,000 each year), many have resorted to selling a couple of pills on the street in order to cover their costs. In essence, decent, respectable people become law-breaking drug dealers. Some people don’t want to sell their prescription drugs, but still must feed their addiction. Broke and desperate, they buy a cheap, street version of their opioid. This is called heroin. It’s a trap, and it’s snaring people who never realized they were abusing heroin derivatives. They believed they were treating their pain with safe, physician-recommended oxycodone or morphine. They believe it was their best option for managing their symptoms. Heroin derivatives are ruining the lives of good, hardworking people across the country. In recent months, I saw the horror firsthand when heroin overdoses stole the lives of two young men in my community – men with their whole lives in front of them. They weren’t your stereotypical druggies – they were addicted to pain meds. See also: How to Help Reverse the Opioid Epidemic   I believe addiction to heroin derivatives is far worse than anyone realizes. Someone must throw a wrench in a problem that’s wreaking havoc on families and entire communities. Here’s how Redirect Health is addressing the issue: 1. Strike “opioids” from the discourse: Never call these highly addictive prescriptions “opioids” or “pain killers.” Instead, call them “heroin derivatives,” because if it walks like a duck and it talks like a duck… Far fewer people will want to start taking these drugs if they understand they’re a form of heroin. Simply changing the semantics will also give providers pause; they won’t be so quick to prescribe heroin derivatives. 2. Provide alternative forms of pain relief: We make it easy and affordable ($0 copays) for people to access other, safer and more effective pain management services. Our chiropractors and primary care physicians work together to help members with practical and customized virtual rehabilitation programs that don’t cost a penny out-of-pocket, don’t require them to miss work, and will provide a long-term, tenable solution to managing their pain. It’s common sense, but not commonly done.