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Why Facts Don’t Change Our Minds
The economist J.K. Galbraith once wrote, “Faced with a choice between changing one’s mind and proving there is no need to do so, almost everyone gets busy with the proof.”
Leo Tolstoy was even bolder: “The most difficult subjects can be explained to the most slow-witted man if he has not formed any idea of them already; but the simplest thing cannot be made clear to the most intelligent man if he is firmly persuaded that he knows already, without a shadow of doubt, what is laid before him.”
What’s going on here? Why don’t facts change our minds? And why would someone continue to believe a false or inaccurate idea anyway? How do such behaviors serve us?
The Logic of False Beliefs
Humans need a reasonably accurate view of the world in order to survive. If your model of reality is wildly different from the actual world, then you struggle to take effective actions each day.
However, truth and accuracy are not the only things that matter to the human mind. Humans also seem to have a deep desire to belong.
In Atomic Habits, I wrote, “Humans are herd animals. We want to fit in, to bond with others, and to earn the respect and approval of our peers. Such inclinations are essential to our survival. For most of our evolutionary history, our ancestors lived in tribes. Becoming separated from the tribe—or worse, being cast out—was a death sentence.”
Understanding the truth of a situation is important, but so is remaining part of a tribe. While these two desires often work well together, they occasionally come into conflict.
In many circumstances, social connection is actually more helpful to your daily life than understanding the truth of a particular fact or idea. The Harvard psychologist Steven Pinker put it this way, “People are embraced or condemned according to their beliefs, so one function of the mind may be to hold beliefs that bring the belief-holder the greatest number of allies, protectors, or disciples, rather than beliefs that are most likely to be true.”
We don’t always believe things because they are correct. Sometimes we believe things because they make us look good to the people we care about.
I thought Kevin Simler put it well when he wrote, “If a brain anticipates that it will be rewarded for adopting a particular belief, it’s perfectly happy to do so, and doesn’t much care where the reward comes from — whether it’s pragmatic (better outcomes resulting from better decisions), social (better treatment from one’s peers), or some mix of the two.”
False beliefs can be useful in a social sense even if they are not useful in a factual sense. For lack of a better phrase, we might call this approach “factually false, but socially accurate.” When we have to choose between the two, people often select friends and family over facts.
This insight not only explains why we might hold our tongue at a dinner party or look the other way when our parents say something offensive, but also reveals a better way to change the minds of others.
Facts Don’t Change Our Minds. Friendship Does.
Convincing someone to change their mind is really the process of convincing them to change their tribe. If they abandon their beliefs, they run the risk of losing social ties. You can’t expect someone to change their mind if you take away their community too. You have to give them somewhere to go. Nobody wants their worldview torn apart if loneliness is the outcome.
The way to change people’s minds is to become friends with them, to integrate them into your tribe, to bring them into your circle. Now, they can change their beliefs without the risk of being abandoned socially.
The British philosopher Alain de Botton suggests that we simply share meals with those who disagree with us:
“Sitting down at a table with a group of strangers has the incomparable and odd benefit of making it a little more difficult to hate them with impunity. Prejudice and ethnic strife feed off abstraction. However, the proximity required by a meal – something about handing dishes around, unfurling napkins at the same moment, even asking a stranger to pass the salt – disrupts our ability to cling to the belief that the outsiders who wear unusual clothes and speak in distinctive accents deserve to be sent home or assaulted. For all the large-scale political solutions which have been proposed to salve ethnic conflict, there are few more effective ways to promote tolerance between suspicious neighbours than to force them to eat supper together.”
Perhaps it is not difference, but distance that breeds tribalism and hostility. As proximity increases, so does understanding. I am reminded of Abraham Lincoln’s quote, “I don’t like that man. I must get to know him better.”
Facts don’t change our minds. Friendship does.
The Spectrum of Beliefs
Years ago, Ben Casnocha mentioned an idea to me that I haven’t been able to shake: The people who are most likely to change our minds are the ones we agree with on 98 percent of topics.
If someone you know, like, and trust believes a radical idea, you are more likely to give it merit, weight, or consideration. You already agree with them in most areas of life. Maybe you should change your mind on this one too. But if someone wildly different than you proposes the same radical idea, well, it’s easy to dismiss them as a crackpot.
One way to visualize this distinction is by mapping beliefs on a spectrum. If you divide this spectrum into 10 units and you find yourself at Position 7, then there is little sense in trying to convince someone at Position 1. The gap is too wide. When you’re at Position 7, your time is better spent connecting with people who are at Positions 6 and 8, gradually pulling them in your direction.
The most heated arguments often occur between people on opposite ends of the spectrum, but the most frequent learning occurs from people who are nearby. The closer you are to someone, the more likely it becomes that the one or two beliefs you don’t share will bleed over into your own mind and shape your thinking. The further away an idea is from your current position, the more likely you are to reject it outright.
When it comes to changing people’s minds, it is very difficult to jump from one side to another. You can’t jump down the spectrum. You have to slide down it.
Any idea that is sufficiently different from your current worldview will feel threatening. And the best place to ponder a threatening idea is in a non-threatening environment. As a result, books are often a better vehicle for transforming beliefs than conversations or debates.
In conversation, people have to carefully consider their status and appearance. They want to save face and avoid looking stupid. When confronted with an uncomfortable set of facts, the tendency is often to double down on their current position rather than publicly admit to being wrong.
Books resolve this tension. With a book, the conversation takes place inside someone’s head and without the risk of being judged by others. It’s easier to be open-minded when you aren’t feeling defensive.
Arguments are like a full frontal attack on a person’s identity. Reading a book is like slipping the seed of an idea into a person’s brain and letting it grow on their own terms. There’s enough wrestling going on in someone’s head when they are overcoming a pre-existing belief. They don’t need to wrestle with you too.
Why False Ideas Persist
There is another reason bad ideas continue to live on, which is that people continue to talk about them.
Silence is death for any idea. An idea that is never spoken or written down dies with the person who conceived it. Ideas can only be remembered when they are repeated. They can only be believed when they are repeated.
I have already pointed out that people repeat ideas to signal they are part of the same social group. But here’s a crucial point most people miss:
People also repeat bad ideas when they complain about them. Before you can criticize an idea, you have to reference that idea. You end up repeating the ideas you’re hoping people will forget—but, of course, people can’t forget them because you keep talking about them. The more you repeat a bad idea, the more likely people are to believe it.
Let’s call this phenomenon Clear’s Law of Recurrence: The number of people who believe an idea is directly proportional to the number of times it has been repeated during the last year—even if the idea is false.
Each time you attack a bad idea, you are feeding the very monster you are trying to destroy. As one Twitter employee wrote, “Every time you retweet or quote tweet someone you’re angry with, it helps them. It disseminates their BS. Hell for the ideas you deplore is silence. Have the discipline to give it to them.”
Your time is better spent championing good ideas than tearing down bad ones. Don’t waste time explaining why bad ideas are bad. You are simply fanning the flame of ignorance and stupidity.
The best thing that can happen to a bad idea is that it is forgotten. The best thing that can happen to a good idea is that it is shared. It makes me think of Tyler Cowen’s quote, “Spend as little time as possible talking about how other people are wrong.”
Feed the good ideas and let bad ideas die of starvation.
The Intellectual Soldier
I know what you might be thinking. “James, are you serious right now? I’m just supposed to let these idiots get away with this?”
Let me be clear. I’m not saying it’s never useful to point out an error or criticize a bad idea. But you have to ask yourself, “What is the goal?”
Why do you want to criticize bad ideas in the first place? Presumably, you want to criticize bad ideas because you think the world would be better off if fewer people believed them. In other words, you think the world would improve if people changed their minds on a few important topics.
If the goal is to actually change minds, then I don’t believe criticizing the other side is the best approach.
Most people argue to win, not to learn. As Julia Galef so aptly puts it: people often act like soldiers rather than scouts. Soldiers are on the intellectual attack, looking to defeat the people who differ from them. Victory is the operative emotion. Scouts, meanwhile, are like intellectual explorers, slowly trying to map the terrain with others. Curiosity is the driving force.
If you want people to adopt your beliefs, you need to act more like a scout and less like a soldier. At the center of this approach is a question Tiago Forte poses beautifully, “Are you willing to not win in order to keep the conversation going?”
Be Kind First, Be Right Later
The brilliant Japanese writer Haruki Murakami once wrote, “Always remember that to argue, and win, is to break down the reality of the person you are arguing against. It is painful to lose your reality, so be kind, even if you are right.”
When we are in the moment, we can easily forget that the goal is to connect with the other side, collaborate with them, befriend them, and integrate them into our tribe. We are so caught up in winning that we forget about connecting. It’s easy to spend your energy labeling people rather than working with them.
The word “kind” originated from the word “kin.” When you are kind to someone it means you are treating them like family. This, I think, is a good method for actually changing someone’s mind. Develop a friendship. Share a meal. Gift a book.
Be kind first, be right later.
Sales Reps May Be Wearing Out Their Welcome In The Operating Room
In the operating room, surgical masks and matching scrubs can make it hard to tell who’s whom — at least for outsiders.
Patients getting wheeled in might not realize that salespeople working on commission are frequently present and sometimes even advise the clinical team during surgery.
Who are these salespeople, and why are they there?
The answer to the first question is pretty easy. These sales reps typically work for medical device companies, such as Stryker, Medtronic or DePuy Synthes. Many surgeries, especially orthopedic trauma and cardiac procedures, require insertion of artificial joints or other hardware manufactured by these companies.
But as to why they’re present in the operating room, the answer depends on whom you ask.
Critics of the practice contend that device reps attend surgeries to strengthen their relationships with particular surgeons and thereby persuade them to choose one brand of artificial hip joint or stent or pacemaker over a competitor’s.
The device reps contend they observe surgeries because they are experts on particular devices and their accompanying toolkits, which often include hundreds of wrenches, screws and other hardware to aid in installation.
Sometimes, the device reps have observed more surgeries with a particular device than any one surgeon. That depth of experience can be helpful, the reps say, especially with the newest device model or upgrade.
“I can’t keep my socks together through the dryer. You can imagine trying to get 100 pans or 300 pans of instruments all set up correctly,” says orthopedic surgeon Michael Christie of Nashville, who specializes in new hips.
Device reps have been attending surgeries for years, but that practice is coming under new scrutiny. As baby boomers age, there has been exponential growth in device-dependent procedures like total joint replacements. In addition, insurers are starting to crack down on health care costs, telling hospitals that they’ll only pay a fixed price, known as a “bundled payment,” for certain surgical procedures, such as hip or knee replacements.
That approach has forced hospitals to take a hard look at the price tags of the devices and the salespeople who are pushing the latest models. Hospitals are “starting to figure out what these reps make for a living. They feel like they’re making too much money, and I think that’s why they want them out,” says Brent Ford, a former sales rep who now works for Nashville-based HealthTrust, a firm that handles contracting and purchasing of supplies like hip implants for 1,600 U.S. hospitals.
Medical device reps are more often business majors than biology buffs, but they train for the job as if they might have to conduct surgery themselves. At an educational center in Colorado, future reps learn how to saw off a hip bone and implant an artificial hip.
Their corporate training frequently involves cadavers, which helps reps develop the steel stomach required for the unsettling sights and sounds of an orthopedic operating room — like a surgeon loudly hammering a spike into a bone.
“Before we’re allowed to sell our products to surgeons, we have to know the anatomy of the body, go through tests of why physicians use these types of products and how we can assist in surgery,” says Chris Stewart, a former rep for Stryker, one of the largest device manufacturers.
Stewart now works for Ortho Sales Partners, a company that helps device manufacturers navigate relationships with hospitals.
Keeping those relationships strong is crucial, because hospitals don’t have to allow reps into their operating rooms. But if reps are allowed, there are rules: Reps can’t touch the patient or anything that’s sterile.
Big companies like Stryker have developed detailed policies for their own reps about how to behave in the operating room. And some hospitals, like hospital chain HCA’s flagship medical center in Nashville, have instituted even stricter rules — selling is banned in the OR and reps are only allowed to provide support for surgical cases.
But Stewart maintains reps still can be useful. Some help surgical assistants find a particular tiny component among the trays of ancillary tools. Some reps even deliver the tool trays to the hospital themselves, prior to the surgery. They want the procedure to run as smoothly as possible so that a busy surgeon will become a steady customer.
“Obviously, there’s a patient on the table being operated on, so that’s where the sense of urgency is,” Stewart says. “You have to become an expert in understanding how to be efficient with helping everyone in the OR making sure your implants are being utilized correctly.”
Keeping up with technology
Stewart says it has become difficult for the hospital staff to keep pace with constant design changes for artificial joints or spinal rod systems.
But the speed of innovation concerns some researchers, including Adriane Fugh-Berman, a Georgetown University medical doctor who studies the relationships between industry and physicians.
“What we need are skilled helpers in the operating room who are not making money off of the choices of the surgeons,” she says.
Fugh-Berman has come to believe that reps should be banned from operating rooms. Her biggest concern is safety, including the occasional violations of sterile protocol. As part of her research, she anonymously interviewed reps who said they’re instructed to always push the latest, most expensive products, even when the old version is more proven.
“The newest device is not necessarily the best device,” she says. “In fact, it may be the worst device.”
Cost concerns
Yet safety issues are not what has worn out the welcome for some reps — it’s their potential influence on surgical costs. Their exact effect remains hard for hospitals to quantify, but hospital executives now have a new incentive to push back on the role of the rep because insurance reimbursement formulas have changed.
For example, in 2016 the government-run Medicare program began changing how it pays hospitals for a joint replacement — from a traditional billing-for-costs model to a fixed-dollar amount for each surgery. It’s a cost-control move, because joint replacement has become one of the most common reasons for inpatient hospitalization for Medicare patients.
Increasingly, hospitals are feeling the squeeze of these new payment caps.
“They’re looking at costs and saying, ‘I want to understand everything that drives cost in my OR,’ ” says Doug Jones, a former rep with DePuy who now works for HealthTrust to control surgical spending. “I think they’re becoming more aware that that rep is in there and saying, ‘Is there a cost associated with it?’ ”
HealthTrust hasn’t been telling administrators to kick out sales reps. But it has been suggesting hospitals reassess their role. The company, which is a subsidiary of for-profit hospital chain HCA, has studied particular devices, like pedicle screws, often used in spine procedures. They cost anywhere from $50 to $100 to manufacture, but a hospital might pay a thousand dollars apiece to keep them in stock. One basic spine procedure can involve several screws and rods, with the sales rep standing to make a 10 percent to 25 percent commission on the equipment used, according to HealthTrust’s market research.
And in many places, upselling occurs in the room, says HealthTrust’s Ford. He recalls seeing reps encouraging a surgeon preparing for a procedure to use a fancier device that wasn’t on the hospital’s discounted list.
Other HealthTrust clients are starting pilot projects on running operating rooms without company-sponsored reps and buying equipment directly from smaller firms, which often have devices that are nearly identical to the brand names.
But getting rid of the rep may have hidden costs, too.
Surgeon-rep relationships
Joint replacements have become so routine that an experienced surgical team can nearly operate in silence. When the surgeon says “neck” and reaches out his hand, an assistant places the piece in his hand without a moment’s delay.
The array of tools and components are often in the right place because a device rep made sure of it. Logistics is a big part of the job — delivering trays of instruments in the pre-dawn hours to be sterilized by the hospital, the “non-glorious side of being a rep,” Ford says.
The logistical role has essentially been filled by the manufacturers instead of hospitals in recent decades. And now surgeons may trust their reps more than anyone else in the room. They’re often the first call he or she makes when scheduling a case, to make sure the device will be ready to go.
“If that widget isn’t there the next day when I’m doing a case and I need the widget, we’re kind of at an impasse,” says Christie, the Nashville-based joint replacement surgeon.
Many experienced surgeons, like Christie, also have financial ties to manufacturers, collecting substantial royalties for helping design new implants. As of 2013, these payments are now disclosed publicly. Christie, for example, was paid $123,000 by DuPuy in 2017.
An industry trade group spokesman defends the close relationship as a way to improve their products and provide hands-on training to surgeons. “Those are two areas where it’s key to maintain a close, collaborative relationship, with the appropriate ethical limitations,” says Terry Chang, associate general counsel for AdvaMed.
Filling a personnel gap
The overall result is that many clinicians are happy to have reps in the room.
“You say ‘sales rep,’ ” says Marley Duff, an operating room manager at TriStar Centennial Medical Center. “I look at them more being somebody that’s expertly trained in their field to provide support for the implants that they happen to sell.”
Duff says reps can be especially helpful when a failing artificial joint needs to be removed and replaced.
Hospitals are reluctant to remove reps, for fear of irritating surgeons, who typically don’t work directly for a particular hospital and could move their cases to another institution. Those hospitals experimenting with going “rep-less” have done so quietly and have had to hire additional staff to pick up the slack.
One of the first in the country to try, Loma Linda University Health, boasted in 2015 of reducing costs for total knee and hip replacements by more than 50 percent by going rep-less.
But a hospital spokesperson now tells NPR that the medical center has abandoned the effort, though she refused to discuss why.
Leadership Quotes That Inspire Me
These quotes truly inspire me:
“The three common characteristics of best companies — they care, they have fun, they have high performance expectations.” — Brad Hams
“The one thing that’s common to all successful people: They make a habit of doing things that unsuccessful people don’t like to do.” — Michael Phelps
“It is amazing what you can accomplish if you do not care who gets the credit.” — Harry S. Truman
“The leader of the past was a person who knew how to tell. The leader of the future will be a person who knows how to ask.” — Peter Drucker
“Leadership: The art of getting someone else to do something you want done because he wants to do it.” — Dwight D. Eisenhower
“Good leadership isn’t about advancing yourself. It’s about advancing your team.” — John C. Maxwell
“People buy into the leader, then the vision.” — John C. Maxwell
“Great leaders have courage, tenacity and patience.” — Bill McBean
“People never learn anything by being told, they have to find out for themselves.” — Paulo Coelho
“We live in a time where brands are people and people are brands.” — Brian Solis
“In real life, the most practical advice for leaders is not to treat pawns like pawns, nor princes like princes, but all persons like persons.” — James MacGregor Burns
“The only source of knowledge is experience.” — Albert Einstein
“Nothing is a waste of time if you use the experience wisely.” — Auguste Rodin
“Nobody can go back and start a new beginning, but anyone can start today and make a new ending.” — Maria Robinson
“A good leader takes a little more than his share of the blame, a little less than his share of the credit.” — Arnold H. Glasgow
“I praise loudly, I blame softly.” — Catherine II of Russia
“Honest disagreement is often a good sign of progress.” — Mohandas Gandhi
“A long dispute means that both parties are wrong.” — Voltaire
“The least questioned assumptions are often the most questionable.” — Paul Broca
“One of the tests of leadership is the ability to recognize a problem before it becomes an emergency.” — Arnold Glasow
“Managers assert drive and control to get things done; leaders pause to discover new ways of being and achieving .”– Kevin Cashman
“It doesn’t matter where you’re coming from. All that matters is where you are going to.” — Stephen Covey
“Great works are performed not by strength, but by perseverance.” — Samuel Johnson
“Strength doesn’t come from what we can do. It comes from overcoming what we once thought we couldn’t.” — Rikki Roberts
“The art of progress is to preserve order amid change and to preserve change amid order.” — Alfred North Whitehead
“The most powerful predictable people builders are praise and encouragement.” — Brian Tracy
“Few things help an individual more than to place responsibility upon them and to let them know that and trust them.” — Booker T. Washington
“Ask because you want to know. Listen because you want to grow.” — Mark Scharenbroich
“If you want execution, hail only success. If you want creativity, hail risk, and remain neutral about success.” — Marcus Buckingham
“To get the best coaching outcomes, always have your 1-on-1’s on your employee’s turf not yours. In your office the truth hides.” — Marcus Buckingham
“The best way to predict the future is to invent it.” — Alan Kay
“Nothing great was ever achieved without enthusiasm.” — Ralph Waldo Emerson
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” — Winston Churchill
“The greatest accomplishment is not in never failing, but in rising again after you fall.” — Vince Lombardi
The New Math of Leadership
“You are now the leader.” It is a sentence that implies a do-something role. If it ended with word “driver” or “cook” or “host,” you would have a clear sense of the actions required. New leaders think being a leader means doing something important. So, they stretch and adjust their style and practice like a new pair of shoes that must be broken in.
What if we altered the frame and thought of leadership more like the rheostat on a light switch—turned up or down, on or off, depending on what was required? If the goal is reading, the light goes up; romantic, the light dims; and time to turn in for the evening, the light turns off. The presence of light becomes relevant only in the context of a need or goal.
When I landed my first supervisory role, my boss advised me to think about leadership like arithmetic—only adding as much leadership as needed to get the net desired.
Too little, and the goal risks not getting accomplished; too much, and the goal gets done but with consequences that can be unhelpful. The implication is that, if all is going as planned, no leadership at all is necessary.
Add Leadership Only if Needed
Barbaro was the 2006 Kentucky Derby winning horse. He came into the race undefeated. His margin of victory—6 1/2 lengths—was the largest in over sixty years. A heavy favorite to win the Triple Crown, with a “mustang-like joy of racing,” he shattered his right hind leg two weeks later at the Preakness after he false started and, ultimately, had to be put down.
But there was a backstory to this memorable event—Edgar Prado, Barbaro’s proud jockey. Unlike most jockeys who generously used a whip, especially on the home stretch, Prado never touched Barbaro with his whip and never asked him to do anything more than necessary. “If he’s running really hard, why should he be punished?” Prado once told a reporter.
I invited a fellow consultant to assist me in working with the executive team of a long-term client. She had heard me repeatedly rave about the CEO of this high-tech company. Her flight was delayed and the meeting underway when she arrived, preventing us from introducing her to the team. After listening to the group have a lengthy, spirited dialogue over a strategic challenge, she whispered, “Which one is the CEO?” Leadership is not a rank to be displayed and trumpeted; it is a spirit to be summoned as required.
Err on the Side of Subtraction
I serve on the board of a community organization. There are no paid members, only volunteers. Most are fairly well-to-do and retired. In fact, I am the only board member still working in a profession. When I joined, I heard stories of the previous leader who thought his job was to give instructions and critique performance.
At the time I was asked to join, morale was low, recruitment of volunteers was challenging, and the organization was at a standstill. I quickly learned that the new leader’s philosophy was to focus on clarifying the vision, running interference to eliminate obstacles that slowed work, and providing lots of affirmation. The accomplishments went up dramatically, right along with morale. His subtraction of control enabled others to take initiative; his addition of affirmation made board members feel valued instead of brow-beaten.
Multiply Contribution Through Leadership Math
Tree trimmers aren’t typically known for their service sensitivity, but tree surgeon Richard Butler is an exception. He long served as caretaker for the massive oak trees in my yard when I lived in Texas. Richard’s service approach was as impressive as his team’s Cirque du Soleil antics in tall trees. For example, realizing I was an author, Richard requested a signed copy of “your latest book” as a part of his payment.
I needed a dozen tree stumps ground out of my yard, and asked Richard for an estimate. Satisfied with the price, work began a few days later. But further examination of the terrain revealed three stumps that were previously overlooked. “If you could please give me another signed copy of your book. Beep Beep!,” Richard announced, “I’ll throw these stumps in at no extra charge.” My delight multiplied!
On another occasion, lightning struck a large elm tree. A call was placed to Richard to “come give an estimate.” Arriving home after work, we found the tree gone and the stump removed. On the back door was not an invoice; it was Richard’s business card. On the back of his card were four words written in the language of a multiplier leader: ‘No charge. Beep Beep!”
Leaders are not just adders and subtractors, they are multipliers! Armed with a generous “Richard Butler” spirit, they create relationship synergy and model a Samaritan mentality. “To lead people, walk beside them,” wrote philosopher Lao-tsu in 500 BC.
“As for the best leaders, the people do not notice their existence. The next best, the people honor and praise. The next, the people fear; and the next, the people hate… When the best leader’s work is done the people say, ‘We did it ourselves!'”
The Curious Case of Reinsurance
https://www.thinkrevivehealth.com/blog/curious-case-reinsurance
Although much of the Affordable Care Act has been contentious, one provision that has bipartisan support as well as proven efficacy is reinsurance. Simply put, reinsurance is insurance for health insurance companies. It essentially provides individual and small-group insurers “coverage” purchased from the federal government to protect against risk of high cost enrollees. Importantly, reinsurance is a market stabilization mechanism. It protects against risk, keeps premiums increases at bay, and encourages market competition in the individual insurance market.
Unfortunately, it’s also a temporary solution. In the ACA, the “innovation” waiver was only designed to be active for three years, 2014 through 2016. In March 2017, former Secretary Price issued a letter to states reiterating the law’s key requirements for “innovation” waivers and offered states assistance in the development and implementation of innovation programs. It’s still up in the air how the waiver will be interpreted, but for now states should take the waiver on its face and consider ways in which the waiver can make improvements to their healthcare markets.
It’s no secret that the individual market is not thriving. Although few states have signaled an interest in using reinsurance programs, recent exits from the individual insurance market like Aetna and Humana may encourage more states to consider waivers to stabilize these markets.
Below are a few states that decided to enact reinsurance programs:
Alaska was the first state to try on the program. With a small population and massive size, it’s no surprise the state has the highest premiums in the country. Adopting the reinsurance program kept premium hikes at bay, a 7% increase versus the expected 42%. In 2018, the federal government will fund $48M in reinsurance and the state will pay $11M.
Minnesota also approved a reinsurance program of $600M through shifting funds that would otherwise come from its MinnesotaCare program for low-income residents. The hope is the program will have an immediate effect on premium affordability for consumers in 2018, but it has been widely hailed as a semi-bipartisan solution.
Iowa is seeking to alter multiple ACA requirements, with the threat of having no insurers participate in the marketplace in 2018. Despite a large and dominant Blue Cross plan, Iowa is proposing several changes to the insurance marketplace. Their Iowa PSM plan would cost around $304M, $220M of tax credits and the remaining to pay for reinsurance.
Other states are considering the possibility but their buy-in will likely depend on how health reform policy changes shake out. And the latest news out of Washington, D.C. indicates a quick resolution or a clean solution isn’t likely.
So, what does all of this mean? A few things:
- The rising cost of health insurance premiums directly affects the ability of small businesses and self-employed workers to provide or obtain healthcare coverage.
- State-sponsored reinsurance programs that target health insurance markets for small groups and individuals make insurance more affordable and accessible.
- If reinsurance continues to expand to other states, new (or returning entrants) to the individual and small-group market can be expected to expand as well.
Whether you’re a health system, a health plan, or a health services organization, the opportunity for reinsurance to drive down premium costs and increase market competition directly impact your business. The revitalization of the individual market has direct impact on managed care, hospital operations, and access to care for patients. Keep an ear to the ground and watch this trend closely, especially as the open enrollment period approaches.
Cartoon – Everyone Unhappy with their Health System is here
Cartoon – Bedside Payment
Cartoon – Co-Pay for the Bagel
Cartoon – What Fits Your Busy Schedule
HENRY KOTULA 