Bacon's Rebellion

Democracy Thrives in Sunlight

Surfing the Data Tsunami

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by

James A. Bacon
in ,

You can either ride the wave...
You can either ride the wave…

by James A. Bacon

Data Crush is coming, and it gives us a once-in-a-lifetime opportunity to transform aging and decrepit institutions, designed for the mid-20th century. As futurist Chris Surdak argues in the previous post, the “digital trinity” — mobile computing, social media and advanced analytics — is sweeping all before it. Digital-driven innovation is outpacing the ability of our ossified structure of government, laws and regulation to keep up. Insofar as antiquated institutions are failing us, this is a good thing. But Surdak, an evangelist for the digital future, warns that every silver cloud has a dark lining.

Either you're riding the wave, or you're crushed by it.
…or be crushed by it.

Insurance companies have the capacity to collect, store and analyze unprecedented volumes of data. At present, they utilize their own data to advance limited aims such as negotiating rates with hospitals and configuring networks of low-cost providers. Soon they will supplement internal data with social media and other sources to gain insights into sociological and behaviorial  dimensions of healthcare, and then with masses of data from fitness trackers such as FitBit and Jawbone that record pulse, blood pressure, and blood chemistry metrics like glucose levels. While these technologies raise privacy concerns aplenty, consumers seem more than willing to barter away their rights in exchange for the benefits provided by these technologies. By the time politicians and lobbyists begin to grapple with these issues, Surdak argues, entire industries will be disintermediated and transformed.

Virginia can either ride the wave or let it wash over us. We can either anticipate the data crush and seek to guide it in socially positive ways, or we can accept whatever comes.

Right now Virginia’s political system is locked in a 20th-century, zero-sum debate over how to allocate the costs of health care — should Virginia expand Medicaid? Should we scrap the Certificate of Public Need regulatory process for hospitals? Almost no one is thinking about how to make the system work more efficiently to drive down costs and improve incomes in a way that would benefit everyone. (When I say “almost no one,” I have to acknowledge exceptions like Del. John O’Bannon, R-Henrico, a prime mover behind Virginia’s all-payer database, and former Virginia Secretary of Technology Aneesh Chopra, co-founder of Hunch Analytics, which applies Big Data to the educational and health care sectors.)

To my knowledge, no other state is taking the lead in thinking about the public policy implications of the Data Crush. No other state is trying to visualize the future, much less to grapple with the legal and ethical issues created by the tidal wave, much less how to ride the wave and re-shape first the insurance industry and then, leveraging the power of insurance, the health delivery system. Remember, despite the intrusion of the Affordable Care Act into the health insurance marketplace, private health insurance is still regulated by the states. Virginia still controls its destiny for private insurance.

Yes, the health care system is mired in the quicksand of subsidies, cross-subsidies and over-regulation that makes it hopelessly wasteful and unresponsive. But the Data Crush is inexorable. The potential exists to create powerful win-win-win social outcomes. Let us take advantage of this opportunity if we can.

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18 responses to “Surfing the Data Tsunami”

  1. LarrytheG Avatar
    LarrytheG

    data crush vs HIPPA…

    insurance companies for health care will be the very first to tell those who have high hopes for “disruption” that the law basically does not allow insurance companies to collect data and use it in determining premiums.

    either I don’t understand or Mr. Bacon and Surdak do not understand.

    health insurance is fundamentally different from other kinds of insurance.

  2. James A. Bacon Avatar
    James A. Bacon

    Of course insurers will use data to set premiums. What are they going to do, draw numbers out of a hat? Perhaps you mean they aren’t allowed to use data to set premiums to discriminate between certain categories of people (based on previous conditions, DNA, etc.) Perhaps, but I never suggested as much.

    What we need is to give insurance companies the ability to re-conceptualize how they pay for health care. Rather than pay fee-for-service or for diagnostic-related groups, they could begin paying for entire courses of treatment. Say someone has a heart condition. Instead of paying for an MRI, and then a series of doctors visits, and then a coronary bypass operation, and then rehab, and then home health, and then more doctor visits, an insurer could contract with providers to pay a flat fee for the entire course of treatment — with built-in incentives for positive outcomes.

    That would change the practice of medicine as we know it.

    1. LarrytheG Avatar
      LarrytheG

      then why are we talking about fitbits and personal habits?

      you don’t have privacy issues if you are collecting data on classes of people – not individuals.

      I note that the Ocare exchanges DO ask about cigarette use but I also know that HIPPA does not allow insurance companies set rates on employer-provided – per subscriber.

      that’s fundamentally different from auto insurance.

      1. James A. Bacon Avatar
        James A. Bacon

        Federal policy discriminates against smokers. How big a leap is it to discriminate against people who sit on their asses all day? or to discriminate against people who eat too much red meat?

        But that’s not what I was thinking of when I mentioned FitBits. The use of Big Data allows people to discover patterns and anomalies they could not before. Think of the FitBit-wearing public as part of a gigantic international clinical trial, and the useful information that could be extracted.

        1. LarrytheG Avatar
          LarrytheG

          I’m just telling you to read and understand what HIPPA says.

          it’s become abundantly clear that there has been a fundamental misunderstanding about how health insurance actually works in this country.

          all I’m asking is that you deal with the reality of the way it is.. not that you agree with it philosophically but now I’m wondering if your philosophy was based on not understanding HIPPA ….and it’s impacts on employer-provided health insurance

          insurance as currently done in this country does not allow insurers to treat subscribers like they would if they were buying auto insurance.

          that’s just a reality. And the way HIPPA rules employer-provided was continued with Ocare.

  3. LarrytheG Avatar
    LarrytheG

    re: ” What we need is to give insurance companies the ability to re-conceptualize how they pay for health care. Rather than pay fee-for-service or for diagnostic-related groups, they could begin paying for entire courses of treatment.”

    that’s exactly what Medicare is moving to right now – but it’s not based on individuals.. or has privacy issues.. or “incentivizes” behavior.

    https://www.medicare.gov/hospitalcompare/linking-quality-to-payment.html?AspxAutoDetectCookieSupport=1

    it actually puts requirements on the providers – not those insured and to point out that this was an option available to private insurance all along – and it was the govt that did it and used their own data collection to do it.

    1. James A. Bacon Avatar
      James A. Bacon

      What’s your point? If Medicare is doing it, why shouldn’t private insurers do it, too?

      1. LarrytheG Avatar
        LarrytheG

        no – my point is that govt gets hammered for being “ossified” when the reality is that govt has adopted big data long before private insurers have – for health care.

        Medicare has been the innovator…

  4. VaConsumer Avatar
    VaConsumer

    You say that consumers cheerfully trade our data for things. Not this consumer! In fact, I’ve ended up not using the FITBIT I bought because I was worried about what the data might be used for. I’ve done without the premium reduction if I’d given more health data to my employer. I am very worried about big data and consumer privacy.

    I worry that like many people now don’t know that credit reports are used to set auto insurance rates (and even renewals), we won’t know what of our data has been combined by whom. The grocery store, credit card, etc. data could be accessed because we don’t own it. Many say it’s too late, but I am hoping that a good thing that will come of the international trade agreements is the US taking on some of the EU’s privacy protections.

    Those who have our data will cry, but we need to take ownership of our own data and know who is using it and for what. There’s no telling what kinds of discrimination will occur if we don’t. As long as we don’t know what is collected and by whom and who they share it with, we’re sitting ducks. I’d like to see that change.

  5. LarrytheG Avatar
    LarrytheG

    well , I spent the evening looking at traffic counts for I-95 – and the data came from a company called Inrix.

    http://inrix.com/scorecard/methodology-en/

    if you have a cellphone and drive a car – you are providing data to Inrix.

    If you use a credit card – you are providing data to all sorts of 3rd party folks….

    if you receive health care – unless you refuse to sign the HIPPA form – you’re supplying data to folks.

    in fact.. if you’re visiting websites – you’re providing data to others.

    not being a smart-ass… just pointing out some basic realities.

    in fact…. in you live in a housing unit with an address – you provide data to all kinds of marketing folks… who will match your census data to your zip code and determine your demographic.. and target you with ads… and other materials…

    so I guess I’m saying your probably already provide a mother-lode of data even if you’re opposed to it… and take steps to not do it… you’d basically have to move to a cave and communicate with smoke signals… … to escape it… in sixties parlance – drop out!

    😉

    1. James A. Bacon Avatar
      James A. Bacon

      Yup. That’s a pretty accurate picture — only it understates the reality.

      1. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        Yup – now all we need is a Putin to pull our collective or individual plug.

        And the Putins are waiting in the wings, believe you me.

      2. Reed Fawell 3rd Avatar
        Reed Fawell 3rd

        PS –

        And those Putins will be both little and big. Whether they be Lilliputians or Giants, our Animal Farms and “1984s” will have arrived in spades. And all will come armed with tethers to tie us up and stomp us down.

  6. LarrytheG Avatar
    LarrytheG

    I think most of us know and accept the fact that physical security is not perfect, requires time, money and continuous monitoring and attention to maintain and even then it can be compromised – even govt, even military.

    we have to recognize that with the digital world.

    just as your bank can be robbed or burglarized physically – it can be digitally also.

    it’s not a world that we can refuse to be part of – easily.

    and the disruption will not end with the current digital realm – soon we all will be dealing with the bitcoin thingy…. and who knows what else.

    I agree with Mr. Surdak – for most all things with the exception of health care – which also will be affected but still not convinced that we will go to a system where each individual is assessed with regard to risk and charged a premium commensurate with his/her risk.

    No advanced economy country does that – and all of them provide safety net health care that is subsidized so the real issue will become what is the most cost effective way to cover everyone – regardless of their risk profile.

    I just don’t think this country is ever going to go to a true free market in health care regardless of big data and digital revolutions.

  7. CrazyJD Avatar
    CrazyJD

    I think all of you may be missing Jim’s larger point. Government is poorly equipped in any situation to deal with rapid change.
    Do any of you remember the problem with PKU disease? I didn’t think so. PKU stands for phenyketonurea, a rare disease that was subject to the benighted efforts of legislatures across the country in the late 50’s and early 60’s.
    Phenylalanine (Phe) is in almost all foods. If the blood’s Phe level gets too high, it can damage the brain and cause severe intellectual disability. Some people are born with the genetic inability to process Phe, and the resulting high levels can be deadly.
    PKU was and is treatable by avoiding food with Phe. This was a rather draconian treatment, particularly for young children, who were required to eat food that had absolutely no taste, usually a specially prepared “milkshake” that was like eating chalk. The resulting behavioral and life quality problems in children were severe.

    A test for the genetic marker became available during the late 50’s, and legislatures across the country made the test mandatory at birth in all hospitals. Keep in mind, the disease was not contagious or infectious.

    There was one rather large problem. The test produced an extraordinary high number of false positives, condemning a large number of children to treatment that was itself damaging. Yet what was a parent to do. The hospital was required to test for it, and there was no way to distinguish the false positive from a true positive. So the government wound up creating a bigger problem than it set out to solve.

    I’m sure that those early problems were resolved, as PKU testing is still done in hospitals. But it was the private sector that solved the problem. The government only exacerbated the problem instead of letting it alone to be solved by rapidly changing medical science. The laws did not change in response to the problem. Today you may see a similar problem with DNA testing for genetic predisposition to this or that disease. Beware government that wants to mandate such testing in its efforts to “control medical costs”
    There is a good reason for that old joke, “I’m from the government and I’m here to help you”

    1. Reed Fawell 3rd Avatar
      Reed Fawell 3rd

      This strikes me as an excellent point.

      I am reminded of how group dynamics often magnifies problems. This is particularly so within groups that are unable to solve or deal with an issue, how the groups then often act in ever more dysfunctional and damaging ways. This helps to explain human group behavior that in hindsight seems so irrational, cruel, or stupid that it is otherwise inexplicable.

      Dorris Lessing and Reinhold Niebuhr spoke powerfully on this subject. For more on it see my comments to article found at:

      dev.baconsrebellion.com/2015/06/who-are-they-to-hate-now

    2. LarrytheG Avatar
      LarrytheG

      you know – the idiocy infusing us is the thinking that unless govt makes no mistakes – is perfect – that it’s totally bad and unsuited for anything.

      For every misstep you point out about govt, I could easily point out 10 for the private sector…

      so what is your real point Crazy?

      you guys kill me. you deny the value and importance of govt – as if we could function without it.

      every flaw, every wrong – is used to discredit and invalidate the legitimacy of govt.

      why?

      you say the govt is “slow” then you point out – 50 separate states doing something that had essentially nothing to do with being slow at all..

      then you go on with more just ignorant stuff about “beware” of govt mandating such tests to “control medical costs”.

      good Lord – you guys just demand to be delusional no matter what!

      again – govt makes mistakes – because govt is run by people – it’s what people do . People do the same dang thing in the private sector!

      when you go through life with a compass that says “govt wrong, private sector right” – you’re not navigating… at all.. you’re living in a pretend world.

  8. CrazyJD Avatar
    CrazyJD

    Your message smacks of something between the fallacy of composition and the fallacy of false alternatives. No one is saying that the government doesn’t have its place. No one argues all or nothing, as you seem to suggest. But it is generally the case that government does not and cannot, by its nature and structure, move as quickly to solve a problem as the private sector. That has no bearing on who might make a mistake. Both can and do. It is the correction of the mistake that is faster in the private sector than in the public sector, almost without exception. So it follows that the more tasks you can assign to the private sector, the better off you are…UNLESS the area of the private sector that is in play is as economically impacted as the government. Otherwise stated, if monopoly or near monopoly conditions exist in the particular part of the private sector that is assigned the task, you are likely to get no better results than if government is assigned the task. Usually this is pretty rare, though some try to make the case (The EU comes to mind) that any truly successful company (Can you say Google?) is a monopoly, or engages in monopoly practices. This was also tried in the 80’s with the government’s suit against IBM and the phone company. Both situations were not resolved (and they usually aren’t) by anti-trust lawsuits but by the advance of technology (better software, hardware) or the relief from government imposed monopoly restrictions (the advent of MCI in the long distance market)

    LarryG: I hate to have to repeat ordinary price and cartel theory on this blog, but you seem to always miss these basics as they apply to the government, which is an absolute monopoly. As my union friends are fond of saying across the bargaining table: You fail to miss the point.

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