Takeaway: Capitol Hill is no match for industry adapting ITunes and other models to employer supported health care ONEM, WMT, AMZN, Carbon Health

Editor's Note: This is a complimentary research note published by Healthcare Policy analyst Emily Evans. CLICK HERE to get COVID-19 analysis and alerts from our research team and access our related webcasts.

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Before internecine warfare broke out in the Democratic Party last week, one of the Affordable Care Act's under appreciated aspects was its role in generational assault. The very structure of the law favors the old.

Generous coverage mandates for preventive services and "essential health benefits" presume a level of demand typical of an older individual. The richness of its provisions are made worse by the age bands that prohibit an insurer from charging an older person more than three times the young. The result, predicted by no less than the Institute of Medicine, put purchase of individual health insurance coverage out of reach for the Millennial generation and much of GenX.

It is no wonder, many of the young, like Rep. Alexandria Ocasio-Cortez find little benefit in the law, "The main reason why I feel comfortable saying that the ACA has failed is because it failed me and it failed everyone that I worked with in a restaurant," she said in an interview last week regarding Medicare for All. Ocasio-Cortez is 31 years old. The median age for a restaurant employee is 29.

The ACA's failures do not Medicare for All make, at least not yet. Leaving aside the November 4th House election result which did not exactly endorse drastic change, the fact is political power in Washington does not normally skip generations.

Leadership always finds their favorites among the tenured who have demonstrated loyalty to basic party messaging and elevates them to important committees. The customs and traditions of Congress ensure a long shelf life for major initiatives like the ACA.

While the ACA gets embedded in Washington's political amber, the world turns on and in that unique American way, solutions are being developed outside of the health policy oligarchy. In the most unexpected turn, industry not Congress, is likely to wield the most influence over health care policy for the next several years, perhaps more.

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A few years ago in some now forgotten hotel lounge, Tim DuBois, former head of what was once known as Arista Records and an award winning songwriter (She Got the Goldmine and I Got the Shaft, 1982; When I Call Your Name, 1991, among others), and I fell into a conversation about the success of ITunes.

He said he failed to anticipate how popular it would be because "I never thought anyone would pay for nothing." In his mind, the experience of purchasing a record or CD, removing the cellophane wrap, reading the liner notes while listening to an artist's work was what you got for your $20, not merely the music itself. 

Unlike the music business, the health care industry has struggled with getting people to pay for nothing. It's entire edifice is built on, as Dr. Raj. Aggarwal put it in our talk a couple of weeks ago, getting paid to do stuff. 

It won't be simple, or easy, or linear, but the ITunes model may finally be arriving in health care, accelerated like many things by COVID. ONEM charges an annual membership fee - the "nothing" part - and accepts commercial insurance for care delivered - the "stuff" part. In that bargain, ONEM is able to deliver a "delightful" experience, according to their S-1.(If you have not already, see Tom Tobin's great work on ONEM and be sure and ask him about his own visit to their New York location.)

Carbon Health, which according to The Health Care Blog just completed a C round has a similar attitude although without the membership fee. The experience, delightful or otherwise positive, is valued by the Millennial generation whose primary purchases as teens and young adults involved the intangible - music on ITunes or Spotify, internet based video games and Soho House access.

The formidable combination of unpleasant and expensive has made health care an easy target of alternative scenarios like Medicare For All or some variation of single payer. The argument is, in short, "it cannot be any worse." The development of a market driven solution, assuming it scales as expected, presents some significant headwinds for that vision. A health care service that is "delightful" and for which patients share some ownership via a membership would suggest that, in fact, health care can be much better than what is normally offered today.

In that event, giving it all up for an untested alternative might just turn out to be unnecessary.


The design of the ACA that favored the old and the sick over the young and healthy, meant that one goal of the health law - to untether health insurance from employment - was never realized except among low wage, low skill workers in Medicaid expansion states.

Meanwhile, MLR requirements for most insurance products except ERISA plans reduced incentives to manage health care costs. Any successful efforts in that regard would be rewarded by the requirement to mail checks to plan members. Prices for all health care consumers rose in response.

Still in the insurance business and absent any major legislative change, employers, now inspired even more by COVID, are filling the void. The annual fee to ONEM is often paid by employers like Google. AMZN's Amazon Cares follows WMT's efforts by about 3-4 years to provide more cost effective care for employees. For employers without the girth of WMT and AMZN, there is ACCD which offers an alternative to typical benefit management.

COVID, especially in the absence of limits on liability, only increases the urgency for employers. Reports last week suggested  a President Biden very likely has the executive authority to require OSHA protections on COVID spread in the work place, requiring testing, diagnosis and care and giving rise to direct contracting with providers.

Full employer engagement, not just in paying for health care, but in providing it, managing it and even celebrating it, has implications that will make the ACA's $1T spend look like spare change under the couch cushions. There are 150 million or so Americans insured through their employer, supporting not just utilization but also a price point often well above government rates.

In the end, perhaps trying to separate health insurance from employment wasn't the best idea. After all, aside from your family who values your health more than the people that rely on you to produce goods and services?

As Calvin Coolidge put it "After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world."