Trump's Obamacare Overhaul Could Be Blockchain Adoption Catalyst

As Republicans attempt to overhaul the Affordable Care Act, blockchain advocates hope modifications to the law could boost adoption of the tech.

AccessTimeIconMay 1, 2017 at 11:00 a.m. UTC
Updated Sep 11, 2021 at 1:16 p.m. UTC
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As pressure mounts on Republicans to overhaul the Affordable Care Act (ACA), blockchain advocates are hoping bullish modifications to the law could provide a springboard for the adoption of distributed ledger tech.

Since the 2009 passage of the ACA – colloquially known as 'Obamacare' – the US healthcare system has continued to grapple with the escalating spending, inefficiencies and antiquated systems that prompted calls for reform in the first place.

Now, President Donald Trump and Republicans in Congress are seeking to repeal and replace Obamacare with a new plan, dubbed the American Health Care Act (AHCA), which they deem to be simpler and more consumer friendly.

While that goal remains elusive and details are subject to change, its core thesis is that healthcare should be driven by consumers to put downward pressure on costs – and that has many blockchain tech proponents eying the legislation as a potential catalyst for the upstart technology.

Corey Todaro, chief operating officer of Hashed Health, a consortium of healthcare companies exploring the use of blockchain in the industry, noted that costs are continuing to "explode", creating pressure for change.

He told CoinDesk:

"We're on the path to $5tn in healthcare spend from the current $3.5tn – it's just insanity. We need anything that can begin to take cost out of the system, and we think blockchain can play a crucial role there."

Before it was pulled from the agenda in March, the AHCA – among other things – sought to replace Obamacare's network of insurance premium subsidies with a significant expansion in the use of tax credits and health savings accounts.

This arrangement would conceptually give consumers more freedom and responsibility to shop for their own insurance plans and health services instead of obtaining them through an intermediary. But after an initial failure to corral enough intra-party support, the bill was revived last week with the addition of several new amendments designed to bring more conservative Republican dissenters on board.

Avik Roy, president of the Foundation for Research on Equal Opportunity (FREOPP), argues that while the plan has its flaws, it could serve to generate demand for lower costs, more transparent pricing and greater consumer control over personal data.

These are items that blockchain could play an instrumental back-end role in delivering.

"Where there's a unique opportunity for blockchain in healthcare is this idea that if patients in particular can have more control over their healthcare dollars, they'll also have more of an incentive to have control over their healthcare data," he told CoinDesk.

Data expansion

But it isn't just about costs and control, it's also about data warehousing.

While climbing healthcare costs grab the most attention, the data being produced by the industry has increased 44-fold since 2009, according to a recent report by Intel.

And further, the infrastructure on which that data is stored and transferred remains heavily siloed and incompatible with a more consumer-driven system, according to industry entrepreneurs like Micah Winkelspecht, founder and chief executive of Gem, a blockchain solutions company.

Winkelspecht said:

"This is leading to a breakdown in the existing system, because in healthcare your data doesn’t travel with you, it travels with the provider."

By serving holding unique identifiers that can direct patients and providers to the location of individual data records, blockchain offers an alternative to existing efforts to remedy this problem, he said.

Over the long term, this could potentially patch together existing data silos with APIs or create even larger, decentralized data storage facilities.

Drop in a bucket

Still, opportunities will occur within a larger context.

Roy emphasized that the segments in healthcare currently experiencing the most tech innovation and receiving the largest capital inflows are areas such as digital health and cosmetic surgeries that are largely outside of the purview of insurance companies.

"LASIK really is the best example because it is driven by the things that insurance doesn’t pay for," he said, referencing the laser eye surgery that is far cheaper now than 20 years ago.

In this regard, Roy added, an expansion of tax credits and health savings accounts could expand the pool of funds that innovators can tap into.

"That's more out-of-pocket dollars that digital health entrepreneurs will be able to take advantage of to provide services that patients really want, including things that relate to blockchain," he said.

At $3.5tn, the US healthcare industry would be the fourth-largest economy in the world by gross domestic product if were its own country, trailing only the US, China and Japan.

That figure is projected to balloon to $5.5tn by the year 2025.

Consumer focus

With numbers of that scale, reformers say that even modest implementation of new technologies like blockchain in healthcare administration and supply chains have the potential to reap hundreds of billions of dollars in savings.

Todaro of Hashed Health reckons that another way AHCA could facilitate blockchain in healthcare is by rethinking some of the complex regulations that surround payment and delivery systems, medical data and health insurance products.

"The patient really does not sit in the driver's seat in terms of the provision of their own care. There's not really a marketplace where you can compare prices and act like a consumer in your own best interest," he said, adding:

"Getting rid of those kinds of regulations I think could be a springboard for a really robust kind of consumer-centric model, and I think that could be mediated very effectively by blockchain."

For example, a more nuanced feature of the Obamacare law was a migration away from the traditional fee-for-service billing model toward fee-for-value schemes in which healthcare providers are compensated based on outcomes delivered rather than simply services rendered.

Barriers to entry

But to be truly effective, fee-for-value programs require a far more robust data infrastructure than currently exists.

Any tweaks to these rules that facilitate the flow and storage of such data could be a gateway for blockchain tech.

"Those kinds of programs are ideally suited for blockchain because they involve the transaction of information in as [close to] real time as possible among a wealth of intermediaries on a continuum of care. That's difficult given the way current health IT stacks are structured," said Todaro.

Gem's Winkelspech said that, here, regulation gets in the way.

"The largest problem is that the regulations tend to be too prescriptive. Rather than defining what outcomes the government wants to achieve, they tend to pick winners and losers in technology and software," he said.

Specifically, Winkelspech emphasized the 2009 Meaningful Use rule requiring the implementation of electronic health records – a regulation that many in the space are closely monitoring for potential modifications in the AHCA.

"[Hospitals] were highly incentivized to digitize health records at a time when there weren't many health record systems. So, what it sort of did was it funneled all these companies to a few players, and those players have become quite large and quite powerful in the industry," he said.

Todaro further said that while such highly prescriptive rules force hospitals out of their comfort zone, they tend to suck of the energy out of the room.

"Some of those specific provisions I think incentivize health systems to look for solutions like blockchain, but on the other hand it exhausts them,” he said, adding:

"We've talked to health system [providers] who say 'We are busy enough implementing a multi-billion dollar, multi-year installation of a comprehensive electronic medical record system. We have got no appetite for exploring new technology even if it could be useful.'"

Help on the way?

Still, blockchain advocates in Congress also see the legislation as a chance to codify a use case for the technology.

Representative David Schweikert of Arizona, the Republican co-chair of the Congressional Blockchain Caucus, for instance, is exploring ways of prioritizing blockchain usage in certain government bodies that handle health data.

Action is already happening on the state level, where Arizona has passed a law in March that would expand the definition of an electronic record to include those hashed or stored on a blockchain system. Likewise, in Delaware, a similar effort is underway, but with a more specific focus on corporate records.

As such, regardless of the fate of the AHCA, some believe momentum for the kinds of reforms blockchain could enable won't be going away.

"The patient is responsible now for a lot more of the healthcare costs and that’s going to be an increasing trend," Winkelspecht said, concluding:

"Consumers, when they go to shop for a doctor, are going to become way more price conscious as more and more of the responsibility for costs is pushed on them."

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