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Health Affairs This Week places listeners at the center of health policy’s proverbial water cooler. Join host Jeff Byers, editors from Health Affairs Publishing, and guests as they discuss health policy’s most pressing news and trends.
Hello and welcome to Health Affairs This Week. I'm your host, Jeff Byers. We are recording on 10/05/2026. Real quick, another plug for our insider event on October 21. We have Richard Kronick and Matthew Fielder, who will discuss Medicare Advantage and explore themes and risk adjustment of coding and things of that nature.
Jeff Byers:So please join us, today to discuss Trillion Health's latest trend report, which is out this week, if I'm correct. Is that right?
Allison Oakes:October 6. Yes.
Jeff Byers:So we'll be out by the time this goes live. We have Trillion's own vice president and chief research officer, Allison Oakes. Allison, welcome back to the program.
Allison Oakes:Hi, Jeff. Thanks so much for having me.
Jeff Byers:Real quick. One question I have for you before we get into the meat of the report. I was looking... We spoke last year to discuss the twenty twenty five trends shaping the health economy report. And I was looking between the two, and we didn't prep you on this, but I am kind of curious.
Jeff Byers:Like, when you're dealing with health care, which there are a lot of similar themes in the 2026 report versus the 2025 report, how do you think about trying to tell the story of the health economy from one year to the next?
Allison Oakes:Yeah, it's an interesting task to do this report year over year and try to put a new spin on things. In some ways, the health economy moves somewhat slowly. You know, the status quo, I think is one of our biggest enemies within the healthcare system. But I think the sort of overarching narrative, a tragedy of the commons, that's sort of our focus of the 2026 Trends Report. I think that's the thing that's really new and important here.
Allison Oakes:And we're gonna get into exactly what that means. But the way you fix the tragedy of the commons, there's really two ways out. Either the stakeholders who are grazing upon that commons, they sort of figure out how to build fences and assign accountability. Or the alternative is mutually agreed upon coercion, which means that the government needs to get involved. And that conclusion really isn't so different from what we said last year.
Allison Oakes:But we think there are a number of sort of mounting pressures that we're going to talk about today that is making all of this really feel like we're at a boiling point and either we as stakeholders need to figure out what we're doing or the government's coming for us largely in the form of price caps right now.
Jeff Byers:Yeah. So when you're in the room trying to discuss the like theme and the title, how did you come up with Tragedy of the Commons then if you're trying to like make a narrative from year to year?
Allison Oakes:Yeah. I think this was a little nugget that was in my brain from my PhD days. But the tragedy of the commons, it's a centuries old concept. Aristotle wrote about this idea that people just don't take care of shared resources. You can think about this in terms of overfishing.
Allison Oakes:If you've ever had a roommate, maybe you can think about it in terms of the common room and the shared spaces, right? But Garrett Hardin was the one who sort of named this phenomenon in a 1968 science article, which has since been cited tens of thousands of times. And sort of the illustration or analogy he used was the pasture. And it was this idea that if there's a common pasture, herders or farmers, each of them will keep adding one additional sheep or one additional livestock. However, as all of those different livestock get added, ultimately sort of the pasture is grazed to ruin.
Allison Oakes:So it's this idea that individual actors are incentivized to be making choices that the collective cannot sustain. And so sort of relating that to the healthcare system, unfortunately, the way our system is set up, no one is truly incentivized to be improving health. And the sort of herders in this scenario, hospitals, physicians, payers, pharma, each of those stakeholders are individually incentivized to be expanding their profits and to be maintaining their own financial sustainability. But our sort of thesis is that at some point, and we think that point is soon, there just aren't going to be enough healthcare dollars to sustain each of those parties revenues, and that everyone's going to end up losing because of it.
Jeff Byers:So how did you think to make it this particular theme versus last year?
Allison Oakes:I mean, this was, I think it was a concept that was talked about while I was doing my health services research PhD. And there's always a lot of sort of brainstorming and marinating on the trends report and how are we going to put together 120 or 30 or so pages to really try and talk some sense into health economy stakeholders, if you will, and what's a compelling way to do that. And this was just an idea that sort of popped into my head. And the more I read about it and dug into it, it was just a little bit of an moment to say, this seems to be exactly what's going on. Let's leverage this to try and help share these data stories and see if we can get this information to land with folks with this sort of framing.
Jeff Byers:Yeah. Thanks for that. I guess really what I'm trying to get to is like when something moves such at a glacial pace, it's like how to make it like more interesting each time.
Allison Oakes:Yeah, to a certain extent, although I do think, I mean, related to affordability and then also the action we've seen from the government just in the last year as it relates to a number of new mandatory models. So things like Teams, CJRX, also states. So what we've seen go on in Indiana as it relates to commercial price caps. I do actually think there's been a decent amount of movement in the last year and it feels like in terms of that metaphorical pasture, we're getting closer and closer to that pasture being depleted. And it feels like decisions are going to have to start to be made one way or the other.
Allison Oakes:And we're hoping to be able to get data in front of people that can help shape sort of the strategy in terms of how we make those decisions rather than, I think in a lot of ways, healthcare system is sort of a series of unintended consequences. So the question is, okay, if we're sort of at the breaking point and we have a chance to sort of, as a country, decide what we do or don't want in our healthcare system, what sort of data or information do we need in order to try and set things up in a way that we can actually incentivize and prioritize value and prioritize the health of the American public, rather than essentially a for profit system.
Jeff Byers:Yeah, so let's get into some of the data with it. It's, you know, much like last year, there's a lot of information, a lot of great information in the report, so we can't get into it all. Some of it might not be surprising for industry watchers, but there were some things that caught my eye. For example, the report notes that underinsurance has eclipsed uninsurance as America's primary coverage challenge. So I was just hoping for listeners, can you explain that?
Jeff Byers:What it might mean, especially as we go into midterms where affordability, as you mentioned, is like a huge issue?
Allison Oakes:Yeah, absolutely. Something we do highlight in the report, we feel like we're sort of at this breaking point and we think that this is gonna show up in the midterm elections and that there's the very real possibility that 2028 will be somewhat of a healthcare election. And we think affordability is a big part of that. Just going into the midterms, Americans are more concerned with healthcare costs than they are about gas, rent, food and utilities, which I think is quite staggering. And under insurance is this particular area that we're paying attention to.
Allison Oakes:And in terms of what it is, it's an issue where people technically have insurance, but they still have such high out of pocket costs that it deters care seeking and it also puts them at risk of medical debt. So really it's a question of is health insurance actually working for people when they have it? So since the introduction of the ACA, uninsurance has decreased from 14 to 8%. But during that same period of time, under insurance has increased from 16 to 23%. So almost a quarter of Americans who do have insurance, their insurance isn't working very well for them.
Allison Oakes:And I think really sort of illustrating this tension in general, we have a medical debt problem in this country because our healthcare is just so expensive, but we see that forty four percent of people who are under insured have medical debt as compared to thirty five percent of people who are uninsured. So the fact that under insured population has a higher rate of debt, it's this interesting trap where because people have health insurance, perhaps they're actually pursuing healthcare that they need, which is great. But because the health insurance is not very generous and isn't working very well, close to half of those folks end up in a situation where they have medical debt. So this is just an example of a way in which our healthcare system is not working very well for the people who use it.
Jeff Byers:Yeah, and in a related tidbit in the report, it states that the cost of insurance is growing faster than wages and inflation, which potentially could contribute to under insurance. So what does this tell us about employer sponsored coverage trends as we are going forward? Yeah.
Allison Oakes:Employer sponsored insurance is something that we're really keeping an eye on in terms of things where I think there's actually a lot of activity in areas where I think there could actually be change. Employer sponsored insurance is an area where I would sort of place that bet. So as we've sort of tried to make the American people quote healthcare consumers, the way we or employers have really done that is by shifting cost to patients. So since 2007, 5% of people used to be in a high deductible health plan. And as of 2025, it's a third, 33% of people are in a high deductible plan.
Allison Oakes:And since 2007, we've just seen that these healthcare costs are increasing faster than anything else. So single coverage employer sponsored plans, those costs have increased by 150 since 2007, but wages have only increased by 73% and a measure of inflation has only increased by 55%. So again, I think this just speaks to the sort of affordability boiling point that we're reaching. And when thinking about family plans, the sort of total cost right now, so the employer premium, employee premium, and also the employee deductible, the average is $30,000 And that's before insurance starts paying for anything. So these are sort of huge costs that are directly impacting people's wallets.
Allison Oakes:And I think sort of the unfortunate thing in a survey that was given to employers, they were asked, if costs continue to go up, how are you gonna solve this? 93% of them said further cost shifting. So it doesn't look like that pressure is going to be alleviated in any way. In terms of like, what are the actual impacts of this and how might things actually change? I think there's sort of two areas that people are talking about and we're tracking.
Allison Oakes:One is direct to employer contracting. And I actually don't think that's the answer. So that's something we talk about in the report. This is the idea that employers would directly contract with different hospitals or different providers. One, I think it's just like an administrative nightmare and we don't really need more administrative complexity.
Allison Oakes:But second, 99% of employers have less than 500 workers. So again, the idea that all of those employers would have the administrative capacity to be doing this, let alone that they have the leverage to actually be negotiating rates, think is a little bit questionable. An area where we see more positive activity though is in this ICRA space or just the recently renamed Choice Plans. It's predicted that there might be a million folks in those sorts of arrangements by 2027. But what's interesting about this is it maintains the tax deduction, but it's offloading the employer responsibility as it relates to sort of managing and administering health benefits.
Allison Oakes:So I think that could be an interesting off ramp here that we're gonna pay more attention to.
Jeff Byers:Yeah. So I know I wanna get to one of the major trend lines in this report. So we'll we'll move on from that bubble point listeners to the report as we don't have but so much time left. So the report has six major trend lines, a couple of them being The US health care system doesn't function as a system, value is not incentivized, therefore it's not measured or managed, and the disconnect between demand and supply is market failure, you know, according to your report. One of the major trend lines of those six that I wanted to talk about is stakeholders fail to understand the health economy is a negative sum game at their peril.
Jeff Byers:So what's meant by that?
Allison Oakes:Yeah. So a negative sum game is a situation in game theory where the total of all the players gains and losses combined is less than zero. So it's essentially this idea that different stakeholders are competing over a shrinking pie. So the idea is that in order for one party to sort of maintain their current standing, they have to take resources from another party. And I think there are a number of things going on in the health economy right now, which suggests this environment will continue to get more hostile, if you will.
Allison Oakes:So one, just sort of the demographic changes that are going on in our aging population. From 2016 to 2034, the share of Americans with employer sponsored insurance is projected to decline from around fifty one percent to around forty seven percent. As we all know, employer sponsored patients, they're sort of the lifeblood of our healthcare system. The rates that those patients are paying are much higher than Medicare or Medicaid. So that will likely contribute to the shrinking pie.
Allison Oakes:But some other big factors are the elimination of the IPO list. So the migration of procedures from the inpatient setting to the outpatient setting and the implications that has for hospitals, issues related to price caps, whether it's coming from the federal government or state governments. And then also this idea we unpack about how novel therapeutics sort of have the potential to be replacing the traditional procedure based approach to medicine.
Jeff Byers:Yeah. So you mentioned game theory, which probably set off some off some people that are hopeful to be contestants on the traitors or survivors. Interesting Yeah. With
Allison Oakes:Prisoner's dilemma. Yep.
Jeff Byers:Yeah. Yeah. So you mentioned this kinda in passing, but there is a large section in this trend line where the report states, the health care demand has stagnated. Spendings for expensive patient populations have increased while utilization among inpatient hospitals, etcetera, are kind of relatively flat or declining, coupled with the notion that novel drugs might replace or poised to replace surgical volume. You know, what does this tell us about the patient population and how might access to services change as a result?
Allison Oakes:Yeah, I think there's something interesting going on. We have a whole trend sort of about population health. And we see that the health of the American population in a lot of ways, unfortunately seems to be declining. We have about eleven percent of folks who have multiple chronic conditions. This is as high as twenty percent in states like West Virginia.
Allison Oakes:That said, even though we have a sicker population, we're not necessarily seeing the sort of corresponding increase in healthcare utilization, despite all of the increased spending that's going on. So you know, per capita inpatient admissions are down, inpatient surgeries are down, ED visits are down. So this contributes to that negative sum sort of narrative. But one thing we're looking at closely is the way that pharmaceuticals potentially replace things like surgeries. And we look at two analyses using our claims data, we see that GLPs, a very hot topic, GLP patient volume has increased by seven hundred percent while bariatric surgery is down about thirty percent since 2019.
Allison Oakes:I think another signal of this Cigna and their Investor Day just last week, they predicted that by 2036, 40 to 45% of all healthcare spending will be pharmacy related. I think the big question here is as more sort of novel drugs and therapeutics come to market, will these medications be substitutes for surgeries and other sorts of hands on medicine that was previously delivered? Or are we going to have folks taking all of these medications in addition to receiving those different surgical procedures? And the extent to which those two things are sort of complements or substitutes has major implications for if spending will continue to go up or if there's a chance that some of these drugs could actually be sort of cost effective and help to reduce spending in certain ways.
Jeff Byers:Yeah, thanks for that. I was chuckling a little bit because if I was a farmer rep, I think I would know the answer to your question about.
Allison Oakes:Yeah. Again, just the way things are incentivized, you can you can guess at how different folks might want to price different things.
Jeff Byers:So you noted before we started recording that you think the offloading of financial risk by CMS on hospitals under team and CJRX is something no one else has written about to your knowledge. So for our listeners, can you explain why you think this is such a big change and the implication it could have?
Allison Oakes:Yeah, we think this is a major philosophical change for hospitals, sort of starting with the idea of DRGs in 1983, hospitals have been trained around this idea that they have to control what goes on inside of their four walls and they're gonna receive a bundled payment for the care that they deliver. However, post discharge, they're no longer necessarily responsible for what happens to that patient. However, new mandatory models coming out of CMS like TEAM and CJRx, what these two models do is they essentially extend the time period that a hospital is responsible for a patient. Specifically, TEAM covers five surgeries that are high revenue and high volume, and it creates a thirty day window post discharge. And then CJRx is a mandatory model for all of the hospitals that aren't included in team and it's specifically focused on joint replacements.
Allison Oakes:And CJRx creates a ninety day window post discharge. And I think the thing that's important here is because of the anti kickback laws that exist, a hospital, they're financially responsible for those thirty or ninety day post discharge windows, but operationally, they're not actually allowed to sort of steer where the patient potentially gets that follow-up care. So for example, if a hospital has a sort of home health service that they offer, or if they have a sniff, or if they run some other sort of postsurgical sort of provider group, they're not able to steer patients towards those groups. They're only able to sort of offer up a list in which their facility is included. So hospitals, even though they're financially responsible for those additional days, they aren't necessarily able to manage the care that patients receive during that period of time.
Allison Oakes:So they're financially on the hook, but they're operationally unable to manage those windows. And this kind of speaks right back to the tragedy of the commons solutions that are on the table, either enclosure or government intervention. These sorts of models we think suggest that the government is more or less on the march as it relates to trying to build fences across the health economy.
Jeff Byers:Well, Oakes, thanks again for joining us today on Health Affairs This Week. Before we wrap up, any final thoughts on the report?
Allison Oakes:Yeah, I mean, thinking about where we go next in this tragedy of the commons we find ourselves in and how we get ourselves out. I think either we as health economy stakeholders start creating accountability and leveraging new information, like the health plan price transparency data to really be measuring value throughout the health economy and figure out how to incentivize value for all different stakeholders. Or alternatively, the government will likely continue to implement things like TEAM, things like CGRx, price caps by many different names. So it's up for us to figure out how to best incentivize value for money and importantly, figure out how we can improve the health of the American people.
Jeff Byers:Well, Oakes, thanks again for joining us today on Health Affairs This Week. Listener, we will put the report link in the show notes. There's a lot of stuff we did not go over. I would recommend to check it out if it sounds of interest to you. Plenty of information, plenty of interesting stuff.
Jeff Byers:And with that, we will see you next week. Thanks all.