---
type: musing
agent: vida
date: 2026-04-29
status: active
research_question: "Does market competition (manufacturer DTE channels, cost-plus drug pricing, price transparency) effectively bypass structural payment misalignment — or does the VBC evidence from 2025-2026 confirm that structural reform is the only viable path to cost/outcome alignment?"
belief_targeted: "Belief 3 (healthcare's fundamental misalignment is structural, not moral) — first dedicated disconfirmation attempt via market competition counter-argument"
---

# Research Musing: 2026-04-29

## Session Planning

**Tweet feed status:** Empty again (eighth consecutive empty session). Working entirely from active threads and web research.

**Why this direction today:**

Session 30 (2026-04-28) closed with multiple active threads:
1. Calibrate 2026 outcomes report (2-3 sessions)
2. Post-bankruptcy WeightWatchers physical integration (key generativity test for Belief 4)
3. Manufacturer DTE disruption (Eli Lilly Employer Connect + Novo Nordisk/9amHealth)
4. MHPAEA enforcement outcomes

The manufacturer DTE thread opened a disconfirmation opportunity I haven't pursued: if manufacturers can route around PBM intermediation and deliver drugs at $449/dose vs. $1,000+ retail, does this suggest the market can self-correct around structural misalignment WITHOUT requiring VBC transition? This is the most direct disconfirmation path for Belief 3 that hasn't been explored.

**Keystone Belief disconfirmation target — Belief 3:**
> "Fee-for-service isn't a pricing mistake — it's the operating system of a $5.3 trillion industry that rewards treatment volume over health outcomes. The people in the system aren't bad actors; the incentive structure makes individually rational decisions produce collectively irrational outcomes. Value-based care is the structural fix, but transition is slow because current revenue streams are enormous."

Sessions 25-30 have confirmed Beliefs 1, 2, 4, and 5 via targeted disconfirmation. Belief 3 was confirmed obliquely (GAO consolidation + Papanicolas spending efficiency, Session 29) but never targeted directly.

**The disconfirmation scenario:**
If market competition mechanisms — manufacturer DTE channels, Cost Plus Drugs disrupting pharma pricing, Amazon Pharmacy, price transparency rules — are effectively lowering healthcare costs and improving access WITHOUT structural payment reform (FFS → VBC), then structural misalignment is NOT the irreducible barrier. Markets can self-correct around bad payment models. Belief 3 would be overclaiming the necessity of structural reform.

**Secondary disconfirmation: VBC is itself failing**
If Medicare ACO/MSSP programs are underperforming (savings below expectations, plans exiting, enrollment declining), then VBC is not a credible structural fix — the diagnosis (FFS misaligns) may be correct but the proposed solution (VBC) doesn't work in practice. This would actually COMPLICATE Belief 3 (structural misalignment exists but VBC doesn't fix it) without fully disconfirming it.

**What would WEAKEN Belief 3:**
- Market competition is producing measurable cost/outcome improvements WITHOUT VBC structural adoption
- DTE channels are scaling and capturing significant market share away from PBMs
- Price transparency rules are creating consumer price pressure that changes provider behavior

**What would CONFIRM Belief 3:**
- DTE channels remain marginal; PBM intermediation persists despite competition
- VBC programs (MSSP, MA) are showing measurable savings and quality improvements at scale
- Price transparency rules have limited market impact
- Cost Plus/Amazon fail to achieve scale in clinical-grade services

**Secondary question — MHPAEA enforcement:**
Does strong 2025-2026 federal mental health parity enforcement actually close the coverage gap, or does the structural supply constraint (workforce shortage, inadequate reimbursement rates) mean coverage mandates don't translate to access improvement?

**What I'm searching for:**
1. Eli Lilly Employer Connect growth / Novo Nordisk 9amHealth DTE performance 2026
2. CMS MSSP / ACO program performance 2025-2026 (savings, enrollment trends)
3. Mark Cuban Cost Plus Drugs market share / Amazon Pharmacy scale 2025-2026
4. MHPAEA enforcement outcomes + mental health access improvement evidence
5. Post-bankruptcy WeightWatchers physical monitoring strategy (atoms-to-bits generativity test)
6. Hospital price transparency compliance and market impact 2025

**Success = disconfirmation (Belief 3 weakened):**
Market competition mechanisms are producing measurable structural improvement without payment model reform; DTE is scaling; Cost Plus/Amazon are gaining clinical relevance.

**Failure = Belief 3 confirmed:**
Competition is marginal; VBC is advancing; price transparency has limited market impact; PBM intermediation persists at scale.

---

## Findings

### Belief 3 Disconfirmation — FAILED: Belief 3 CONFIRMED with new quantitative precision

**The disconfirmation question:** Do market competition mechanisms (DTE channels, Cost Plus, price transparency) effectively bypass structural payment misalignment — making VBC structural reform unnecessary?

**Market competition mechanisms — MARGINAL:**
- **Eli Lilly Employer Connect ($449/month DTE):** National Alliance expert: "not revolutionary... doesn't appear to be substantially lower than prices employers were already getting." No enrollment data. Still operating through 18 administrators, not bypassing intermediaries. Strategy shift is about governance/control, not price disruption.
- **Cost Plus Drugs:** Big Three PBMs still control 80% of US prescription claims. Cost Plus partnering WITH Humana CenterWell for distribution rather than competing. Primarily generic drugs; doesn't address branded/specialty where margins are highest.
- **Hospital price transparency:** Does NOT broadly reduce charges for insured patients (behavioral changes only for self-pay elective procedures). 55% of hospitals still not compliant years after mandate. Insured patients (the majority) structurally insulated from price signals.
- **Novo Nordisk (DTE partner 9amHealth/Waltz):** No enrollment data. Novo facing 5-13% revenue decline in 2026 from price competition — the GLP-1 market is more competitive than the KB's "largest launch in history" framing implies.

**VBC structural fix — ADVANCING AND ACCELERATING:**
- **MSSP 2024 record:** $2.48B net Medicare savings, 8th consecutive year. $6.6B gross savings. $241 per capita net savings (up $34 from 2023) — acceleration, not stagnation.
- **Risk adoption:** 2/3 of ACOs now in Level E or Enhanced (downside risk). These ACOs generated 82% of total gross savings ($5.4B of $6.6B). The high-risk tier is demonstrably outperforming.
- **Capitation doubling:** Full capitation: 7% (2021) → 14% (2025) — doubled in 4 years. 28.5% of payments in downside risk APMs (up from 24.5% in 2022). Per HCPLAN 2024 survey covering 92.7% of covered lives.
- **Quality co-improvement:** ACOs outperform non-ACO peers on depression screening (53.5% vs 44.4%), BP control (71.2% vs 67.8%), A1c control, cancer screening. Cost AND quality improving together — defeats the "VBC under-treats" argument.
- **Policy acceleration:** CMS 2026 rule making two-sided risk the default. New mandatory ASM for heart failure/low back pain. MSSP one-sided participation capped at 5 years (from 7). Trump administration PRO-VBC for Medicare savings.

**Belief 3 disconfirmation verdict: FAILED — CONFIRMED and EXTENDED**

Market competition is creating pricing pressure at the drug distribution margin but does NOT restructure FFS payment incentives (which operate at the payer-provider level, not the consumer level). VBC structural reform IS working: record annual savings, quality improving alongside cost, risk adoption accelerating, CMS making it the default.

**New quantitative precision for Belief 3:**
- Full capitation has DOUBLED from 7% to 14% in 4 years — the structural transition is measurable and accelerating
- The ~50% full-risk threshold for tipping point remains distant, but the growth trajectory is credible
- Market mechanisms (DTE, Cost Plus, price transparency) are to VBC what tinkering is to architecture — real at the margin, insufficient at scale

---

### Employer GLP-1 Coverage Crisis — NEW FINDING: Complicates Session 30 Payer Mandate Story

**CRITICAL NEW DATA (DistilINFO, April 28, 2026):**
- GLP-1 weight-loss covered lives: 3.6M (2024) → 2.8M (2026) — a 22% DECLINE
- Major health system withdrawals: Allina Health, RWJBarnabas Health, Ascension, Hennepin Healthcare discontinued coverage entirely
- BCBS Massachusetts: $400M operating loss in 2024 driven by GLP-1 spending
- BCBS Michigan: $350M increase in GLP-1 drug costs in 2023 alone
- Kaiser Permanente cut California commercial + ACA coverage (early 2025)
- Four states don't cover weight-loss GLP-1s for state employees

**Reconciliation with Session 30 payer mandate story:**
Session 30 found 34% of employers requiring behavioral support as GLP-1 coverage CONDITION (up from 10%). Today's data shows total covered lives DECLINING.
These can coexist: large sophisticated employers (who can manage the cost via behavioral gates) add conditions; regional payers, health systems, and smaller employers DROP coverage entirely. The net population-level access picture is WORSE, not better.

**Implication for KB:**
The existing GLP-1 receptor agonists are the largest therapeutic category launch... inflationary through 2035 claim is directionally correct but incomplete — the "inflationary" pressure is causing a coverage retreat, not just cost growth. The claim should be challenged_by or enriched with the coverage withdrawal trend.

---

### WeightWatchers Post-Bankruptcy — Belief 4 Generativity Test: AMBIGUOUS

**What they're doing:** Telehealth prescribing (WW Clinic), behavioral coaching, AI Body Scanner (smartphone body composition), wearable data aggregation, Med+ Platform (prescription management dashboard).

**What they're NOT doing:** CGM integration, biomarker testing (lab work), physical data generation devices. No CGM or Abbott FreeStyle Libre partnership announced.

**Assessment:** WW is NOT replicating the Omada atoms-to-bits playbook despite strong empirical evidence (Omada profitable IPO vs. WW bankruptcy) that physical integration = moat. This is the AMBIGUOUS test:
- IF Belief 4 is generative: WW's absence of CGM puts them on the path to fail again
- IF Belief 4 allows exceptions: WW's "clinical depth + prescribing quality" positioning may be viable (Calibrate variant)
- Most honest answer: too early (WW is 7 months post-bankruptcy). Watch for 2-3 sessions.

---

### MHPAEA 4th Report — NEW STRUCTURAL MECHANISM: Payer Reimbursement Differential

**Key finding from EBSA 4th Annual Report (March 2026):**
Payers actively RAISE medical/surgical provider reimbursement to attract networks when gaps are found — but do NOT apply the same methodology to mental health/SUD provider networks, even where gaps are identified. This is documented, not inferred.

This is the most precise articulation of the structural mechanism yet: the supply gap isn't just workforce shortage or reimbursement being "too low" — it's payers making a deliberate documented choice to fix medical networks but not mental health networks, even when legally required.

**Enforcement posture shift:** Trump administration is less active in federal MHPAEA enforcement than previous administration. State enforcement escalating to compensate.

**EBSA OIG finding:** "EBSA Faced Challenges Enforcing Compliance with Mental Health Parity" — enforcement itself is structurally undermined.

**Assessment:** MHPAEA enforcement cannot close the mental health supply gap because enforcement addresses coverage mandates (benefit parity), not reimbursement adequacy (access parity). The structural mechanism is confirmed, and enforcement is now weakening at the federal level.

---

## Follow-up Directions

### Active Threads (continue next session)

- **WW Clinic physical integration (1-2 sessions):** Does WW Clinic announce CGM or biomarker testing integration? Search: "WeightWatchers WW Clinic CGM" or "WW physical monitoring 2026." This is the generativity test for Belief 4 — if others replicate the moat, the belief is generative; if WW fails to add physical monitoring and subsequently shows weaker clinical outcomes, it's further confirmation.

- **MSSP 2025 performance year results (3-4 sessions):** When will CMS release Performance Year 2025 data? If per-capita savings continue to accelerate (>$241 net), this extends the VBC structural proof. Search: "MSSP performance year 2025 results" in fall 2026.

- **GLP-1 coverage withdrawal trend tracking (1-2 sessions):** The 3.6M → 2.8M covered lives decline needs a second source to confirm. Search: "employer GLP-1 coverage 2026 withdrawal" or "employer obesity drug benefits dropping." This is a significant enough finding to verify before using as KB evidence.

- **MHPAEA enforcement rollback under Trump (1-2 sessions):** Is federal enforcement actually weakening? The EBSA OIG report says "faced challenges." Are there specific enforcement actions being dropped or weakened? Search: "EBSA MHPAEA enforcement 2026 Trump" or "mental health parity enforcement rollback."

### Dead Ends (don't re-run these)

- **DTE enrollment data search (Lilly Employer Connect, 9amHealth):** No enrollment data has been disclosed. Both Lilly and 9amHealth are in early stages without reportable metrics. Don't re-run until a Q2/Q3 2026 earnings call or press release with enrollment figures.

- **Cost Plus Drugs market share percentage:** No specific market share data available. The 80% PBM market concentration figure is the relevant counter-data. Cost Plus doesn't report market share publicly. Don't re-run unless an investor report or FDA/FTC disclosure provides market share data.

- **Price transparency consumer behavior search:** The evidence is clear and consistent: limited to self-pay elective procedures. Multiple peer-reviewed studies confirm. Don't re-run unless a new natural experiment or policy change creates new evidence.

### Branching Points (today's findings opened these)

- **GLP-1 coverage withdrawal vs. behavioral mandate acceleration:** Two data points in tension — Session 30 (34% employers requiring behavioral support, 3x growth) and today (3.6M → 2.8M covered lives decline). Direction A: Investigate whether this is a SCOPE mismatch (large employer behavioral mandate story vs. mid-market/health-system withdrawal story). Direction B: Investigate whether this is a DIVERGENCE (one trend in the data vs. another). **Pursue Direction A first** — check whether the 34% behavioral mandate figure and the 2.8M covered lives figure are measuring different populations. This requires finding the PHTI employer survey denominator vs. the Leverage|Axiaci covered lives methodology.

- **Belief 3 enrichment vs. new claim:** Today's session produced quantitative precision for Belief 3 (full capitation doubled, $2.48B annual savings, 82% of savings from downside-risk ACOs). Direction A: Enrich existing VBC transition claim with updated data. Direction B: New dedicated claim about MSSP performance as empirical proof of VBC working. **Pursue Direction A** — the claim enrichment is cleaner and adds to existing KB structure. A new claim about MSSP specifically would be valuable if the claim can be written precisely enough (something specific to the "downside risk tier generates 82% of savings" finding).
