Obamacare

Why ObamaCare's Cost Controls Will Fail

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Before the passage of last year's health care overhaul, supporters of the law repeatedly made the case that it was intended to help control costs. Obama and various administration officials promised that it would hold down health insurance premiums while restraining the long-term growth of health care spending. They rigged the bill to get the Congressional Budget Office to score the law as a net reduction of the deficit. 

But despite all the effort put into gaming the numbers, the fiscal argument was never very believable. As in Massachusetts, the bill was about coverage expansion first, cost-control second. And the law fundamental approach to cost-control was to hand off responsibility to bureaucrats, who would then look for successful cost-control innovations and try to replicate it throughout the system.

It was an belief born out of years of legislative failures: Congress has failed to control costs. Maybe, thought reformers, empowered experts can do it better. It's reform built on faith in bureaucrats, experts, technocrats, and policy wonkery. That's how we got the Independent Payment Advisory Board. And it's how we got the law's 400-plus page regulation for accountable care organizations (ACOs)—highly integrated provider networks that, in theory, have financial incentives to provide better, cheaper care. 

At best, these sorts of centrally planned reforms are untested, with no guarantee that they'll work—if anything, there's evidence suggesting that they might not. But the Obama administration and its health policy technocrats are still wedded to bureauwonkism anyway. Here, for example, is their latest round of self-congratulation regarding ACOs, via The Hill:

The agency said it has seen strong results from a five-year demonstration project with goals that are similar to ACOs' — lowering costs by improving quality and shifting away from paying doctors to perform more procedures.

The demonstration program involved 10 large, integrated healthcare systems. Seven of the 10 met all 32 of the program's quality benchmarks, the Medicare agency said in a release. And all 10 agreed to participate in a two-year supplement to the initial demonstration project.

But don't think the wonks have won this round: 

Most of the organizations that took part in the demonstration project, however, have voiced serious concerns about the proposed structure of ACOs.

Nine of the 10 health systems involved in the demonstration signed a letter in May saying they might not participate in the ACO program unless the Medicare agency makes major changes to its initial proposal.

The clinics said they all supported the concept of integrated, coordinated care, but that, "as currently proposed, ACOs have a greater potential for incurring losses … than for generating savings."

Reformers are mostly right when they argue that Congress hasn't done a great job of controlling health costs or the growth of tax-financed health spending. But where they go wrong is in thinking that a small number of experts in positions of government-granted authority will somehow be more successful. The basic problem with the bureauwonk model of health reform is that it assumes that technocrats can not only identify but successfully scale local innovation to the national level. That turns out to be exceedingly difficult; what works in one health organization doesn't always work in others. Even organizations willing to participate in demo projects won't always want to turn control of their innovations over to federal regulators. 

When CBO director Douglas Elmendorf testified before Congress last month about the government's history of attempts at health care innovation, he was blunt about the general lack of success: "The demonstration projects that Medicare has done in this and other areas are often disappointing…It turns out to be pretty hard to take ideas that seem to work in certain contexts and proliferate that throughout the health care system. The results are discouraging." The Obama administration is betting on these reforms anyway; a better bet might be that the results, or lack thereof, will continue to be more or less the same. 

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  1. Why ObamaCare’s Cost Controls Will Fail

    Because it’s the government. I mean, really… When has ANY government program rein in costs?

    No more explanations required.

    1. “Why ObamaCare’s Cost Controls Will Fail”

      Because of the Republitards/Tea-Bagging Terrorists. I mean, really… When has ANY GOP administrations been able to rein in costs?

      No more explanations required.

      1. Your first mistake here was misreading “ANY government” as “any DEMOCRAT government”. Your second mistake was the knee jerk reaction of slobbering away at Republican government, as if that were an insult.

        You’ve been posting here long enough to know there’s no bias here between Democrats and Republicans.

  2. The basic problem with the bureauwonk model of health reform is that it assumes that technocrats can not only identify but successfully scale local innovation to the national level.

    The knowledge problem… How does that work, again?

  3. “Government attempts at health care innovation.” To state it is to demonstrate its absurdity.

  4. What’s insane is that this hasn’t been repealed. Fiscal crisis, anyone?

    1. They still believe it will reduce expenses and “bend the cost curve.” This will be achieved through prevention, reducing waste, fraud and abuse, and “shared savings”

      1. Don’t forget the tax increases.

      2. Like I said, insane.

    2. What’s insane is that this hasn’t been repealed. Fiscal crisis, anyone?

      We have plenty of money, it was just stolen from us.

      1. W have plenty of money, we just need to print it.

        1. We have plenty of money, we just need to print it.

      2. Your trouble is that you think your earnings belong to you.

  5. It will work this time!

  6. It’s pathetic and amazing that people still need it spelled out to them in detailed articles that central…planning…sucks…and…will…always…fail.

    1. Not this time, Jim! Not this time!

      1. I have been swayed by your argument. Clearly I spoke in haste and am mistaken.

        1. It’s all just a matter of having The Right People in charge.

  7. “Before the passage of last year’s health care overhaul, supporters of the law repeatedly made the case that it was intended to help control costs”

    And they were all liars.

      1. Yes, except change the tense to the present. They ARE liars. They still claim that this is a “deficit reduction bill.”

    1. You mean it’s not possible to provide more coverage to more people with more pre existing health problems, and save money????

      1. Re: Pablo,

        If it were possible, they would have done it already!

        Right?

  8. Seven of the 10 met all 32 of the program’s quality benchmarks

    without seeing the details, I’m gonna guess these benchmarks were akin to the bank stress test benchmarks.

  9. All price controls fail. That’s all you need to say.

    Putting in price controls is creationism for liberals.

    1. Well said. It’s a matter of faith.

    2. Price Controls always fail because politicians don’t have the ability to change the laws of supply and demand.

      1. Those laws clearly need to be repealed.

        1. Last week they repealed the laws of physics with their new mileage standards.

          1. Gravity is a recessive tax on the poor. And the fat.

            1. Women and minorities hardest hit.

      2. “Price Controls always fail because politicians don’t have the ability to change the laws of supply and demand.”

        I do.

    3. Putting in price controls is creationism for liberals.

      Intelligent design, more accurately, but yeah.

      1. Yep. And government is god.

      2. calling it “intelligent design” is like calling “price controls” an “review of unreasonable rate increases”.

        It’s creationism. It’s price controls. It’s all nonsense, and each TEAM has picked their crackpot base to pander to.

    4. All price controls fail. That’s all you need to say.

      Putting in price controls is creationism for liberals.

      Has the fact that health care is the one good necessary for life, we do not get to choose when to consume it, and it could easily bankrupt us if we are unlucky been factored into the analysis?

  10. The whole time that Obamacare was being pushed through Congress the stats about MassCare were increasingly negative. Masscare has repeatedly shown that every thing they hoped to contain (costs, Er visits, etc.) went in the complete opposite direction. It’s a bright shining example of the difference between “ideals” and “reality”, and it’s currently devouring the revenue in the Bay State.

    Here was a state run version of Obamacare that was clearly a disaster in almost every conceivable way, yet Obama was able to distort and squelch any comparisons between his plan and Masscare.

    1. But Mittens says it worked! And he’s proud of it! And Mittens wouldn’t lie, would he?

      1. I almost want to see him win the primary just so the MSM can once and for all expose socialized medicine as the complete and utter failure it is.

        Of course, the idea that the MSM would be that critical of a government program that similar to Obamacare is just wishful thinking.

        1. There will be two republicans who don’t own telephones in a district you’ve never heard of who will be responsible for its failure.

  11. But despite all the effort put into gaming the numbers, the fiscal argument was never very believable.

    Proving, for the nth time, that if you’re explaining, you’re losing.

    And the truly astonishing things about the centerpiece of cost containment, the vaunted ACO, are

    (1) The pilot program that ACOs were based on, which wasrun by volunteers who were presumably ideally situated to make it succeed, actually failed.

    (2) The geniuses at CMS managed to take a failed pilot program and lard it up with so much bureaucratic deadweight that absolutely no one wanted to do it.

    1. Meh. Close italics tags where appropriate.

  12. And the law fundamental approach to cost-control was to hand off responsibility to bureaucrats, who would then look for successful cost-control innovations and try to replicate it throughout the system.

    As soon as those bureaucrats can come up with an effective magic spell substanceless nonsensical jargon-based mission statement, prices will fall.

  13. But where they go wrong is in thinking that a small number of experts in positions of government-granted authority will somehow be more successful.

    It’s likely they’ll do worse, because they can’t be fired in an election.

  14. Why not simply make it a capital crime to charge too much for health care? Would that not solve the problem?

    1. As I’ve said many times, the solution is clear. Make it a felony to be a doctor, convict all doctors, then enslave them for life. The 13th Amendment has an exception for criminals.

      1. I don’t see any incentive for a doctor to provide quality care under your proposal. Other than that, it could work..

        1. Whips, starvation, and threats of death are all compelling inducements to performance.

          If this works, other professions could be enslaved. This beats communism, as people in professions that aren’t useful to society would remain free.

          1. I suppose that is preferable to what the Golgafrinchans did.
            What that link fails to mention is that shortly after the B Ark set sail the remaining population was wiped out by a virulent disease contracted from a dirty telephone.

      2. As I’ve said many times, the solution is clear. Make it a felony to be a doctor, convict all doctors, then enslave them for life. The 13th Amendment has an exception for criminals.

        Conscription is still available.

        1. That works, too. Either way, doctors as involuntary servants to our medical needs.

    2. Sure, as soon as you actually find ANY health care professionals after that imperial edict is enacted.

      1. Better arrest them first–good idea.

      2. What matters is whipping up public support for the idea.

        1. Pretty much all of us who aren’t doctors should support it.

  15. Leeches are cheap.

    1. I’ll cut that non-gangrenous limb off for you. No charge…it’s sort of a hobby of mine. I’ll even haul it away for you when I’m finished.

    2. Depends of the definition of Leeches.

  16. Major stock indices just turned negative on the day

  17. Threadjack – Still no story on the fed audit?

    http://www.guatemala-times.com…..loans.html

  18. Why ObamaCare’s Cost Controls Will Fail

    1. Why ObamaCare’s Cost Controls Will Fail.

      (not that explaining it to progressives for the nth time will make any difference)

  19. If results do not match intentions then obviously the intentions were not backed with sufficient force.
    To suggest that the intended result cannot be achieved through force is to question intentions.
    Anything is possible if enough force is applied to it.

    1. Re: sarcasmic,

      Anything is possible if enough force is applied to it.

      Yes, do not underestimate the dark side of The Force.

  20. Richard Milhous Nixon and Barack Hussein Obama. So very many parallels. Bad news for all.

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