Yet More Evidence That ObamaCare's Cost Reforms Won't Work


Credit: National Institutes of Health Library / Foter.com / CC BY-NC-SA

During the debate over ObamaCare, the law's backers talked a lot about the promise of "delivery system reform"—health policy changes, mostly to the way providers are paid, that they hoped would reduce costs while increasing quality. You hear the phrase less often these days, but President Obama invokes the same concept when he talks about making "modest reforms" to Medicare: Rather than slashing benefits, Obama wants to tweak the incentives in the health system in order to produce savings.  The problem, though, is that these reforms turn out to rather difficult to implement successfully.

Here's just one recent example: In today's Wall Street Journal, Elliot Fisher, Stephen Shortell, and Mark McClellan, a trio of health policy scholars from Dartmouth, University of California, Berkeley, and the Brookings Institution, respectively, defend what is arguably the most prominent of ObamaCare's delivery system reforms: the Accountable Care Organization (ACO), which is intended to create financial incentives for health providers to better coordinate care, hopefully saving money and improving patient outcomes in the process.

Critics have compared ACOs to 1990s-style Health Maintenance Organizations (HMOs), which they say only held down costs by being stingy with care and access, and which were deeply unpopular with the public. But the authors of the WSJ piece argue that health providers will have to hit new quality measures—quality measures that didn't exist in the 1990s.

But the quality measures built into ObamaCare's ACOs aren't working so well yet either. Indeed, last week, virtually all of the health providers that Medicare has dubbed "Pioneer ACOs"—the program's leaders and examples—sent a letter to Medicare officials overseeing the program in which they threatened to drop out. The reason is that the Pioneers feel that the performance and quality metrics aren't up to snuff—and the data doesn't yet exist to determine what the metrics should look like. As Inside Health Policy, which first obtained the letter, notes, "The Pioneer ACOs were supposed to be the few shining examples of organizations that could handle outcomes-based pay." Instead, they're threatening a revolt.

Health reformers had high hopes for ACOs, but so far the results just aren't promising. Yes, the ACO model seems to work quite well inside a small number of high-quality medical systems—highly coordinated institutions like the Mayo Clinic, Intermountain Health, Geisinger Health System, and the Cleveland Clinic that provide fantastic care and hold down costs. These health systems were the models for the larger reform. But like so many successful localized health policy reforms, it's proving very difficult to scale. Indeed, ObamaCare's ACO rules were so poorly written that the model ACOs—the poster children for why ACOs would work—declined to participate in the Pioneer program, citing over-prescriptive rules and an excessively bureaucratic approach overall. This is what federally run delivery system reform actually looks like: a lot of failure and frustration. And it's why we should be skeptical that modest reforms will ever be enough.

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  1. You might also mention that one of the things that was supposed to save so much money in Obamacare – the shift to electronic health records – is actually vastly inflating costs.

    No, not because it costs money to implement EHR.

    But because once doctors and hospitals successfully deploy EHR systems, consultants come in and teach them how to use them to bill more to insurance companies and Medicare.

    Apparently the old system where a doctor wrote something down on a chart and then the hospital billed for the service actually underreported billable services. Once it’s all database-driven, you can set up business rules and stored procedures that make sure that every last billable event ends up in the EHR system. Voila – massive billings increases.

    Nice work, Obama.

    1. “I had the most absurd nightmare. I was poor and no one liked me. I lost my job, I lost my house, Penelope hated me and it was all because of this terrible, awful Negro.”

    2. I wrote about that here: https://reason.com/blog/2013/02…..nic-health

      Thought about mentioning it in this piece, but didn’t. But yes — it’s a pattern. The technocratic reforms that are supposed to painlessly reduce costs don’t seem to be very successful.

      1. Also you have to realize from an IT/database perspective, while increased efficiency would theoretically result from electronic records, the reality is that it will likely result in massive databases that are improperly maintained and unwieldy as hell. And I say this as someone who manages and works in multiple multi-terabyte databases.

        1. Hey Epi, I have a question. In several instances I have run into programmers who make data entry systems that take more time to run through than writing things down. Is there anyone pointing out that a drop-down menu with 200+ items is not fucking useful/efficient?

          1. Yes. They are lazy and have never been taught to think of usability. It isn’t all their fault, few people do. Its easier to bind all the items to a list than present useful information.

          2. Is there anyone pointing out that a drop-down menu with 200+ items is not fucking useful/efficient?

            As a software engineer, all I can say is “LOL!”

          3. As Brett said, many programmers are lazy and hate doing good UI design (because it requires more work and thought). They’re not going to be the ones using it, so they don’t care. This is a particular feature of in-house software, because there is no “customer” to make choices; you have to use what they make because it’s all you have.

            1. to be fair it takes a different skill set and it’s usually management unwilling to pay for user experience experts.

    3. Like when you hurriedly put together an all-encompassing, sweeping overhaul of the medical insurance industry you could have thought of everything.

  2. Yet More Evidence That ObamaCare’s Cost Reforms Won’t Work

    Oh they’re working. Exactly as intended.

    1. This!

  3. Critics have compared ACOs to 1990s-style Health Maintenance Organizations (HMOs), which they say only held down costs by being stingy with care and access, and which were deeply unpopular with the public.

    I have loved my HMO since I shifted to it from my traditional health insurance 24 years ago. My family has had no access problems, they seem to pay for more services and our paperwork is almost non-existent.

    1. Here too. Although we had a bad experience with a non-integrated HMO. Our current experience with Kaiser has been pretty good, and premiums and other expenses are much lower.

  4. The picture is Big Brother creepy.

  5. Those guys seem to know what time it is over there for sure.


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