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Has Obamacare's Biggest Cost Saving Measure Failed?


A major way Obamacare sought to control health care costs was through encouraging Accountable Care Organizations (ACOs). In theory, ACOs lower costs by allowing doctors to pocket a percentage of the savings they create when they find ways to deliver care more efficiently. Unfortunately, the theory behind ACOs hadn’t yet been tested when Obamacare passed. As the months go on, the data hasn’t been encouraging. The WSJ reports on the latest results of the ACO pilot program set up by Obamacare:

All of the 32 health systems in the so-called Pioneer Accountable Care Organization program improved patient care on quality measures such as cancer screenings and controlling blood pressure, according to data to be released Tuesday by the Centers for Medicare and Medicaid Services. But only 18 of the 32 managed to lower costs for the Medicare patients they treated—a major goal of the effort.

Two hospitals lost money on the program in the first year. Seven have notified CMS that they intend to move to another program where they will face less financial risk. Two others have indicated they intend to leave the program, CMS says, but it declined to identify them.

When we last covered ACOs, we expressed hoped that they could be a source of savings but noted, “These kind of organizations are still in the experimental phase, which makes Obamacare’s embrace of them premature. This may turn out to be (yet another) challenge for Obamacare’s implementation.” The ACOs in the pilot program still have two more years to reach their benchmarks, but based on the first year data it looks like we were right.

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  • bpuharic

    56% of them lowered costs? And this means they failed to lower costs?

    So if you exclude successes then it’s a failure. Hard to argue with that!

    AND it improved HEALTH. Seems to be a winner there as well…

    • Nick Bidler

      Given that it was supposed to lower costs across the board, I would assume it would need better-than-coin-flip chances at price reduction to count as a ‘success.’ I’d have counted ‘success’ as being closer to 70-75%.

      It is possible to not be a ‘success’ without being a ‘failure,’ but this leaves me doubtful about the ACA’s ability to improve coverage and reduce costs. (Doubly so for me, since I’m a 25-year-old male, and I’ll be paying for my parents’ and grandparents’ health insurance until they die.)

  • Beauceron

    “Unfortunately, the theory behind ACOs hadn’t yet been tested when Obamacare passed.”
    That’s a diplomatic way of putting it.
    Another way would be to say that the Obama administration and his supporters pretty much made up things as they went along, regardless of whether or not it had any potential of being true or not.

    • bpuharic

      Actually what they did was make sausage. The US right wing had its special interests diametrically opposed to any middle class benefits at all. This was what we got.

      • avery12

        since dems passed it in both the senate and house without a single republican vote, there was nobody to placate. rather they have never had the opportunity until obamacare to pass anything that so purely reflected the democrats vision alone and unadulterated. that this vision is of hustling and scamming American citizens on the grandest scale is an observation that has not been lost upon the observant.

        • bpuharic

          The GOP is the most radically right it’s been in 6 decades. It’s ceased to be an American party and now is interested in the deification of capital. It will do what it necessary, including destruction of the middle class to achieve this (e.g. polices leading to TARP.)

      • saailer

        I just read one of your comments from Zimmerman. I realize this is off the subject being discussed, however since the comment is days old I thought you may not read it…#1) Offer, from trial, evidence that supports Martin was “chased down”…#2) “To execute” is to kill somebody as part of a legal or extralegal process. The usage of this verb is incorrect. And was used to amplify and distort what really happened. If someone chases down and executes (your wife’s terminology) that is cold blooded murder. It is intended as a subtle alteration; many of your comments drip with this method of propaganda. Rather typical of liberals when truth goes against their argument and whether I’m left or right I know deceptive information when I read it…

        • bpuharic

          Drip with propaganda? Hmmm…kind of like saying 47% of Americans are ‘moochers’?

          That what you had in mind?

          • saailer

            Not at all…you know what I meant

          • saailer

            Thank you for making my case…Other readers can now observe how you slid right past the main content of the comment and responded too “drip with propaganda”; the bait. …Hide, distort, and avoid the main issue and utilize any other word or phrase to change subject…

          • bpuharic

            The reason Zimmerman was acquitted was because of America’s infatuation with guns. A gun toting dude killed a black kid.

            And the fact is, he was under no threat. He was sitting in his car and was requested NOT to take action. He got out of his car and hunted down a black kid, carrying his gun

            It’s so American it makes you want to salute.

          • saailer

            A salute from you would be laughable…Unless you delete your initial response you have 23 in blackjack…Game over

      • WilliamK

        Are you saying the left does not have special interests? That would come under the umbrella of wild assertions.

  • Jim__L

    How much did they manage to lower costs? Across all 32, did costs drop?

  • ljgude

    I think the ACOs are an example of the kind of detail that may achieve modest cost savings but can not make a difference in the overall economic prognosis of Obamacare. The Swiss system, which like the American system, is based on insurance costs 11% of GDP and is one of the more expensive healthcare systems in the world. The US has been widely reported as costing 16% of GDP and recently I have been seeing some writers claim 17.5%, Interestingly the ACA caps US healthcare spending at 17.5% by 2017. The problem is that the US is the outlier – costing about double what many countries spend to produce slightly better health outcomes. If the ACA is going to survive it will need drastic change. I understand why liberals often favor single payer – with single payer the government can force that system to stop spending 50 cents of every healthcare dollar before it reaches anyone with medical training. (I heard that on NPR in about 1999 from a Clinton era health official) And I understand the opposition to that because no medical system can undergo losing half of its lolly without having a huge impact of health outcomes. Here is an example of how bad the current US system is. A relative just was hospitalized for blood clots in the lungs. To treat them the doctors need to thin the blood and quickest way to do that is Heparin which is injected directly into the skin in the stomach area. The cost of a weeks supply of Heparin is about $100 for a weeks supply from a drug store. The hospital provided it at such a cost that after Medicare paid their share, and the insurance paid their share the patient had to pay $200 per shot amounting to several thousand dollars to get them through a week and a half. The Time magazine article ‘Bitter Pill’ of a few months ago showed that these predatory practices are the rule, not the exception, in our hospitals. The article also pointed out that the healthcare industry spends far more than – wait for it – the defence industry. That certainly surprised me. The article demonstrates pretty convincingly that both parties are in the politicians pockets and the percentage of GDP it is costing us is going to continue, I believe, to bleed the economy until it collapses. Obamacare may make it as an established entitlement program and it may not, but it is built on an unsustainable level of expenditure. Our docs ain’t quacks, but those running things are crooks.

  • WilliamK

    Here is the problem. Everybody in the USA wants more healthcare than they are willing to pay for. Everybody expects some body else to pay. As long as no one has to take personal responsibility (expects unlimited “free” care no matter what) the expenditures will go up.

  • Pait

    I still think that the coverage of health in this blog is biased. This is a pity because it detracts from the blog’s strong areas. Hear the voice of the facts in the link below.

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