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ACA Fail Fractal
ACA's Cost-Saving Measures Flounder

Two of the ACA’s cost control measures are backfiring. In Los Angeles, Consumer Watchdog filed two more lawsuits against a couple of large insurers, Cigna and Blue Shield, for restricting their provider networks in the wake of the Affordable Care Act. One of the key ways the ACA tries to rein in costs even as it expands access is decreasing the number of doctors and hospitals plans give their users access to. Naturally, this tends to upset consumers, especially ones who have long-standing relationships with providers now excluded from their plans, or who were misinformed about the network status of a chosen provider. Kaiser Health News reports:

According to the Cigna complaint, Sheila Davidson, a 61-year-old from Orange County suffering from pelvic inflammatory disease and other health problems, selected a plan after her former policy was cancelled, and after checking to make sure her specialists were included.  At first, the plan paid her doctors’ bills and counted her share of the payments toward her annual deductible.

But the complaint alleges that when Davidson was about to reach the $6,350 annual maximum she had to pay for in-network care, Cigna switched all her doctors to out-of-network status.  That meant she had to pay a $12,500 deductible before the insurer reimbursed anything.  She has appealed that decision with the insurer, but has not yet received a decision, she said.

Meanwhile, the flagship Accountable Care Organization program created by the Affordable Care Act took another hit this week, according to the WSJ. ACOs are teams of doctors and hospitals that agree to coordinate care for Medicare patients. If they keep costs below certain benchmarks, they get to keep some of the savings as profit. It sounds great in theory, but of the 32 groups that signed up for the ACA’s pilot program, only 19 remain after another four left this week. The four that just left did so in large part because they could not meet the benchmarks set by the program and weren’t seeing any of the savings come back to them. Of the 19 still in the program, the results have been poor to mixed, with only 11 seeing any savings at all.

Next to less intricate reforms that have a good track record of producing savings—like price transparency, wider use of clinics and nurse practitioners, and cost-sharing—the ACA’s cost-saving measures have fallen wide of the mark.

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  • LarryD

    Command and control founders again. As expected.

  • Corlyss

    Congress has never been very good at imposing taxes and fees on a large number of voters. They’re good at singling out small sectors of unpopularly rich guys or businesses, but not people that can actually hurt the Congressmen.

    • Thirdsyphon

      I think you have it exactly backwards. Congress ratchets up payroll taxes on middle-class wage earners almost every year, while hedge fund managers get to skate by with a tax rate under 15% that nobody seems able to fix. The reason is that small groups of wealthy guys can easily organize to preserve their tax breaks, whereas vast swaths of ordinary workers with less at stake for each individual one of them have a much harder time coordinating themselves into a lobby.

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