ObamaCare’s Failing Cost Control

The law’s ‘accountable care’ experiment is a bust so far.

WSJ editorial, 10-20. Excerpts: 

"A major claim of ObamaCare’s political salesmen is that it will reduce U.S. health spending. The heart of this claim is the Accountable Care Organization, or ACO, but already evidence is accumulating that it isn’t working."

"a speech from HHS Secretary Sylvia Mathews Burwell citing “evidence that we have bent the cost curve.” The data show the opposite."

"The Medicare “Pioneer” ACO project originally featured 32 experienced health systems hand-selected by HHS"

"In year one, spending increased at 14 sites and only 13 of the 32 qualified for a bonus. In year two, spending increased at six of the remaining 23 and 11 received a bonus. Spending did fall somewhat overall, driven by a few high-performance successes. After netting out the bonuses and penalties, the Pioneer ACOs saved taxpayers a grand total of $17.89 million in 2012 and $43.36 million in 2013. All in, per capita spending was a mere 0.45% lower compared to ordinary fee for service Medicare."

"Yet the upfront start-up investments for the pioneers (in administration, compliance and information technology) ran to $64 million, so at best the program is a wash."

"Shared Savings program. Among those 114 ACOs, only 29 hit HHS’s financial targets in 2012. They saved $128 million and were paid $126 million in bonuses. In 2013, only 64 of 243 participants hit the targets."

"ACOs are failing because HHS’s regulations are a classic case of counterproductive and arbitrary central planning: The government is paying hospital groups to generate slightly lower bills. As the quitters may have discovered, it is more remunerative to stay with the old system, with higher hospital bills but no bonuses."

"HHS also refused to involve seniors or give them any reason to choose ACOs over other providers."

"patients often never know they are being treated by a given ACO"

"the ACOs cannot accurately know which patients belong to their organization, they cannot understand how they are performing"

"the integrated health systems that ACOs are supposed to recreate—Mayo Clinic, Geisinger, Kaiser Permanente and the rest—refused to become pioneers when the ACO regulations first appeared."

"Mayo wrote that both ACO programs “are still too complex in their structure and requirements. They are excessively detailed and restrictive"