Healthcare providers have long been among Obamacares most enthusiastic supporters. The American Medical Association, the American Academy of Pediatrics, and the American Hospital Association have all spoken out in favor of President Obamas signature piece of legislation.
But their statements of support are proving to be little more than lip service.
According to an August survey conducted by the Commonwealth Fund, three-quarters of hospitals have expressed no interest in forming Accountable Care Organizations, the integrated networks of healthcare providers that are at the heart of Obamacares efforts to coordinate care for Medicare patients across the healthcare system, eliminate waste, and control costs.
Hospitals and doctors are revolting because ACOs saddle them with significant financial risks and substantial new administrative burdens. Patients wont like them because theyll put government bureaucrats not their doctors in charge of their care. Ultimately, ACOs will reduce competition throughout the healthcare market place and raise costs.
Obamacare offers financial incentives to providers for creating ACOs. But the bribes arent working. According to the Commonwealth Fund survey, only 13 percent of hospitals reported that they were participating in an ACO or had plans to do so this year.
So far, 154 ACOs have been formed; theyre serving 2.4 million Medicare recipients. Thats far below the Obama administrations prediction that the Affordable Care Act would spur the formation of 270 ACOs this year.
The first problem with ACOs is pretty fundamental theres no specific model to imitate. Kaiser Health News compares an ACO to a unicorn: Everyone seems to know what it looks like, but nobodys actually seen one.
If anything, ACOs resemble the Health Maintenance Organizations (HMOs) of the 1990s that produced lower-quality, centralized care, failed to control costs and were detested by consumers.
A handful of organizations in the United States have had success integrating the delivery of health care including the Mayo Clinic, the Cleveland Clinic, Geisinger Health System, and Intermountain Healthcare. Obamacares champions have held these groups up as potential models for ACOs.
But all four have declined to participate in the pioneer ACO program, which was tailor-made by the Obama administration to reward such organizations, according to Kaiser Health News.
The Cleveland Clinics CEO called the Obama Administrations rules replete with prescriptive requirements that have little to do with outcomes, and many detailed governance and reporting requirements that create significant administrative burdens.
Indeed, the administration would require providers to absorb any losses they incur if they fail to realize the savings regulators demand. The ACO rules would also force providers to collect data on all sorts of indicators of healthcare quality. That data may be useful but the infrastructure for obtaining it will cost billions.
Last year the Obama Administration overhauled the ACO requirements in an attempt to reduce red tape and entice healthcare providers to participate. It announced that it would give them money upfront through its so-called advance payment initiative, so that they could access to the capital needed to invest in infrastructure [for ACOs].
And thats on top of the $10 billion the Center for Medicare and Medicaid Innovation was given in mandatory funding by the health care law a big chunk of which was expected to help kick-start the creation of ACOs.
Despite all the hype, ACOs dont even appear to save the healthcare system much money. The nonpartisan Congressional Budget Office estimates that the entities will reduce Medicare spending by only $4.9 billion through 2019. Thats less than 1 percent of Medicare spending over that period.
Some observers even believe that ACOs could make health care more expensive. A study published last year by James C. Robinson, Director of the Berkeley Center for Health Technology at the University of California, concluded that health care consolidation into ACOs reduces market competition.
Consequently, a smaller number of big health organizations could demand higher payments from insurance companies and other payers. Insurers would simply pass those cost increases on to consumers in the form of higher premiums.
Wrote Robinson, the ongoing consolidation of local hospital markets is already frustrating the efforts of employers and private insurers to moderate the growth of health care costs.
So providers are rejecting the ACO model on the front end nervous about the significant and costly administrative burdens theyll pose. But if they fight through the red tape and establish the ACOs that Obamcare wants them, theyll find themselves unrestrained by competition and free to raise prices. Not exactly what the Obama Administration has in mind.
The fact that so many providers are rejecting the call to become ACOs only represents Obamacares latest failure. But that failure bears good news for patients.