How ObamaCare is already failing

A key technocratic gimmick of ObamaCare, the Accountable Care Organization, is rolling out now — but the wheels are already starting to come off.

ACOs are federally chartered health-care providers which, we’re told, will help doctors and hospitals better coordinate care to improve the health of Medicare patients and reduce costs.

According to ObamaCare’s supporters, ACOs will streamline communication among doctors and thereby result in more effective care for patients. Providers will be paid not according to the number of procedures they perform, but according to the quality of care they deliver. So doctors and hospitals will have a strong incentive not to repeat tests or perform procedures that don’t improve patients’ health.

But critics (like me) warn that, instead of helping doctors and patients to make individualized treatment decisions, ACOs will empower government bureaucrats to consolidate health-care providers into top-down organizations and dictate how care is delivered — at greater cost.

So who’s right?

Well, the theory underpinning ACOs was based on the success of a small number of highly coordinated health systems like the Cleveland Clinic, the Mayo Clinic, Intermountain Health and the Geisinger Health System. ObamaCare’s backers touted each of those organizations a model for ACOs.

But all four “models” have chosen not to join the first wave of 32 federally chartered “pioneer” ACOs launched this year — because the bureaucratic burden of following ObamaCare’s new regulations is just too high.

In a letter to the Department of Health and Human Services, the Cleveland Clinic writes that the rules are “replete with prescriptive requirements that have little to do with outcomes” and “detailed governance and reporting requirements that create significant administrative burdens.”

A top official at Geisinger echoed the criticism, calling the regulations “problematic” and noting that the rules seem “to be very prescriptive and restrictive with a fair amount of administrative and regulatory oversight.”

So the ACOs aren’t about delivering better care. They’re about empowering the federal bureaucracy.

Nor will they save significant money. If they work as promised, the Congressional Budget Office expects ACOs to reduce Medicare outlays by about $4.9 billion between now and 2019. But Medicare spends north of half a trillion a year, a figure projected to rise to more than $920 billion in the next decade. So the savings from ACOs amount to less than 1 percent of expected expenditures over the period.

Some experts believe that ACOs won’t yield any savings at all. Last fall, Federal Trade Commissioner J. Thomas Rosch warned that the overall result of the ACO reform may “be higher costs and lower quality health care — precisely the opposite of its goal.”

How’s that? In many cases, “coordination” will amount to “consolidation” — that is, many health providers grouping together under a single ACO, which will give them greater market power.

Facing less competition, the new ACOs will have more freedom to hike their prices. Consumers will be left with fewer health-care choices.

As UC-Berkeley health economist James C. Robinson reported last year, “hospitals in concentrated markets charge significantly higher prices to private payers than do their peers in more competitive markets.”

The consolidations have already begun. The total value of the top 10 hospital mergers and acquisitions came in at $5.6 billion last year, up from $3.8 billion in 2010.

More bureaucracy. Higher prices. Worse care for Medicare patients. ObamaCare doesn’t fully kick in for some years, but it’s already damaging our already creaky health-care system. Repeal — and replacement by genuine reform — is a must.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top