Tags: Barack Obama | Healthcare Reform | Obamacare | ACOs | health savings | cost savings

WSJ: Obamacare Health Savings Failing

By    |   Monday, 20 Oct 2014 12:01 PM

Obamacare was to have reduced health spending in the United States, according to its proponents, but evidence is growing that the reductions aren't happening, says an op-ed in Monday's edition of The Wall Street Journal.

The cost savings were to occur through the health reform program's Accountable Care Organizations, which set standards for healthcare that brought hospitals, primary care physicians, and specialists together into teams to efficiently coordinate patient treatment.

The model was introduced as a federal regulation in 2011, the Journal reports, and allows providers that reduce spending by using the formula to receive a bonus representing a portion of the savings. It also requires providers that spend more than the benchmark to pay a penalty.

The program was to have saved costs, but, according to a recent Health and Human Services release for its first two years, that hasn't happened.

The initial ACO project used 32 health systems that had been picked by HHS after making progress toward Medicare cost savings through using similar systems. But in two years, 13 of those systems dropped out after spending increased.

The first year alone, spending went up at 14 sites, and only 13 of the initial 32 sites got their bonus. The second year, spending went up at six of the remaining 23 sites, with 11 receiving a bonus.

Spending did fall, though, with the pioneer ACOs saving taxpayers $17.89 million in 2012 and $43.36 million in 2013, with per capita spending coming in at 0.45 percent lower than the usual fee for service Medicare.

The start-up costs went up to $64 million, the HHS report shows, so "at best the program is a wash," says the op-ed piece.

But as the Medicare budget was $583 billion, and even the most experienced providers could not cut costs, "what about the community hospitals that need the most improvement," says the Journal.

Meanwhile, the HHS' second ACO pilot program, which offers rewards for coming in under target but no penalties when that does not happen, also did not work out as planned.

Among 114 of those types of plans, just 29 hit the financial targets in 2012, saving $128 million and getting paid back $126 million in bonuses. Then, in 2013, just 64 of the 243 ACOs hit their targets.

The ACOs are failing, says the Journal, because the HHS rules are a "classic case of counterproductive and arbitrary central planning," with governments paying hospital groups to come up with lower bills rather than stay with a system that generates higher bills but no bonuses.

Meanwhile, integrated health systems, such as the Mayo Clinic and Kaiser Permanente, refused to become pioneer ACOs, with Mayo writing that both programs are "too complex in their structure and requirements. They are excessively detailed and restrictive in ways that have significantly limited the number of interested groups.”

Instead, says the Journal, patients should be given incentive and pricing information through a plan like Wisconsin Republican Rep. Paul Ryan's defined-contribution Medicare reform plan, as hospitals would adapt to compete for business.

"Mandating a new industry business model through the Federal Register was never likely to amount to much, however well meaning," said the op-ed piece.

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Obamacare was to have reduced health spending in the United States, according to its proponents, but evidence is growing that the reductions aren't happening, says an op-ed in Monday's edition of The Wall Street Journal.
Obamacare, ACOs, health savings, cost savings
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2014-01-20
Monday, 20 Oct 2014 12:01 PM
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