The editors of the Chicago Tribune pronounce cost control under the PPACA dead:
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. More to the point, the Medicare budget for 2013 was about $583 billion and these are supposed to be the most experienced providers. If most of them can’t succeed, what about the community hospitals that need the most improvement?
HHS runs a second ACO pilot for everybody else, with rewards but no penalties, called the 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.
The WSJ editors continue to cling bitterly to the illusion that market forces can bring down healthcare costs in the U. S.:
A better alternative would give patients the incentive and usable information about prices and value a la Paul Ryan’s defined-contribution Medicare reform. Doctors and hospitals will quickly adapt to compete for their business. That might mean ACOs or something else.
That might be true except that providers control both the supply and demand for healthcare. Revenues can be increased either by increasing the prices of individual services or by increasing the number of services prescribed. That’s no market.
The reality is that the fee-for-services model has fallen and it can’t get up. Under the model as it exists now almost all of the economic surplus is captured by producers while far too many patients can’t afford care. The PPACA with its healthcare exchanges has not improved on this. It has merely provided an illusion of improvement. For many people deductibles are unaffordably high.
Reform can no longer just nibble around the edges. It’s got to be a lot more basic than that.
According the the WSJ article the following is how the data was spun by the government:
The much-delayed data received zero media notice despite a speech from HHS Secretary Sylvia Mathews Burwell citing “evidence that we have bent the cost curve.†The data show the opposite.
The above exemplifies why people are trusting government-speak less and less.
“The reality is that the fee-for-services model has fallen and it can’t get up.”
The model may indeed have fallen and “lost it’s way.” But, I think it’s a far better idea to remodel it, rather than to say it can’t get up and is basically a “goner.”
“The data show the opposite.”
What data is that? Costs actually have slowed compared with historical averages.
Steve
Fee-for-service was workable when the numbers of available treatments/diagnostics was limited as it was in the early 20th Century, but today it just incentivizes doctors to make care expensive (more service, more fee). Incentives need to be for practicioners to help patients avoid costly services by keeping them healthy.
It is not possible for market forces to discipline health care costs as no market can exist. How do we draw a supply-curve for “health care”? How do producers know when to vary output/price when the best possible outcomes are preventing consumers from needing services in the first place? We can keep most of the industry private but to control costs there is no substitute for the government as monopsonist to negotiate prices.
It’s a question, not an assertion, but I’ve seen articles attributing the slowdown in health care spending to the recession, just like so many other good. That of course, if true, would reopen the market forces argument.
For your reading pleasure.
http://www.zerohedge.com/news/2014-08-21/obamacare-disaster-businesses-philly-fed-finds
The PPACA didn’t improve HC costs, it simply was a convoluted, oftentimes forced way for people to access health insurance.
For uninsured people it widened the medicaid footprint, as well as offering unverified subsidized policies to “low-income people,” in order to buffer premium costs. These were the so-called “winners” in the HC gambit. However, for the rest, the “losers,” the ACA uprooted what they were accustomed to in medical services, canceled policies, forcing them to conform to government set standards that didn’t necessarily fit their lifestyle, age group or needs.
Like Drew suggested, many think the recession has been a variable in inadvertently lowering HC costs. Individual deductibles going through the ceiling, is another factor, whereby people are having to self-pay greater amounts before they reach the point of having their insurance cover costs. This alone may cause people to delay or not even seek care for some problems. which adds into the perception of lower health care costs. I also think some of these same policy holders may see little benefit in even having health insurance with such high deductible. Thus they may cancel what they signed up for, and go without insurance, which many predict will raise the number of those without HC insurance in the near future.
Then there is physician dissatisfaction with government reimbursements and regulatory intrusions causing them to opt out of health insurance altogether, starting their own concierge practices. According to my insurance agent, this is a growing industry, because of Obamacare Finally, more doctors are accepting only cash payment for their services, and totally by-passing all insurance and government health care programs.. That’s been my experience this past year with doctors I have personally seen — privately paying before I walk out of their office. What this does is diminish the pool of services for the masses participating in Obamacare exchanges, creating a more frustrating, less responsive medical source for those with acute/chronic ailments. Basically, having an insurance card does not guarantee a person of having timely and quality medical care.
IMO, it’s a totally new and oftentimes unsettling, unhealthy way to seek healthcare. I can’t say, though, that it’s a better, more cost-effective system. Instead, it’s designed to be arbitrarily selective, in giving some affordable healthcare while tightening the screws to others.
I have copd and my wife has diabetes, both manageable conditions with medication. But there it is, how do you afford meds if your money goes to premiums and copays. Hate to say it outloud, but there comes a point where you cannot afford to stay alive.