WBUR’s online health care blog, “CommonHealth,” has a flashy headline article today titled Massachusetts Attorney General Drops Health Reform Bombshell. What’s the bombshell? That the state’s proposal to control health care costs by moving people into accountable care organizations (ACOs) is unlikely to work, because patients who are currently covered by similar arrangements receive care that as just as expensive as everyone else. ACOs are supposed to control costs using old managed care tactics that led to patient and provider revolts in the 1990s: forcing patients into limited networks, where they have a limited choice of doctors and hospitals, and paying providers on a “capitated” basis. Capitation means that providers get paid a fixed amount for treating a patient for a whole year, regardless of how much or how little it ends up costing to treat them. The theory is that this will remove the incentives for providers to over-use certain types of care, since they actually lose money by providing more care. The reality is that it gives providers an incentive to avoid people with serious health issues, and to provide less care (appropriate and inappropriate) to those they do cover.
WBUR could have added a subtitle, “Commonwealth of Massachusetts Drops Health Reform Bombshell,” because the Governor’s administration also just released a report showing that health care costs for people with private insurance is going through the roof – a 10% increase from 2008 to 2009, more than twice the national average, and more than five times the rate of inflation. Did the state find that these costs were due to over-use of care and growing utilization? No – the report states that it is rising prices for receiving the same care, not growing use of care, that explains virtually all of the rising health care costs in private insurance. In other words, preventing over-use of care, which is what ACOs are supposed to do, will not address the problem of rising costs.
WBUR could have added yet another subtitle, “Massachusetts Attorney General and Commonwealth of Massachusetts Dropped Health Reform Bombshell Last Year, but We Weren’t Paying Attention,” because both of these agencies included the same finding when they released their annual reports in 2010. I was struck by how the state’s research was diametrically at odds with the direction the state was moving on health policy, and reported on it here at Blue Mass Group.
Winston Churchill has a famous saying: “You can always count on Americans to do the right thing – after they’ve tried everything else.” It would seem that when the state has to resort to trying to implement, again, the follies of managed care from two decades ago – attempting to solve the cost problem by limiting patients’ use of care – we have tried everything else but single payer.
ACO’s are not counting on financial risk of providers with payers holding the key. ACO’s reward outcomes, QUALITY OF CARE. No such thing existed under Managed Care.
There are quality performance measures, coupled with the cost controls will push towards a more cost effective model. Well, that’s the plan.
What you are post is wrong, Charlie frames is a better summary of the AG report.
ACOs are very complicated – they win both by reducing cost AND by increasing quality. Do one without the other, and they should, in theory, lose.
I’m somewhat skeptical that they’ll work because the complexity is great and there may be ways to game the system that we don’t know about yet.
So much work just to protect insurance companies! If we just adopted health insurance schemes like every other developed world has, we’d pay 30% less for health care and not have to experiment with things that can blow up in our face.
“If we just adopted health insurance schemes like every other developed world has,”
Mars and West Neptune are a little off my beat, but closer to home, what would be left for us to be innovative and entrepreneurial and supply-side about if we give up the fancy-funding of medicine? Everything crudely physical is already imported from Shanghai or Bangalaore, and more spiritual industries like cybernetics and military aviation are likely to follow soon. Are we REALLY all to live happily ever after by taking in one another’s genetic modifications? Even with real estate, it seems a slender foundation.
True, there are lots of raw materials we can produce indefinitely for use by our economic betters in the neodeveloped countries, but there is not all that much scope (is there?) for a constant stream of Kuhn-worthy Copernican revolutions in agriculture or pastoralism or mineral extraction.
(( On a parochial note: Massachusetts is a very poor cousin in these departments. Not quite Iceland is our poor MA, perhaps, but dangerously close. Which reminds me that probably the fish will not be coming back either . . . . ))
The promise of “insurance schemes,” on the other hand, is as bright as ever, and by no means “HEALTH insurance schemes” alone, for one of the few great Vistas of Innovation still open before us is all the human events that have never yet been properly reduced to insurance fodder. Educationalism, for example, cries out to be insurance-ated, and not tertiary educationalism alone. Surely parents ought to be able to buy a policy that guarantees either a proper elementary schooling for Dick and Jane (and maybe Spot as well), or else financial compensation for their missing out on it?
Plus why not Lottery Insurance?
In a way “insurance insurance” seems the _ne plus ultra_, but this product, I believe, has already been invented, essentially, in the form of “credit default swaps.”
However, at this point my own grasp of all the scrumptious complications fails: “Let them that know it tell it, / Who in that joy have part.”
Happy days.
What government program was EVER successful “reducing cost AND by increasing quality”? I can’t think of one.
When Martha Coakley starts sticking her toe into the health insurance waters, we’re doomed. There is no way ACO’s will slow down health care inflation. Only putting health care spending control in the hands of patients will do that.
… to mind also happens to be possibly the most socialistic program in existence in the US:
The VA.
What makes you think this isn’t already true? Patients are very very free to ration any medical service they receive. And just to point out how wonderfully-alinged-with-right-leaning-sensibilities this is, they are free to do so at their own risk. See? Personal responsibility.