Not-So-Affordable Care

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In a 2022 book, Seemed Like a Good Idea, health economist Mark Pauly and his University of Pennsylvania coauthors describe how health-care policymakers “often rely on hope or conjecture, not rigorous evidence of effectiveness” when proposing and implementing new programs. Even when those programs fail, as they usually do, the authors argue that policymakers often persist in supporting them. Look no further than the Affordable Care Act, aka Obamacare or the ACA.

Obamacare’s proponents claimed that the American health-care system could and should be transformed from a fee-for-service model to one based on “value.” To make this transition, the law would promote the formation of accountable-care organizations, or ACOs—groups of health-care providers that assume responsibility and financial risk for the quality and costs of care for a defined group of patients. These groups would presumably yield superior care coordination, enhanced quality, and ultimately lower costs.

When Obamacare was enacted, commentators noted that the proposed ACOs looked like the integrated-delivery networks tried in the 1990s and the Medicare Coordinated Care Demonstration projects funded in 2002, both of which failed to lower costs and improve quality. But the health-policy community insisted that it knew better. A recent publication from the Congressional Budget Office (CBO) suggests that, as usual, they were wrong.

The federal government’s Medicare program operates ACOs through the Centers for Medicare and Medicaid Services (CMS) under two parallel tracks: the Center for Medicare and Medicaid Innovation (CMMI) and the Medicare Shared Savings Program (MSSP). Thirty-nine percent of Medicare’s fee-for-service beneficiaries are enrolled in an ACO.

Read the full article on City Journal.