When Barack Obama went to Congress to pitch his health care law in 2009, he said the U.S. needed to expand access to insurance and control the cost of care. “We spend one and a half times more per person on health care than any other country, but we aren’t any healthier for it,” he told lawmakers.
The law he signed five years ago succeeded in expanding access, with 16.4 million uninsured people gaining coverage.
How’s the president doing on cost control?
The Patient Protection and Affordable Care Act (PPACA) let the administration create several experiments designed to transform how health care is paid for. The goal is to find alternatives to the fee-for-service system that pays doctors and hospitals more for doing more tests and treatments. That system has long been blamed for hundreds of billions of dollars of wasteful spending that doesn’t help patients and sometimes harms them.
In January, the Obama administration announced plans to accelerate a shift to new experimental payment models it has tested in the past few years. Medicare, the federal insurance for Americans 65 and over, already makes about 20 percent of its roughly $350 billion in annual payments through the new models, and the administration wants to raise that to 50 percent by the end of 2018.
There’s little evidence that those experiments meaningfully control costs.
“The savings they create are modest,” said Alan Weil, editor in chief of Health Affairs, a health finance and delivery policy journal. Weil has said the reforms move in the right direction, but has criticized them for being “insufficiently disruptive.” While changing doctors’ and hospitals’ incentives is important, Weil said, “I just think humility in what we can expect is needed.”
Medicare declined to make officials available for an interview and didn’t respond to written questions.
The Obama administration has placed its bets on two approaches. The first is a model called accountable care organizations (ACOs), arrangements that encourage doctors and hospitals to collaborate to reduce costs while improving the overall health of their patients. Providers can get a share of the money they save. The second approach is called bundled payments, which attempt to limit the total price Medicare will pay for an “episode of care” such as a hip replacement. Bundled payments encourage doctors to avoid complications from surgery that can extend hospital stays, for example, because they won’t get paid more for extra treatment.