ACOs: Still Not a Solution
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Last Thursday marked the release of the much-anticipated final ACO regulations. Industry organizations like the AMA (American Medical Association), the AHA (American Hospital Association), and AMGA (American Medical Group Association), who had been full-throated in their critiques of the proposed preliminary rules six months earlier, dashed out statements supporting elements of the program almost immediately, praising CMS's willingness to adjust the rules, offer greater incentives for participation and actually listen to those providing the service.

This is interesting, however, as none of the changes addressed the real, fundamental flaws in the ACO model initially conceptualized in PPACA. As I laid out in my policy paper published by the Heritage Foundation, Why Accountable Care Organizations Won't Deliver Better Health Care - and Market Innovation Will, the ACO model simply overlays a new layer of Federal regulation and oversight on the existing system, doing nothing to address its flaws and inefficiencies -- most notably a piecework payment system that defies real accountability for better health outcomes and greater value. Moreover, given the scale requirements, this model stands to exacerbate the trend toward provider consolidation and does nothing to move to a market-based model of healthcare focused on transparency, patients, and accountability for better health outcomes.

In short, the Administration didn't get it before, they still don't get it and it's highly unlikely that they will. The organizations that have been considered models for healthcare delivery -- Geisinger, Kaiser, Mayo, Cleveland Clinic -- weren't mandated by the government; they were mandated by the market. The answer is not more regulation, more government intervention, and more bureaucracy, but rather greater transparency and greater accountability for costs and outcomes.


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Rhetoric and Reality—The Obamacare Evaluation Project: Cost
by Paul Howard, Yevgeniy Feyman, March 2013


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