In August, I wrote about how hospital monopolies are the biggest driver of health costs that nobody talks about. These powerful hospital chains know that insurers have no choice but to accept their jacked-up rates, and the cost of health insurance goes up whenever it suits their needs. Now, according to remarks by Federal Trade Commissioner J. Thomas Rosch, it turns out that accountable care organizations—one of Obamacare’s most touted policy gizmos—could make this problem far worse. “The net result” of ACOs, says Rosch, “may therefore be higher costs and lower quality health care—precisely the opposite of its goal.”
Rosch spoke last Thursday before the American Bar Association’s Antitrust Fall Forum, where he lambasted the “unintended consequences” of Obamacare’s headlong rush into the buzzword-filled land of accountable care organizations. ACOs, you will recall, are meant to improve the degree to which various physicians treating the same patient cooperate with one another. In theory, this would lead to better, more integrated care and reduced waste. In reality, ACOs will also stimulate mergers between hospitals and physician groups, worsening the problem of provider consolidation.
ACO’s purported savings shift costs to private insurers
The Congressional Budget Office, much to the dismay of Obamacare’s advocates, didn’t put much stock in ACOs, projecting that the law’s new Medicare ACO initiative would save $5.3 billion over ten years: eight-hundredths of one percent of Medicare’s projected spending over that period. “In other words,” Rosch points out, “the savings to Medicare from the ACO program are no more than a rounding error. Yet even the CBO’s modest cost savings projections are likely overstated.”