Thursday, October 11, 2012

More Reasons Why Obamacare Is the Wrong Approach to Reducing Costs

The Wall Street Journal reports this morning on yet another study finding that reforms to change the delivery system of health care have failed to produce their intended results:

A high-profile Medicare policy that sought to reduce certain hospital-acquired infections by cutting payments tied to treating them turned out to have no impact, according to a new study in the New England Journal of Medicine.  The study…found “no evidence” that the shift had any measurable impact on the infections, which were already decreasing before the change went into effect.  The study follows other research that has cast doubt on the effectiveness of some efforts to tie reimbursement to quality-improvement efforts in health care, an approach that is being considerably ramped up under the federal health overhaul.

While this particular initiative pre-dates Obamacare, the health law builds on the same concept – that federal bureaucrats can reduce Medicare costs by engaging in various tweaks to the health care delivery system.  Unfortunately, however, several other recent studies have come to the same conclusions as this morning’s report – that these efforts to “build a better mousetrap” in Medicare will not succeed in reducing costs:

  • A paper in Health Affairs (subscription required) released last week found that even “aggressive” improvements in performance measures by accountable care organizations caring for diabetic patients would result in minimal cost savings – and “after the costs of performance improvement, such as additional tests or visits, are accounted for,” those minimal cost savings could become cost increases.  In other words, an initiative the Administration has trumpeted as “bringing real change to a health care system that has cost us too much” won’t have much impact on reducing costs.
  • A recent analysis of North Carolina’s patient-centered medical home initiative found the program yielded no budgetary savings, contrary to expectations.
  • More broadly, the Congressional Budget Office noted earlier this year in a major report that most Medicare demonstration programs over the past several decades have NOT saved money – re-iterating the above findings, and again suggesting Obamacare’s efforts to control costs by micro-managing Medicare in a slightly different fashion won’t work.

In an article this morning, the New York Times notes that “in the 2008 campaign, Mr. Obama often told voters that he would lower premiums by $2,500 a year per family ‘by the end of my first term as president.’  It has not happened…”  That fact should be glaringly obvious to anyone who has paid a health insurance premium in recent months.  And the events of the past few weeks demonstrate both why Obamacare has failed to lower costs thus far, and is also unlikely to lower costs in the future.