Opinion | Obamacare is not saving US health care costs

Given the high costs of the U.S. health care system, it’s natural to think that there must be an easy way to make significant savings. After all, the United States spent 16.6% of its gross domestic product on health care in 2022, compared to just 12.7% for Germany, the next highest spender, according to statistics from the Organization for Economic Co-operation and Development. Since Germans are not dying on the streets due to lack of care, it seems clear that at least a quarter of the spending can be cut to have no negative consequences.

When the Affordable Care Act was enacted nearly 15 years ago, its framers began seriously looking for those savings, pursuing various theories about where they might be found. With some skepticism, I began calling this the search for a “magic pot of money” that could be surgically removed without worsening anyone’s condition.

Years have passed and we still haven’t found the magic pot of money.

This isn’t because people aren’t trying hard enough. Obamacare included many elements that were expected to result in significant cost savings while actually improving the quality of health care.

The hope was that preventive treatment would help detect symptoms early and avoid costly emergency room visits. (Treatment for high blood pressure is much cheaper than for stroke.) Doctors and hospitals could be compensated for keeping patients healthy rather than performing expensive procedures. A government committee similar to Britain’s National Institute for Healthcare Evaluation could rigorously evaluate treatments for cost-effectiveness. The Innovation Center will experiment with new models of care to drive further innovation.

The innovation center, known as the Center for Medicare and Medicaid Innovation (CMMI), will conduct pilot projects aimed at lowering costs and improving quality of care, and will be the first in the government’s first decade of operation under the Congressional Budget Office. (CBO) estimates that it will save approximately $2.8 billion.

This isn’t a huge amount in the context of overall health budgets — Medicare spent about $750 billion in fiscal year 2022 — but it’s a move in the right direction and includes This was carried out in the context of reforms. Healthcare system organizations (ACOs) will lead the health care system toward higher quality and lower costs. Additionally, savings will be cumulative, as will the expansion of his CMMI expertise in improving health systems.

Unfortunately, CMMI came to an end after its first 10 years. Costing It will cost the government about $5.4 billion and is expected to cost the government an additional $1.3 billion by 2030. Nor is CMMI the only initiative to fail in this way. In a June letter to Sen. Sheldon Whitehouse (DR.I.), CBO reported that “overall, the evidence regarding the impact of ACOs on Medicare spending is mixed.” To paraphrase Wonkese, this means that it was difficult to determine whether ACOs delivered significant savings.

It turns out that preventive treatment costs more than it saves. One of the reasons for this is because he may need a doctor to treat the disease. many Relieve mild symptoms to prevent serious health crises. They found that expanding the number of people insured increases, not decreases, emergency department visit rates because people are less worried about the costs of newly insured people. A program to reduce readmissions for Medicare patients may have resulted in thousands of deaths as hospitals sought to avoid admitting patients who might be subject to readmission penalties. In a plan to encourage the creation of new insurance cooperatives, a type of voluntary public option, nearly all insurance cooperatives failed within six years.

This is not to say that everything in the Obamacare program was worthless. (Well, the one that could have killed someone was bad.) But innovation also comes with the risk of failure. This shows how difficult it is to actually change the system in a way that produces significant savings.

It’s not that we don’t know how to save money. The system could run more efficiently by reducing slack, but it would also make people wait longer for many tests and treatments, like Canadians and Brits. . The average salary for a doctor in 2021 is $316,000, but that could be reduced to the level of doctors in Germany ($183,000) and British doctors ($138,000). The government could mandate drug price reductions, resulting in Americans losing access to drugs that are not worth producing at the mandated prices and to many drugs that have not yet been developed.

The problem is, these savings aren’t free. There are also many other potential savings that I cannot name for space reasons, and you are probably preparing to email me right now.

These savings come with significant other costs, making them too expensive to consider politically. If you try to cut doctors’ salaries almost in half, they’ll be shocked. If you tell other people that they can’t get that fancy new drug they just read about and that they have to wait six months to see a specialist, they’ll panic too. Politicians know this and are unwilling to take risks. This is why it turns out that most of the geeks who were looking for the magic pot of money were chasing rainbows.

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