Obamacare Harming Ventures to Control Health Costs
Amidst the ongoing debate about whether Medicare can contain costs, it’s worth looking at a relevant article in the issue of Health Affairs released yesterday. The article (subscription required) traced one Medicare Advantage plan, a chronic condition special needs plan for patients with diabetes operating in several states in the South. The plan in question engages in home house calls, nurse management, care transitions, and other similar interventions to improve the quality of care beneficiaries receive. The study examined diabetic patients in the plan on several metrics of care, and compared their health outcomes to a cohort of diabetic beneficiaries who remained in government-run Medicare. The results? Enrollees in the Medicare Advantage plan “had lower admission rates, shorter average lengths-of-stay in the hospital, lower readmission rates, slightly lower rates of hospital outpatient visits, and slightly higher rates of physician office visits than their fee-for-service counterparts.” In other words, beneficiaries in the private Medicare Advantage plan got better care than beneficiaries in government-run Medicare. And government-run Medicare’s outcome gap between white and non-white patients was virtually eliminated under the Medicare Advantage plan.
In one instance at least, it appears that beneficiaries in Medicare Advantage plans are getting better care than in government-run Medicare. So what does Obamacare do to these innovative plans? It cripples them. According to one study, Obamacare’s Medicare Advantage cuts by 2017 will cut enrollment in half, and cut plan choices by two-thirds. Not only will fewer beneficiaries enroll in these plans and therefore receive these types of benefits – fewer plans will even come into existence, meaning there will be fewer innovative practices created like the ones profiled in the Health Affairs piece.
In recent weeks, liberals have taken to making the point that Medicare has a great record of reducing costs. And in one sense, it does – it can do a great job of dictating prices to providers, at least in the short term. But all those arbitrary reductions in provider rates merely cause the air in the proverbial balloon to move when squeezed, as private insurers pay more because government insurers pay less. The real savings comes in reducing costs by improving care – and on that note, the Health Affairs article shows but one way the private sector is outperforming the federal government.
Thus, even as the federal government, in various Obamacare provisions, is trying to create new care integration models in order to replicate what the private sector has already achieved, it’s simultaneously undermining those private sector innovations by cutting payments to Medicare Advantage plans. This perverse behavior is one more reason why Obamacare will not live up to its promise of containing health care costs.