Politico reported on a pilot program in ObamaCare. In an experiment under the Affordable Care Act, the Pioneer Accountable Care Organization program, were all able to improve patient care. Some were even able to lower Medicare costs.  The program’s results are similar to results found in the private sector, says Mark McClellan, former CMS administrator. The program is trying to reduce health care costs by increasing the health of patients through quality of care and reducing hospitalizations. In doing so, the results won’t spell immediate success for most organizations. McClellan advises that in a year, year and a half, or two years time, we will begin to see serious improvements in the health of patients, and a direct link to lowered Medicare costs. The Pioneer ACO will continue in the experiment, although some of the providers have left the program.

The Medicare Trustees reported encouraging news for seniors: the program is projected to retain its solvency for two years longer than was predicted in 2012.  Medicare is expected to be fully solvent until the year 2026, a decade longer than what predicted in 2009.  For seniors this means that the program has more funds than predicted, making extreme cost cutting methods such as cutting benefits for prescriptions unlikely.
This increase in funds is likely a direct result of Obamacare which takes $700 billion of “excessive and wasteful” payments previously being paid to private providers that service Medicare and reallocates those funds to Medicare directly.  The trustees also attribute the favorable projection to the recent slowing of healthcare costs which was likely encouraged but the structural changed brought by the ACA. “For instance, the health law incentivizes the creation of accountable care organizations (ACOs) in which doctors, nurses, hospitals, social workers, and pharmacists work together to improve seniors’ health and reducing excess Medicare spending.”

Additionally, the slowdown in healthcare costs have prompted the Congressional Budget Office to revise the long-term deficit projection by $500 billion dollars, since Medicare spending is a top contributor to the debt.  See article at ThinkProgress.

USA Today reported that new payment plans, improved efficiency and a move toward consumer-driven insurance plans adopted and accelerated by the 2010 health care law will continue to force down overall Medicare costs, according to industry analysts and studies, even as the economy continues to improve. These innovations caused the $618 billion drop in projected Medicare and Medicaid spending over the next decade that was reported May 15 by the Congressional Budget Office.  That report showed that costs for the two programs in 2012 were 5% less than projected in early 2010, and the CBO data are expected to foreshadow the spending projections in the annual Medicare trustees report scheduled to be released this week.

Health spending grew about 3% a year from 2009 to 2011, a drop from the average 6% annual growth the previous decade.  An analysis of health costs for employees of large corporations showed per-employee health spending also decreased. Those savings came from more cost sharing for employees and higher co-payments and higher insurance deductibles. Those factors accounted for 20% of the reduced spending.  A continuation of that trend through 2012, he said, could cut public-sector health spending by $770 billion less than predicted.

Administration officials say some of the lower spending can be traced to the law. Penalties for hospitals that readmit patients for the same condition within 30 days of their release have driven the readmission rate from about 19% to below 18%, said Patrick Conway, chief medical officer for the federal Centers for Medicare and Medicaid Services.


Accountable care organizations, which receive their Medicare payments based on quality not the number of procedures performed, have also reduced costs, Conway said, as have electronic medical records.


USA Today had an interesting article on health care spending since enactment of ObamaCare.  In the four years leading to expanded health insurance, the government has used authority in the Patient Protection and Affordable Care Act to try to reshape the economics of health care through regulation and financial incentives. That appears to be keeping a lid on medical costs.  One big change is the government’s revived push toward managed care. The government wants to pay a lump sum for a patient or diagnosis, demand higher standards and expect the medical provider to get the job done for that cost. Rather than cutting reimbursement rates, the government is raising the bar for what it expects for every dollar it spends.

“Health care spending last year rose at one of the lowest rates in a half-century, partly the result of cost-saving measures put in place by the 2009 health care law, a USA TODAY analysis finds.”  “Health care spending hit a record $2.67 trillion last year, but its share of the overall economy shrank, from 17.12% of gross domestic product in 2011 to 17.04%, … an analysis of Bureau of Economic Analysis data found.”

“Cost-saving measures under the health care law appear to be helping keep medical prices flat, according to health care providers and analysts.”   In 2012, the average price paid for medical care rose at about the same rate as other prices in the economy, an inflation rate of less than 2%.

Also keeping costs lower:

Government insurance. More people are getting health insurance from Medicare and Medicaid, which pay less to doctors and hospitals than private insurers. Medicaid, which pays the least, covers 56 million poor people, up 10 million from five years ago. It will add nearly 20 million enrollees next year.

Generic drugs. About four of five drugs used today are less expensive generic medicines. The nation’s top-selling drug, Lipitor, for high blood pressure, lost patent protection last year.

Competition. Health care exchanges, which start next year, may keep insurance prices down while limiting consumer choice. In early deals, hospitals and doctors are agreeing to lower rates than traditional private insurance in exchange for more volume.

Among the most visible successes are efforts to save money on the most expensive patients by permitting the use of a hospice rather than a hospital for end-of-life care and emphasizing home health care over nursing homes.


The New York times reported that millions of poor and elderly Americans may have to contribute more for health care under a proposed federal policy that would give states more freedom to impose co-payments and other charges on Medicaid patients. Under the proposal, a family of three with annual income of $30,000 could be required to pay $1,500 in premiums and co-payments.

The 2010 health care law extended Medicaid to many childless adults and others who were previously ineligible. The Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Congress had intended.  Hoping to persuade states to expand Medicaid, the Obama administration is allowing state Medicaid officials to charge higher co-payments and premiums for doctors’ services, prescription drugs and certain types of hospital care, including the “nonemergency use” of emergency rooms.

With patients paying more, the federal government and states would pay less than they otherwise would.


The L.A. Times reported that health care consumers saved nearly $1.5 billion in 2011 as a result of the Affordable Care Act (Obamacare) that limit what insurance companies can spend on expenses unrelated to medical care, including profit, a new analysis by the New York-based Commonwealth Fund shows.  Much of those savings — an estimated $1.1 billion — came in rebates to consumers required because insurers had exceeded the required limits. The study also suggests that the Affordable Care Act forced insurers to become more efficient by limiting their administrative expenses, a key goal of the 2010 law.

In some cases, insurers passed savings on to consumers in the form of lower premiums and higher spending on medical care, the researchers found.   Administrative costs in the individual market dropped in 39 states, with major improvements in South Carolina.  Insurers in 37 states spent relatively more of their customers’ premiums on medical care, with big gains in South Carolina.

Stepping up regulation of health insurance companies has been a top priority for consumer advocates, who have complained for years that insurers routinely increase premiums to pad profits and executive salaries rather than pay for medical care. The healthcare law attempts to address this by requiring insurers to spend at least 80 cents of every dollar they collect in premiums on medical care, rather than on administrative expenses.  Insurers selling to employers must meet an even tougher standard, spending at least 85 cents of every dollar on medical care.


The Washington Post published an interesting article that sheds light on Mitt Romney’s plan to help those with preexisting conditions get health insurance. Romney claimed during the past debate, “I do have a plan that deals with people with pre-existing conditions.” However, he is unable to articulate how it will help anyone other than those that have maintained continuous insurance coverage and it is still unclear how the 49 million uninsured individuals will get coverage.

As the article explains, the plan that Romney has been stressing will only help those with pre-existing conditions that have maintained continuous health insurance coverage. This means that anyone who may have had a break in coverage due to losing their job or for any other unforeseeable reason will not be helped at all by Romney’s plan.

After all of Romney’s talk about making it easier for those with pre-existing conditions to get coverage, in actuality only a small fraction of those with problem medical conditions will be helped, leaving a far greater number of people out of luck.

This plan is in stark contrast to President Obama’s health care law that allows those with preexisting conditions the same comprehensive coverage, at the same rates that every other citizen pays.  As the law says, an insurance company “may not impose any pre-existing condition exclusion.” Karen Pollitz, an insurance market expert, explains that Romney’s plan is much more unlikely to provide a solution than the president’s Affordable Care Act. Pollitz explains, “The ACA just says insurance companies can’t discriminate against you, period. If you’ve been uninsured, you can come into this market on Jan. 1, 2014, no questions asked.”


Senior Housing News had an article about Medicare’s reimbursement being linked to quality care.  “Medicare is planning on eventually introducing a payment system for skilled nursing facilities that’s based on the quality of care being given rather than on costs and resources, but first it needs to figure out a system for doing so by analyzing results from its three-year “Nursing Home Value-Based Purchasing Demonstration” project, which ended on July 1.”

The national incentive pay program for nursing homes to provide superior quality in order to receive better payments is an initiative of the Affordable Care Act, but it will be several years in coming.  See report to Congress on the demonstration project.

Health policy experts remain optimistic that the current system can be transformed into a “higher performing, value-driven” healthcare system.  The Centers for Medicare and Medicaid Services (CMS) views the implementation of this sort of quality-based payment program as an important step in revamping how Medicare pays for healthcare services, says HHS, aiming to hold providers accountable for the quality of care they provide to Medicare beneficiaries, promote more effective, efficient and high quality care processes, and address the variation in quality across care settings.

The plan for this program will link payment to performance to “improve value for Medicare beneficiaries and other residents residing in SNFs by promoting the development and use of robust quality measures to allow patients and providers to assess the quality of skilled and non-skilled care furnished in SNFs,” says the report. “[T]he emphasis on Medicare beneficiares’ functional status can help prepare them for discharge to a less intensive non-institutional setting.”


Kaiser Health News and NPR collaborated on a story about new tools to fight Medicare fraud.  “Fighting health care fraud in the U.S. can seem like an endless game of whack-a-mole. When government fraud squads crack down on one scheme, another pops up close by. But the fraud squads who look for scams in the federal Medicare and Medicaid programs have some new weapons: tools and funding provided by the health law.”

Medicare and Medicaid pay out some $750 billion dollars each year (at least $65 billion dollars a year is lost to fraud) to more than a 1.5 million doctors, hospitals and medical suppliers.  Criminals use real patient IDs to bill for wheelchairs that were never delivered or exams never performed. Dishonest doctors charge for care they never deliver or perform unnecessary operations. In one scam, criminals bill Medicare and a private insurer for the same patient.

The federal health law and other legislation directed the federal government to start using sophisticated anti-fraud computer systems similar to those used by credit card companies to detect suspicious purchases.  The computer program reviews Medicare claims – some 4 million a day – to look for outliers or spikes.   Also doctors and others who want to bill Medicare are being assessed based on their risk to commit fraud.

Over the next decade, Congress will direct some $340 million dollars in additional funding for government anti-fraud efforts.  The number of so-called Medicare Strike Force teams operating around the country has quadrupled since 2009. The number of defendants facing fraud charges jumped sharply last year. At the end of next month, Medicare is expected to report to Congress the number of new scams detected and the number of new cheats kept out of the program.


Sarah Kliff wrote an article for The Washington Post about Obamacare’s spending cuts to Medicare.  The Romney campaign claims that the Affordable Care Act “cuts $716 billion” from the program. That $716 billion figure comes from the nonpartisan Congressional Budget Office detailing the budget impact of repealing the Affordable Care Act.  If Congress overturned the law, “spending for Medicare would increase by an estimated $716 billion over that 2013–2022 period.”

The majority of the cuts come from reductions in how much Medicare reimburses hospitals and private health insurance companies.  See graph here. These cuts don’t touch Medicare benefits.

Aside from the misleading use of the term “cuts” in describing ObamaCare’s impact on Medicare, there’s the bigger problem for Romney and Ryan: Ryan’s own budget resolution which Romney fully endorsed and which passed the Republican House kept the exact same Medicare “cuts” or savings.