One of the major complaints that progressives had regarding the Affordable Care Act (ACA, aka ObamaCares) is that it did little to limit the control of the health insurance industry on the health industry. Yes, the ACA did stop some of the more heinous practices of the health insurers, such as pre-existing conditions exemptions, but the overall effect of the ACA was that millions of more people would be "forced" to buy health insurance. And even though the ACA requires the establishment of Health Insurance Exchanges in order to:
create sizeable and stable risk pools; minimize adverse selection; wield bargaining power with insurers; and hold down administrative costs, all while providing greater choices to enrollees
it will be health insurance companies whose products will be offered by the exchanges.
On the surface, there appears to be little in the ACA about moving to a single-payer system - the true progressive health care reform goal. But, as in the case of an iceberg, it is not only what is on the surface that bears attention. Included in the ACA is a program known as Accountable Care Organizations (ACOs). According to an Op-Ed in the New York Times, ACOs herald "The End of Health Insurance Companies". Maybe not soon enough for progressives, but far sooner than health insurers desire, I'm sure.
Penned by former Obama advisers Ezekiel J. Emanuel, an oncologist and vice provost and professor at the University of Pennsylvania, and Jeffrey B. Liebman, a professor of public policy at Harvard, the Op-Ed details how ACOs will fundamentally change the way people interact with, and pay, their health care providers.
By 2020, the American health insurance industry will be extinct. Insurance companies will be replaced by accountable care organizations — groups of doctors, hospitals and other health care providers who come together to provide the full range of medical care for patients.
Many health insurance companies also impose barriers — like requiring prior authorization for tests and treatments and denying payment for covered services, which forces patients to appeal — to discourage patients from using the medical services for which they are insured and to attempt to avoid paying for those services. While these barriers can reduce waste by preventing unnecessary care, they can also discourage patients from receiving care they need, as well as impose administrative burdens on doctors and patients.
But thanks to the accountable care organizations provided for by the health care reform act, a new system is on its way, one that will make insurance companies unnecessary. Accountable care organizations will increase coordination of patient’s care and shift the focus of medicine away from treating sickness and toward keeping people healthy.
Though ACOs are often mistaken for remodeled HMOs, the authors state that there are mark differences that make ACOs far superior to HMOs
A.C.O.’s are not simply a return to the health maintenance organizations of the 1990s. Although in both models patients are members of a provider network with a specific group of doctors and hospitals, and both are paid primarily per member rather than per procedure or test, there are big differences between them. H.M.O.’s were often large national corporations far removed from their members. In contrast, A.C.O.’s will consist of local health care providers working as a team to take care of patients who are likely to be members for years at a time. H.M.O.’s often cut costs not by keeping people healthy but by denying patients services and by forcing doctors and hospitals to take lower payments. In the 1990s, we lacked the information technology and proven models of integrated care delivery that we have now. These advances will allow A.C.O.’s to simultaneously improve health outcomes and reduce costs.
Is it any wonder that ACOs are rarely mentioned in the discourse surrounding the ACA? I'm sure that health insurers would much rather folks debate the merits of "mandates" than discuss the benefits of the ACA - especially one that is, effectively, the event horizon of their industry. But the insurers are not only wagering on "Repeal and Replace" or a potentially favorable (to them) Supreme Court ruling. Some have seen the future, and are already taking steps to part of the next phase in health care.
A few health insurers see this asteroid coming. Wellpoint, for example, bought the clinic operator CareMore for $800 million last summer to make the transition into the A.C.O. business. Others, like the Optum unit of UnitedHealth Group, are developing data analysis services to provide to future A.C.O.’s. If they don’t want to go the way of the dinosaurs, insurance companies will have to find a new business to be in, one that is useful in the new world of coordinated care.
Unfortunately, the next phase in health care will still entail for-profit corporations; however, one can hope that, this time, the profit will be well-earned - and not stolen.
Further readings on ACOs:
Accountable Care Organizations, Explained
NPR - Jan, 2011
Can Accountable-Care Organizations Improve Health Care While Reducing Costs?
Wall Street Journal - Jan, 2012