by Mitch Kokai
Senior Political Analyst, John Locke Foundation
[P]rojects designed, approved, and paid for by the demand side for the market aren’t working. As I’ve said on many occasions, many of these techniques actually do work when they are instituted by entrepreneurs on the supply side. But supply-side innovations have nothing to do with ObamaCare. They are happening in spite of ObamaCare.
Indeed, most of what the administration wanted to happen is not happening. But unintended things are happening—some good and some bad. (As an aside, the secretary of Health and Human Services seems to ignore adverse effects but quickly credits the ACA for trends perceived as positive.)
What does this mean for the way doctors practice medicine? On the negative side, hospitals are merging and they are acquiring doctors. In the process, they are making the market less competitive, gaming third-party payment formulas, and doing other things that make our health insurance premiums and our taxes higher than they otherwise would be.
More than half the doctors are now working for hospitals and other institutions, rather than in private practice. Hospitals are using their new doctor employees to get more money out of Medicare. Even the Medicare Payment Advisory Commission (MedPac), the federal agency responsible for overseeing Medicare fees, has noticed—although belatedly—that hospitals can charge Medicare more for the same services than doctors can charge if they bill Medicare as independent practitioners.
On the positive side of the ledger?
The other major unintended consequence is the boost to consumer-directed health care. In the health insurance exchanges, the cheapest plans are going to have deductibles of $5,000 or more. And lots and lots of people are going to choose the cheapest plans.
On the plus side, consumer-driven health care has been given a boost and entrepreneurs are responding with products that seem to be far removed from the accountable care model the administration is pushing. The Manhattan Institute’s Avik Roy reports employers are going for Health Savings Accounts (or Health Reimbursement Arrangements) in a big way. Bottom line: millions of patients are going to be buying care with their own money, rather than with a third-party payer’s money.
This development is viewed as an opportunity by health care entrepreneurs. A study by the consulting firm Accenture predicts the number of walk-in clinics is going to double in the next few years. The Obama administration doesn’t like them because they are not part of integrated care/coordinated care/medical homes/etc. Even so, they are doing what the ACOs are unlikely to do: lowering costs, increasing quality, and improving access to care.