Hospitals and the ACA

One of the really frustrating things about the Republican claim that we need Ryan’s “vouchercare” is that Democrats are actually going to cause the end of Medicare by letting it go bankrupt through rising costs.   Vouchercare would, in all likelihood, lead to higher overall health care expenditures, whereas Democrats enacted a little-known piece of legislation entitled The Affordable Care Act (yes, that’s sarcasm) that has a number of methods to make Medicare more efficient and bring down the rates of health care inflation.  Among the very useful ideas in the ACA is holding hospitals accountable for the quality of their treatment.  Right now, if a patient acquires an infection at the hospital due to poor medical management practices, that is actually in the hospital’s financial interest, as they earn lots more money caring for the hospital-acquired infection in addition to the original reason for the visit.  Talk about perverse incentives.   Fortunately, Medicare reforms are designed to address this problem (from the Times):

For the first time in its history, Medicare will soon track spending on millions of individual beneficiaries, rewardhospitals that hold down costs and penalize those whose patients prove most expensive.

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

The major point of the linked article, though, is that Hopsitals don’t actually like this.  Yglesias sums up this fact much better than I could:

Naturally, as Robert Pear reports, incumbent hospital administrators hate this idea and feel that the government ought to reimburse them for as much treatment as they can sell to patients, regardless of whether or not it makes anyone healthier.

Again, the ACA Medicare reforms certainly aren’t perfect, but they definitely are a good start and this program is a prime example.  If Hospitals are upset because they’ll be making less profit from sick patients regardless of their overall performance, that’s not such a bad thing.

About Steve Greene
Professor of Political Science at NC State

2 Responses to Hospitals and the ACA

  1. Mike Barr says:

    This is a good place to mention a few related points.

    1. What we spend on medical care, medications, insurance, and so forth — all health care costs — are someone else’s profits.
    2. A reduction in what the government spends on health care is a reduction in someone’s profits.
    3. The more likely a government policy is to actually reduce or hold constant health care costs, the stronger the opposition from health care industry groups and their lackeys in Congress.

    So you can tell if a policy is window dressing or would actually have a chance to hold down health care costs. If HMOs, big pharma, and insurance companies are against something it is probably a good policy for the taxpayers.

    • Steve Greene says:

      Indeed. What really seems to drive our massive cost inefficiency relative to other countries is the huge amount of money spent on insurance and related administration and doctor’s salaries. Relative to the rest of the world, American doctors are simply paid too much.

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