The Great Unknown: Actual Obamacare "Savings"

No one knows whether Obamacare, now known as ACA, The Affordable Care Act, is affordable or whether it drives us further into national bankruptcy.

Most of the savings strategies - ending Medicare regional variations, paying only for “what works” based on outcomes research, putting into place a ubiquitous interoperable electronic record system, herding independent doctors into accountable health organizations, bundling hospital and doctor fees, coordinating care for chronic diseases through medical homes, and changing how we pay doctors - sound good and feel good, but most of these strategies are untested and unproven.

How one views “savings” boils down to speculation and a rhetorical contest between true believers in centralized government overhaul and those who believe somehow the market, innovators, and entrepreneurs will sort it all out and lower costs and improve quality.

True Believers

Among the true believers in Obamacare savings are:

• Jonathan Gruber, PhD. An economist at Massachusetts Institute of Technology, who proclaims,

“In summary, analysis by both the Congressional Budget Office and the CMS actuary show that the ACA will substantially reduce the federal deficit, only slightly increase national medical spending (despite an enormous expansion in insurance coverage), begin to reduce the growth rate of medical spending, and introduce various new initiatives that may lead to more fundamental reductions in the long-term rate of health care cost growth. The ACA will not solve our health care cost problems, but it is a historic and cost-effective step in the right direction.” (Jonathan Gruber, “The Cost Implications of Health Care Reform,” New England Journal of Medicine, June 3, 2010)

• Peter Orszag, Obama’s director of the budget, who, relying on data from Dartmouth’s Medicare Atlas Group, believes the U.S. could save $700 billion, or 30% of all health costs by eliminating cost differences between various Medicare regions and homogenizing payments across the board. “Wasteful spending,” he asserts,” does nothing to improve patient health but subjects you and me to tests and procedures that aren’t necessary and are potentially harmful.”

• Dr. Donald Berwick, a Harvard pediatrician and founder of the Center for Health Care Improvement, who has been nominated as head of CMS, The Centers for Medicare and Medicaid. Berwick is a true believer in centralized governmental power over the health sector as the lever to bring down costs. He has spoken and written glowingly about the British National Health Service (NHS). The NHS has a command-and-control structure that dictates how, for what, and how much British physicians and hospitals are paid.

Doubters and Debunkers

Critics are becoming suspect of the basis of Obamacare’s saving arguments.(“Critics Question Study Cited in Health Debates, June 3, New York Times), especially of the Dartmouth Atlas of Health Care groups assertion that regional variation lead to a 30% waste in the system. The data used to justify this assertion is questionable. The principal argument behind Dartmouth’s research is that doctors in the Upper Midwest offer consistently better and cheaper care than their counterparts in the South and in big cities, and if Southern and urban doctors would be less greedy and act more like ones in Minnesota, the country would be both healthier and wealthier.

Nonsense, say critics, like Richard “Buz” Cooper, MD, a professor of medicine at the University of Pennsylvania. Regional differences are due to poverty, socioeconomic factors, the patient mix, and cultural conditions, not provider greed.

Jeffrey Anderson, writing in the June 4 WeeklyStandard.com,”Realizing The True Cost of Obamacare” The New York Times Finally Spills The Beans, says,

“In short, the president’s claims that Obamacare would lower costs have been widely debunked, even from the Medicare chief actuary in President Obama’s own administration. Now his inferences that by lowering costs (which Obamacare wouldn’t do), Obamacare would also increase the quality of care, have similarly been debunked — although one marvels at the insular environment in Washington that allowed them to take hold in the first place. And yet, in Dr. Berwick, President Obama has found a true believer who’s not likely to be persuaded by the Times report. (President Obama is also a true believer — but in the government-expanding ends he’s trying to achieve, not in the reasons he gives for supporting them.”\

What I find fascinating about this debate is that although Obamacare has been enacted, it won’t really be implemented until 2014. There is still ample time to change course. Meanwhile there is plenty of room for speculation about the validity of the savings.

Biased projections, on either side of the political aisle, have never accurately, and cannot, reflect future realities.