Want to run the government like a business? Bring back the ACA.

Just days after his inauguration, President Donald Trump signed an executive order to delay further implementation of the Patient Protection and Affordable Care Act (ACA). This is just one of many steps the President and Congress plan to take in an effort to repeal the ACA. It sounds simple – just a few strokes of a pen and this behemoth of a law will disappear into history. But will it? Aside from the individual mandate and Medicaid expansion, two of the most famous and controversial pieces of the ACA, there are countless others. The ACA itself required the creation of nearly fifty new entities, with each of those entities authorized to implement other new entities or programs. For example, the ACA authorized the creation of the Center for Medicare and Medicaid Innovation (CMMI), which has created over eighty innovation models with the goal of increasing the quality and efficiency of patient care while decreasing the cost. This new relationship between cost and quality in health care is termed “value based purchasing,” and it is an idea that has taken root beyond the reaches of the ACA.

Over 65% of the population had private insurance in 2015, and the private sector has not been left behind in this push toward value based care. Among the most notable category of CMMI innovation models are those entitled Accountable Care Organization models (ACOs). In CMMI ACOs, like the Medicare Shared Savings Program, Medicare patients are attributed to an ACO that is responsible for keeping quality of care high and cost of care low for its patient population. If the ACO is successful in reducing costs and maintaining quality standards, the ACO receives a portion of the money saved. From the government’s perspective, a successful ACO lets everyone win: patients receive higher quality care, Medicare saves money, and providers collect a check.

And if it could work for Medicare why couldn’t it work for private payors? Soon after the CMMI ACO programs were rolled out, ACOs started gaining traction in the private payor world. At the end of January, 2016, ACOs in the private sector had over 17 million lives whereas Medicare and Medicaid ACO programs had only ~8 million and ~2 million lives, respectively. And this shouldn’t be surprising: if the government wants to stop paying so much for health care, why wouldn’t insurance companies want to do the same?

Any repeal of the ACA will not touch those 17 million individuals enrolled in private payor ACOs, and with the government’s plans for health care up in the air, it is more important than ever to keep an eye on the private sector. If ACOs and other value based purchasing models prove successful for private payors, our new private business-minded President may want to revisit some aspects of the ACA.

This entry was posted in Affordable Care Act, Private Payors.

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