Government Pushes Through US Health Reform As Study Says It Would Widen Deficit by Up to USD530 Bil.
The Centres for Medicare and Medicaid Services announced the accountable care organisations that will participate in the Shared Savings Program, as rhetoric over the US health reform grows over the potential addition to the US debt over the years.
IHS Global Insight Perspective
A study notes that the health reform could add up to USD530 billion to federal deficits while increasing spending by more than USD1.15 trillion. Meanwhile, the Centres for Medicare & Medicaid Services' announcement signals the first major implementation of the law since the US Supreme Court arguments on the reform last week.
The development showcases the political wrangling over the reform, with costs being the central theme of the debate.
The federal government is expected to continue to push through reforms, particularly with respect to Medicare, in the next few months, before the Supreme Court decision in June.
CMS Announces First ACOs
The Centres for Medicare & Medicaid Services (CMS) has announced the selection of 27 accountable care organisations (ACOs) that will participate in the Medicare Shared Savings Program. The ACOs will be responsible for 375,000 beneficiaries spanning 18 states in the United States. Providing more details on the development, the CMS said that five of the ACOs will participate in the Advance Payment ACO Model aimed at encouraging rural and physician-based organisations. The model will see participating ACOs receive advance payments to cover costs of infrastructure that are required to be repaid from the shared savings earned. Furthermore, two of the 27 ACOs have opted for the programme's higher share of savings model, which also allows for a share of losses if metrics such as an increase in the cost of care are not met. The CMS is reportedly reviewing more than 150 applications from ACOs seeking to participate in the Shared Savings Program beginning on 1 July, of which over 50 are applying for the Advance Payment ACO Model.
Study Points to Widening Deficit
Even as the federal agency announced another achievement of the health reform implementation, concerns over the legislation have continued, with a study concluding that the law could add up to USD530 billion to federal debt over one decade. According to Reuters, the study was conducted by Republican Charles Blahous, who is also the party trustee for the Medicare and Social Security entitlement programmes. The key conclusion was that in one decade, the health reform legislation would widen the deficit by USD340–530 billion, while increasing spending by more than USD1.15 trillion.
Outlook and Implications
The CMS's announcement will be viewed as significant, particularly as it is the first major announcement following the three-day arguments at the US Supreme Court on the new healthcare law. The development will also signal that the federal government continues to push ahead with its implementation plans despite the questions surrounding the legislation. More so, with the CMS announcing that it is evaluating a further 150 applications for ACOs, with potential additions in the Shared Savings Program expected in the next three months, this indicates that the agency continues to aim for a complete overhaul of the fee-for-service programme. The latest addition follows the Department for Health and Human Services' announcement late in 2011 of 32 healthcare providers as "Pioneer ACOs", potentially aiming for USD1.1 billion in savings for the next five years (see United States: 22 December 2011: HHS Announces Partnerships with 32 Healthcare Providers As Pioneer ACOs). The Pioneer ACOs model became effective from 1 January and is perceived as assuming greater risk than the latest 27 ACOs approved by the CMS. The ACOs are measured by a performance metric that includes 33 quality measures covering care co-ordination, patient safety, preventative health services, and patient care for at-risk populations with a reducing cost element.
Separately, the research findings by Blahous in the latest study will be viewed as politically motivated, although there is increasing concern among Americans over the legality and effectiveness of the Patient Protection and Affordable Care Act. One of the main reasons for the concern is whether the law will increase healthcare costs in the long run, considering the expanded coverage it propagates.
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