In the three years since, a steady accumulation of evidence has amassed to the contrary. Through a thousand tiny nudges, the law has transformed the entire medical field from one that encouraged more, and more expensive, care with no regard for outcome into one geared toward paying for quality. Some of the changes have been blunt and simple. The old pay-for-quantity system rewarded hospitals for doing a bad job, since patients who contracted an infection or received poor treatment would come back for more treatment, bringing in a second Medicare reimbursement. Obamacare created penalties for hospitals with high rates of infection or patient readmission. Lo and behold, this year, Medicare announced that its patient-readmission rates fell—“a feat that long seemed beyond reach,” the Washington Post reported.
Obamacare also imposed a tax on the most expensive insurance plans, and though the tax does not take effect until 2018, employers have already started shopping around to avoid its bite. “Companies hoping to avoid the tax,” reported the New York Times last spring, “are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care.”
The most dramatic change underfoot is an entrepreneurial wave encouraged in sundry ways by Obamacare. The law encourages the creation of Accountable Care Organizations—doctors who band together and get paid based on their patients’ medical outcomes rather than on how many tests and procedures they perform. As Bloomberg News reported in June, “Hospitals are improving care and saving millions of dollars with one of the least touted but potentially most effective provisions of the law.” Walgreens is making a huge investment in its own ACOs, and the consulting firm Accenture predicts the law will continue to prompt an explosion of walk-in clinics. The significant increase in doctors and hospitals converting to electronic medical records and other technological innovations has helped create “a new marketplace and platform for innovation—a health-care Silicon Valley,” as an awed Thomas Friedman reported.
All these reforms have added up to a revolution in modern medical economics. Health-care inflation since 2011 has fallen to its lowest level in half a century. The Congressional Budget Office estimates of Obamacare’s costs, widely derided at the time of its passage as too optimistic, have thus far proven too pessimistic. The agency has already cut $600 billion off the expected ten-year spending total for Medicare and Medicaid. If the reforms continue to bear fruit, costs will come in even lower.
And health experts increasingly expect the reforms will bear fruit. “The ongoing slowdown in the health-care growth rate defies historical post-recession patterns and is likely to be sustained,” concluded PricewaterhouseCoopers in June. “It appears that the reforms will stick and health-care exchanges and other policies will bring competitive pressure to markets,” says Randall Ellis, a professor of health-care economics. “Although the proof for this point of view is not yet definitive,” reports the Health Affairs blog, “the depth and breadth of change suggest that significant transformation in the nation’s delivery system is under way.” Among health-care wonks, this is no longer a controversial assertion: The evidence thus far suggests Obamacare’s cost reforms are a staggering success.
