Could a "doc fix" have a bigger impact on U.S. healthcare than the ACA?

Two interrelated features of the U.S. healthcare system are probably the primary causes for the uniquely high cost of healthcare in the U.S.: weak government control over pricing, and the fee-for-service payment model.

These interrelated weaknesses are exacerbated, as a weekend Washington Post exposé showed, in that Medicare pretty much lets doctors determine the rates at which they paid, by leaving it to the AMA to produce estimates of how long each procedure takes. Surprise! The doctors' chief trade group massively pads the estimated times required for most procedures. 

Even if procedure prices were based on accurate time estimates, free-for-service incentivizes providers to perform a high volume of the most expensive procedures. Nonetheless, countries in which the government imposes monopsony price control -- i.e., every other wealthy country in the world -- generally manage to deliver universal healthcare at two thirds to half the cost per capita of healthcare in the U.S.  Government control over pricing, as Ezra Klein recently forced healthcare free market evangelist Avik Roy to admit, is the sine qua non of effective heathcare cost control.  And we in the U.S. don't have it, as a study published in Health Affairs ("It's the Prices, Stupid...", Gerard F. Anderson et al., 2003) explains:

The WSJ on the ACA, cont.

Early this month, I looked at a couple of Wall Street Journal stories that emphasized the negative in the Affordable Care Act rollout and wondered whether the WSJ healthcare coverage wasn't Foxifying a bit. One emphasized the premium hike for a relatively small subset of people subject to the individual mandate (and without employer-provided insurance), and one aggregated and exaggerated a series of "blows" to the law, most of which were old news.

Healthcare reporter Louise Radnofsky was on both bylines. She's a good reporter. Her coverage over time has been balanced.*

But as the rollout of the ACA exchanges looms, I wonder whether WSJ news editing is tilting the emphasis on ACA coverage generally [ [UPDATE: I have spoken to someone at the Journal, whose word I trust, who assures me that editors area not imposing a political agenda on reporters. I regret speculating about motive without information.].

Today, Project Millennial blogger Mike Miesen flags another questionable WSJ framing of ACA news that had also registered with me this morning:

Healthcare consolidation perverted by pricing power

Last week, I noted Eduardo Porter's warning that the ACA was spurring hospital consolidation, which increases the hospitals' pricing power. That's the downside of consolidation. Below, that post is updated with a snapshot of the upside of consolidation, realizable when the power to set prices lies elsewhere.
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Eduardo Porter today spotlights a key factor in healthcare inflation: consolidation among hospitals and other healthcare providers:

What is missing from the stampede of policy innovation is something to tackle one of the best-known causes of high costs in the book: excessive market concentration. 

Two decades ago, there were on average about four rival hospital systems of roughly equal size in each metropolitan area, according to research by Martin S. Gaynor of Carnegie Mellon University and Robert J. Town of the University of Pennsylvania. By 2006, the number of competitors was down to three. 

The share of metropolitan areas with highly concentrated hospital markets, by the standards of antitrust enforcers at the Justice Department and the Federal Trade Commission, rose to 77 percent from 63 percent over the period. 

David Goldhill, consider our dental dystopia

David Goldhill, long an advocate of shunting all but catastrophic health care costs onto consumers (pairing super-catastrophic insurance with mandatory HSAs) offers, I must admit, a compellingly negative view of what's likely to become of cost controls embedded in the ACA or favored by the health care experts I like to read. It's a kind of mirror image of Atul Gawande's thousand flowers vision:

Through private insurance, Medicare and Medicaid, our health system relies on centralized cost control and clever adjustments to payment formulas to try to tame the beast. Traditional health experts may repackage their ideas, but they are never discouraged by past failure. So the new Accountable Care Organizations are a reinvention of H.M.O.’s. The Independent Payment Advisory Board is the new Medicare Payment Advisory Commission, or MedPAC. Bundled payments are the new Prospective Payment System.

We often see some early benefit from the introduction of new ideas, but over time such initiatives are always subjugated by our system’s nefarious economic incentives. Implement cost control reforms and watch providers circumvent new rules and guidelines. Reduce reimbursement rates for procedures, and witness providers expand the definition of required services. Convert fee-for-service reimbursements into bundled payments, and soon more severe diagnoses are given. Attempt to use government buying power, and see providers turn to lobbyists to keep prices up. We are approaching a half-century of fighting this losing battle.

It's true that power industries and interest groups are very successful at gaming new regulations. It's also true that today's reforms bear some resemblance to prior efforts.

Smart messaging, with a large dollop of denial, from Aetna's Bertolini

The health insurance industry has sensed and seized -- or created -- a PR opportunity amid the mounting tension in the runup to the Supreme Court's decision on the constitutionality of the Affordable Care Act. First, UnitedHealth announced that it would continue to allow parents to cover adult children up to age 26, a requirement of the law, regardless of whether that part of the law was struck, and adhere to other ACA mandates, such as providing preventive services without copay and forgoing lifetime coverage caps. Aetna and others made similar announcements. Mark Bertolini, CEO of Aetna, has been particularly out front, giving interviews to the Wall Street Journal and Washington Post emphasizing Aetna's innovation in improving healthcare delivery and reducing costs.

There's some disingenuity in Bertolini's message as it's evolved over the past two weeks, however. Yesterday he told WonkBlog's Sarah Kliff that the Supreme Court decision doesn't matter, that Aetna and the industry will continue with innovation regardless of the decision, and that a deficit reduction deal is more important than the ACA.  That's backwards. If the ACA's new rules for health insurers and array of cost-cutting incentives for healthcare providers and insurers are left in place, they will likely have a bigger long-term impact on government spending than any tax-and-spending deal the Congress strikes. Bertolini's own boasts about Aetna's recent accomplishments and strategy indicate as much, though he's now working to unmoor their origin and continued impetus from the ACA.  Check out the denial in his exchange with Kliff: