The ACO love-fest (a must read)

Some days just warrant a lot of posts. This is one of them. I’ll keep this one brief.

I rarely declare things “must reads,” but the Kaiser Health News column by Michael L. Millenson is one of them. He does the best job of anyone I’ve ever read at concisely explaining ACOs and why they’re a popular idea. He’s right that they haven’t been strongly attacked by opponents of reform. They’re a good idea! But …

Millenson misses just one thing. Concerns about ACOs have been raised by health economists, including me. The provider integration they encourage may make sense for public payment purposes, but at the risk of increased provider market power relative to insurers. That could lead to higher private prices. If that’s what happens, observers will call it a “cost shift.” But, like many prior examples of cost shifting in health care, it’ll be a market power story.

No wonder providers like them. They’re not worried. Does that mean we should be?

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