The Latest Healthcare Fad

Health reform is dominated by fashionable ideas. Remember when HMOs were the panacea? Add ACOs to a growing list of “cures” touted in Washington today, including price controls for pharmaceuticals and prevention.

Mention McAllen, Texas, and people don’t usually think of health care.  But as Dr. Atul Gawande observes in a beautiful and eloquent essay, perhaps they should. Begins Dr. Gawande:

It is spring in McAllen, Texas. The morning sun is warm. The streets are lined with palm trees and pickup trucks. McAllen is in Hidalgo County, which has the lowest household income in the country, but it’s a border town, and a thriving foreign-trade zone has kept the unemployment rate below ten per cent. McAllen calls itself the Square Dance Capital of the World. “Lonesome Dove” was set around here. McAllen has another distinction, too: it is one of the most expensive health-care markets in the country. Only Miami—which has much higher labor and living costs—spends more per person on health care. In 2006, Medicare spent fifteen thousand dollars per enrollee here, almost twice the national average. The income per capita is twelve thousand dollars. In other words, Medicare spends three thousand dollars more per person here than the average person earns.

His essay, in the June 1 issue of The New Yorker, describes the incredible story. The people of McAllen are getting much health care – but no one thinks that they are any healthier or better for it. Dr. Gawande, a former advisor to Hillary Clinton in her 1990s health-reform efforts, advocates ACOs, as an alternative to today’s “untenably fragmented, quantity-driven systems of healthcare.”  Under these accountable-care organizations, providers would work together, quality would increase, and prevention would be promoted.  It is a remedy to the “sheer profiteering” of, well, doctors and hospitals in McAllen, Texas. Joseph Antos, an AEI senior fellow, concisely critiques the idea:

Sounds great. So great that Gawande is prepared to penalize providers who don’t form such organizations. But, despite the enthusiasm of experts (span>including Mark McClellan, physician and former administrator of Medicare<), ACOs do not exist and it is not clear how they would accomplish what has been promised. Even Gawande admits that this would “by necessity” be an experiment. As he says, we do not know what the necessary ingredients are that account for the success of systems like the Mayo Clinic and Geisinger Health, and we do not know how to transplant them into the bloated health system that typifies most of the country. What he doesn’t say is that we cannot solve our health system problems by top-down solutions that focus solely on the suppliers of healthcare. If a reformed health system is to succeed, it will have to engage patients to take more responsibility for their health spending decisions. And it will have to respond nimbly to the demands of its customers—something that is sorely missing today Clearly, there’s a problem in McAllen. But it’s bigger than one town in Texas, and it won’t be solved by the latest policy platitude.

Health reform is dominated by fashionable ideas.  Remember when HMOs were the panacea?  Add ACOs to a growing list of “cures” touted in Washington today, including price controls for pharmaceuticals and prevention.