As he writes now:
The test of health-care reform … was whether McAllen or El Paso would become the new norm. Would McAllen’s costs come down or El Paso’s go up?
[snip]
As it turns out, the cost of a Medicare patient has flattened across the country, El Paso included. U.S. health-care inflation is the lowest it has been in more than fifty years.
Most startling of all, McAllen has been changing its ways. Between 2009 and 2012, its costs dropped almost three thousand dollars per Medicare recipient. [Dartmouth economist Jonathan] Skinner projects the total savings to taxpayers to have reached almost half a billion dollars by the end of 2014. The hope of reform had been to simply “bend the curve.” This was savings on an unprecedented scale.
Gawande interviews McAllen's doctors, and determines that new incentives (and possibly, his own scrutiny of the town) helped spur behavior change. He singles out one health reform initiative—the law's accountable care organization (ACO) pilots—for special attention.
"The two McAllen accountable-care organizations together managed to save Medicare a total of twenty-six million dollars," he writes. "About sixty per cent of that went back to the groups. It wasn’t all profit—achieving the results had meant installing expensive data-tracking systems and hiring extra staff. But even after overhead doctors in one group took home almost eight hundred thousand dollars each (some of which they shared with their mid-level staff). It was proving to be a very attractive way to practice."
See the Daily Briefing's summary of Gawande's article
Of all the weeks for Gawande to write this story, it ended up appearing at the perfect moment—a moment that showed McAllen is a microcosm of something bigger.
Hours after the New Yorker posted Gawande's article, CMS made a landmark announcement: Hospitals participating in its Pioneer ACO program have saved nearly $400 million over two years.
It's the first time that Medicare officials have been able to say that one of Obamacare's pilot programs has been proven to save money, according to independent actuaries. And that has real, practical implications for hospitals. It means that Pioneer ACO-like measures will be allowed to roll out across all of Medicare, for starters.
What comes next
There's still a lot we don't know about the Pioneer program, Medicare ACOs, and Obamacare's other pilots. How applicable are the findings? How sustainable will the savings be?
But we can only learn by testing, testing, testing these models. And you know who made a strong case for these pilots? Gawande, who reviewed the ACA's pilot programs in 2009, as a follow-up piece to his original McAllen article.
(If you take anything away from my blog post, it's my unsubtle recommendation to read Gawande's quarterly New Yorker articles. It's the most efficient way of staying current on health policy; there are no low-value ideas in his elegant prose.)
Five-plus years ago, the Obamacare reform package was under attack for not doing enough to control health care costs. But as Gawande correctly pointed out:
Which of these programs will work? We can’t know. That’s why the Congressional Budget Office doesn’t credit any of them with substantial savings. The package relies on taxes and short-term payment cuts to providers in order to pay for subsidies.
But, in the end, it contains a test of almost every approach that leading health-care experts have suggested...
None of this is as satisfying as a master plan. But there can’t be a master plan.
We're still far from figuring out how best to control costs and boost efficiency in U.S. health care. The "plan" remains in progress.
But Gawande's McAllen story, Medicare's Pioneer ACO data—the findings are hints that reform is on the right track. And they offer the promise that, just maybe, America's health care system won't always be such a costly conundrum after all.