The Obama Diary

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NYT: A Health Care Success Story

IT may have been the most influential magazine article of the past decade. In June of 2009, the doctor and writer Atul Gawande published a piece in The New Yorker called “The Cost Conundrum,” which examined why the small border city of McAllen, Tex., was the most expensive place for health care in the United States. The article became mandatory reading in the White House. President Obama convened an Oval Office meeting to discuss its key finding that the high cost of health care in the country was directly tied to a system that rewarded the overuse of care. Five years later, the situation has changed. Where McAllen once illustrated the problem of American health care, the city is now showing us how the problem can be solved, largely because of the Affordable Care Act that Mr. Obama signed into law in 2010.

The problem was that doctors in McAllen were responding to reimbursement incentives in the American health care system that rewarded activity rather than value. The more procedures and visits a doctor billed, the more he got paid. The Affordable Care Act was designed to change that. One of its provisions created the Medicare Shared Savings Program, which rewards doctors for keeping their patients healthy. Participation in the program requires primary care doctors to create networks, called accountable care organizations, or A.C.O.s, to better coordinate patient care. These networks are reimbursed for delivering high-quality care below a baseline of historical Medicare costs. In 2012, doctors in McAllen formed the Rio Grande Valley Accountable Care Organization Health Providers, and signed up for this experiment. The early results are in, and they are stunning: From April 2012 to the end of 2013, the Rio Grande Valley A.C.O. saved more than $20 million from its Medicare baseline. These changes didn’t just save money; they also improved patients’ health. From 2012 to 2013, the number of patients achieving control of their diabetes rose 11.8 percentage points. The number receiving vaccinations rose 12.2 percentage points.

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