Health care costs dropping and Obamacare is part of reason

By every measure, the growth in health care costs has been slowing since the Affordable Care Act was signed into law in 2010 by President Barack Obama.

The ACA was far more about health insurance than about health care, yet it is one of the factors helping to slow increases in costs.

"We see in our subgroups anywhere from 1 to 4 percent" increases in costs, said Tammie Lindquist, senior director of value analytics at Minneapolis-based Allina Health. "There were several years there when there could have been trends that would have been double-digit numbers, and then it dropped down in the high single digits and now they're in the low single digits for the last couple years."

Mike Lenz, vice president of strategic initiatives for the health plan Medica, which operates in the upper Midwest, said the ACA is just one of a full list of reasons that "could be close to a dozen" for the slowing increase in costs, and he starts his list with a sluggish recovery from the last recession. Health care is not exactly recession-proof, and in hard times people will put off medical procedures that seem discretionary.

The kind of insurance people have also matters, and increasingly it's a kind of plan that means the consumer pays a lot out of pocket for many services before much gets picked up by insurance.

When it's your own money, you care about when to seek care and you find cheaper ways to feel better. Andrea Walsh, the executive vice president and chief marketing officer of HealthPartners, said people in those high-deductible plans are four times more likely to phone a hot line to get advice on care or to seek answers about benefits.

The case for the ACA, nicknamed Obamacare, playing a role starts with its simple provisions, like the ACA's penalty for hospital readmissions. Medicare gently prodded providers for years to do something about the costs of readmitting patients for infections and other complications, then in the ACA the government got serious and put in a penalty.

The result was predictable. In 2012, according to PricewaterhouseCoopers' Health Research Institute, readmissions were down 70,000 in the country, and it's projecting further big drops in readmissions.

But the most significant policy initiative in the ACA called for the formation of what are called accountable care organizations for some Medicare patients. These so-called ACOs are health care providers that agree to take over the care -- not just the treatment -- of a group of people with reimbursement tied directly to health outcomes. What matters is good health, not just whether a procedure was done.

While still early, that provision alone signaled that there are going to be big changes in the way government pays for care.

And government is a major player. The Medicare program has about 52 million beneficiaries, and thousands of baby boomers are aging into the system every month.

"There has been a huge movement, some of it stimulated by the legislation, to care value," said Penny Wheeler, a physician and chief clinical officer of Allina Health. "All of the organizations are trying to move from being rewarded for how many things we do to what outcomes we get per dollar spent. Organizations that are progressive, and there are a lot in this city, are thinking (about) how do we best do that."

HealthPartners' Walsh said 85 percent of its members are taken care of by a health care system in which some portion of the payments from HealthPartners are tied to achieving specific results in what HealthPartners calls its triple aim -- lower cost, higher quality and higher patient satisfaction.

Medica's Lenz offered an interesting take on the ACA's law's positive effects on costs, mentioning what's called the Hawthorne effect.

All that's left of the once massive Hawthorne Works in Cicero, Ill., is a brick tower, preserved behind a Dollar Tree store. It's famous for being the factory where researchers figured out that no matter what they did to the lighting, the productivity of the workers building telephone equipment seemed to improve. Lighter, darker, didn't matter.

But when the changes stopped and the researchers stopped looking, productivity slumped.

Now everybody is watching health care costs, so it's the wrong time for a hospital to raise prices or buy a costly new treatment system, or for doctors to be sloppy about overprescribing drugs. Too many eyeballs are watching to do anything other than find the lowest-cost effective therapy.

Lenz noted that a similar thing happened in the early 1990s amid the failed reform efforts of the Clinton administration. Just talking about reform slowed the growth in costs for a time.

(Reach reporter Lee Schafer at

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