Research & Commentary: Accountable Care Organizations

Published December 1, 2011

As states begin to estimate the price of implementing President Barack Obama’s Patient Protection and Affordable Care Act (PPACA), one costly component of the law has yet to receive much-needed attention: accountable care organizations (ACOs).

According to Obamacare proponents, ACOs will be federally financed organizations for Medicare that will establish “accountability for care” while reducing health costs. Those opposing ACOs argue the organizations will do nothing to ensure accountability because ACOs continue the already-excessive reliance on third-party payers. With third-party payers receiving the bill, patients have limited knowledge of the costs of care and therefore a reduced financial incentive to use discretion in choosing health services. ACOs don’t change that dynamic and thus will not reduce Medicare’s high costs.

ACOs are not a patient-centered health care model, instead enacting cost-saving tactics at patients’ expense, notes Dr. Daniel H. Johnson Jr. in The Washington Times: “If ACOs become the only possibility for organizing, financing and delivering care, physicians and patients alike will find themselves in a treatment straitjacket.”

To ensure accountability in health care and cut costs while maintaining quality, government should empower patients and doctors instead of creating new bureaucracies.

The following documents offer additional information on accountable care organizations under PPACA.

Deconstructing the Latest Health Care Fad: Accountable Care Organizations

John Goodman of the National Center for Policy Analysis applies the concept behind ACOs to automobile purchases, revealing the underlying problems with the plan. He writes, “When you are healthy, how your ACO functions may not matter very much. But when you’re sick, the fact that the ACO is the agent of Blue Cross instead of your agent may matter a great deal.”

Consumer Power Report #243

Heartland Institute Senior Fellow Greg Scandlen defines how ACOs will limit Medicare beneficiaries’ access to doctors. Scandlen states, “Never mind that patients suffer. People who are focused on ‘population health’ are indifferent to the needs of individual patients.”

Why Accountable Care Organizations Won’t Deliver Better Health Care—And Market Innovation Will

In this policy brief, Rita E. Numerof, Ph.D., argues ACOs limit patient power instead of encouraging accountability. She states, “it is unlikely that an untested organizational structure will create accountability.”

Patient Beware of Accountable Care Organization

In this commentary, Daniel Johnson of The Heritage Foundation explains the federal definition of ACOs and reveals their potential problems: “It all sounds wonderful and, in fact, ACOs should be one of the options available for patients to choose in a new free market for health insurance. But ACOs may prove far more popular among certain physicians, wonks, and bureaucrats than among the general population of health care consumers.”

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Health Care News website at, The Heartland Institute’s website, and PolicyBot, The Heartland Institute’s free online research database, at

If you have any questions about this issue, contact Kendall Antekeier at 312/377-4000 or [email protected].