Ezekiel Sees a Tiny Wheel

In his WSJ article today, Doctor Perfesser Ezekiel Emanuel (sorry, subscription required) presents a breathless, “time is running out” advocacy for not giving up on ACO’s.

He acknowledges that no evidence exists to show ACO’s have reduced costs substantially. He goes on to assert that if only ACO’s will implement something he calls “bundles for hospitals”, $50 billion would be saved over the next 10 years.

Hey, $5 billion a year is not chump change, but is that what Dr. Zeke means by “substantial”? Will it bend down the cost curve? Will it actually prevent the recession-driven slowdown in medical spending, from bending back up?

 CDC says the level of US healthcare spending has reached roughly $2.9 trillion annually. That means Dr. Zeke’s $5 billion annual ACO hospital-bundling savings would be worth 0.001724 of our present spending. In words, that’s seventeen one-hundredths of ONE percent. In other words, if your family medical insurance premium is $2,500 per month, Dr. Zeke’s solution would save you $4.31. Which won’t buy you a latte grande.

Maybe the perfesser lost track of a couple decimal places along the way. Or maybe I lost track of them.  But if not, why is Dr. Zeke so worked up that time is running out; that President Obama is missing a historic opportunity; and that the medical cost curve will again bend upward – – if we fail to do this ACO bundling thingy that he thinks will save all of seventeen one-hundredths of one percent?