Health Care Reform: What are the Benefits of Accountable Care Organizations?

Finally, the United States government has developed legislation that mandates universal health care and it is said to be the 33rd country to do so (True Cost, 2010).  The Patient Protection and Affordability Care (PPAC) Act, which was passed by the Senate on December 24th, 2009 and the House of Representatives on March 21, 2010, was signed into law by President Obama on March 23, 2010.  According to Novick, Morrow, and Mays (2008) the United States could’ve had universal Health Care in the early 1990s when the Health and Security Act was introduced to Congress in 1993 (p. 40).  The aim of this legislation was to provide universal access to a health care plan to every individual (Novick et al., p. 40).  The plan focused on the provision of preventive services that include immunizations, cholesterol measurements, screenings for cervical cancer, and mammography with $750 million in funding by 2000 (p. 40).  The Health Security Act failed to pass for a number of complex reasons.

The Patient Protection and Affordability Care Act provide major reforms to a number of key areas in the current healthcare policies of the United States.  According to the Kaiser Family Foundation (KFF) (2010),  this legislation reforms insurance, Medicare and Medicaid, prescription drugs, taxation, long-term care, medical malpractice, prevention and wellness, individual and employer requirements, premium subsidies,  and quality in service (KFF, 2010).  Some of these legislative reforms take effect immediately while others are phased in over time.

The healthcare reform bill does not clearly address accountable care organizations (ACO) for which it request a pilot study of for at least a three year period (PPAC Act, 2009). Doctors and hospitals would be grouped and paid through Medicaid to provide care to elderly or disabled patients (Diamond, 2009) and pediatric patients (PPAC Act, 2009).  Diamond (2009) said that the state of Massachusetts is considering doing away with the fee-for-service plan and replacing it with ACO.  The system, provider centered and funded through global capitation, has to be big enough to be stable, be a legal entity, and willing to report on performance (Diamond, 2009; PPAC Act, 2009). Each year spending benchmarks will be determined with identified savings thresholds (Diamond, 2009). If it is determined that the number of patients to be cared for at a particular ACO is to increase by a certain percentage in the coming years and the providers minimize that hike then a portion of the difference is kept and shared among providers. It is believed that ACO’s won’t work because clinicians in economically stable positions won’t reduce their fees to help ACOs visualize cost savings (Diamond, 2009). It will be interesting to see how this plays out.


Diamond, F. (2009). Accountable care organizations give capitation surprise encore. Manage Care Magazine. Retrieved from

Kaiser Family Foundation (2010). Health reform: Health reform implementation timeline. Retrieved from

Novick, L.  Morrow, C., & Mays, G.  (2008).  Public health administration: principles for population-based management (2nd ed.).  Boston: Jones and Bartlett Publishers.

Patient Protection and Affordability Care Act of 2009. Pub. L. No. 111-148 (2010).

True Cost.  (2010).  Analyzing our economy, government policy, and society through the lens of cost benefit.  Retrieved from


11 thoughts on “Health Care Reform: What are the Benefits of Accountable Care Organizations?

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