health spending while also improving the quality of care. But more than three years after enactment, it is clear that PPACA ACOs are fundamentally flawed because they prevent genuine consumer choice: the populations the ACOs are supposed to manage are often unaware that they are enrolled in an ACO and therefore have little incentive to stay within the ACO care network. The ACOs are furthermore hamstrung by their reliance on cumbersome fee-for-service payment systems. On the other hand, long-standing integrated care initiatives have shown potential for slowing cost growth and improving the quality of care. Rather than seeking to repair the broken PPACA ACO model, reformers should create a new model that incorporates provider-driven managed care into a larger system of genuine consumer choice and marketplace competition. Key points in this Outlook: •Patient Protection and Affordable Care Act (PPACA) proponents initially touted Medicare accountable care organizations (ACOs) as a key to improving patient-provider interaction and to creating a better and more affordable health system for seniors. •The PPACA ACO model is fundamentally flawed because beneficiaries are never given a transparent choice to join an ACO and because the model relies on fee-for-service payment systems. •A better Medicare integrated care option would make patients and consumers accountable for their health care choices, ensuring that low-cost, high-value, and provider-driven managed care options would be given ample room to compete and thrive in Medicare.

The most celebrated “bend the curve” idea from the Patient Protection and Affordable Care Act (PPACA) is the Medicare accountable care organization (ACO). ACOs are intended to be integrated health plans, with hospitals, physicians, and other health services providers working together in a coordinated patient delivery system. The Obama administration and the law’s strongest proponents repeatedly cited ACOs both during consideration of the law and in the years since its passage as evidence that Obamacare was more than just a coverage expansion measure. The public was told that ACOs, along with a few other “delivery system reforms,” would transform the way hospitals and physicians interact with patients and thus slow the rate of growth of the nation’s health spending while improving quality. In sum, ACOs were promoted as a key to a better and more affordable health system. "It is clear that the ACOs of the PPACA variety will be, at best, minor blips in the nation’s $2.7 trillion health system." Yet there never was any evidence to back up these grandiose claims. Indeed, in its cost estimates for the legislation, the Congressional Budget Office (CBO) never assigned anything more than relatively trivial savings to the ACO concept.[1] Moreover, critics noted during the law’s consideration and shortly after its enactment that structural flaws would prevent ACOs—at least as conceived in the PPACA—from ever having a meaningful impact on the delivery system or on cost growth. But that did not stop the relentless hype by the law’s advocates. More than three years after enactment, it is clear that the ACOs of the PPACA variety will be, at