US healthcare reform: Lessons for the UK

Approaching the fifth anniversary of the signing of the Affordable Care Act (ACA), Dr Ashish Jha reflects on what the ACA has accomplished, which challenges remain and how we might move forward.

Blog post

Published: 16/03/2015

As we near the fifth anniversary of the signing of the Affordable Care Act (ACA), it is an important moment to reflect on what the ACA has accomplished, which challenges remain and how we might move forward. The lessons of the ACA, especially from the Accountable Care Organizations programs, have important implications for the UK NHS and their efforts to improve integration, delivery, and quality of care provided.

What does the Affordable Care Act aim to do, and how?

The ACA is two laws in one: an act to improve access to health insurance, and an act to improve the functioning of the healthcare delivery system. We have paid much less attention to the delivery system changes, and that is the focus here.

So what are the problems of the U.S. healthcare delivery system that needs fixing? The first, and biggest, is spending. In 2013 alone, the United States spent $2.9 trillion on healthcare, almost as much the rest of the world combined. Yet there is broad consensus that the quality of healthcare that Americans receive is far from optimal. Care is often unsafe, ineffective, variably delivered, and does not truly meet the needs and expectations of patients. Why? Healthcare is fragmented, has payment schemes that reward quantity over quality, fails to engage patients effectively and pays inadequate attention to effective management and leadership.

The ACA makes three broad efforts to the address these issues:

1. It changes how we pay for things, rewarding higher quality care through value-based purchasing and penalising providers for “failures” such as high readmission rates.

2. It holds providers accountable for the health of a population.

3. It centrally manages innovation through the Center for Medicare and Medicaid innovation by promoting and funding the development of innovative models of healthcare delivery.

What has been accomplished and what challenges remain?

All the data to date suggest that readmission rates have started to fall. Health IT incentives, which were not part of the ACA but also an Obama administration effort, have moved the adoption and use of Health IT in dramatic ways. Yet the impact on patient outcomes is far more mixed. And this gets to a key lesson: incentives work when they are adequate in size, transparent in design, and clearly targeted towards easily tractable measures. The value based purchasing (aka P4P) scheme, seems to have had little or no effect.

The Accountable Care Organization (ACO) program: status update

The Act has also ushered in the age of Accountable Care Organizations (ACOs), a group of providers that take responsibility for a population (part of the initiative to hold providers accountable for both spending and health outcomes). ACOs come in two main flavours: Pioneers and Shared Savings Programs (SSP).

ACOs are quite a varied lot: most of them are small with less than 100 physicians. Half of all ACOs have a hospital, the other half don’t. Most don’t have other types of provider organisations, such as skilled nursing facilities or home health agencies.

Not surprisingly, a small but meaningful number of Pioneer ACOs dropped out of the program. Across the rest of the Pioneers, a small number have lost money, a majority have more or less broken even and a minority have saved money. The impact of the ACO program on quality is underwhelming, but these are the early days. One hopes that ACOs will be able to make big gains in quality, though the evidence for this is not yet in.

ACOs have taken on a broad set of activities to improve quality and reduce cost. One of the biggest challenges that ACOs report is shifting the mindset of physicians from a fee-for-service model to a more integrated approach. But despite these challenges, ACOs report being very optimistic about whether their care model will improve care and lower spending.

Implications for the UK

The UK is undergoing important changes in how it delivers healthcare to its population. A part of this effort, as articulated in the Five Year Forward View, is to create organisational forms which better meet the needs of their local population, much like ACOs. While this model is extremely promising, there are important issues that will likely need to be addressed:

1. The first is having a health IT system that can facilitate true population health management. This means that all parts of the healthcare delivery system (and potentially other sectors, such as social services) must be on an electronic platform and be able to communicate seamlessly with each other. Even though a majority of physicians and hospitals now have robust electronic health records in the U.S., critical patient data does not easily flow across these providers, making population health management extremely difficult.

2. The second big challenge is in shifting the culture and mindset of providers. In the U.S. ACOs identified that getting physicians to change their practice style from a fee-for-service approach to an integrated, population-health approach is very challenging. Surely, this kind of change will be a challenge in the UK as well, and all the evidence suggests that it takes time and persistent effort.


It has been five years since the passage of the Affordable Care Act and the early evidence of its impact on care delivery is mixed. We have seen some initial successes and I am encouraged by the progress we have seen with ACOs. While still in the early stages of development, these organisations represent a most promising approach to changing the way we deliver healthcare. Ultimately, we are at the start of a long journey to healthcare delivery reform and while the US and the UK begin at different points, it is remarkable that many of the efforts at change are quite similar. There is a great deal of hard work, reflection and revision ahead of us if we are going to make high-quality, affordable healthcare a reality.

Dr Ashish Jha is Director for the Harvard Global Health Institute. Please note that views expressed in guestblogs on the Nuffield Trust website are the author's own. 

Suggested citation

Jha A (2015) ‘US healthcare reform: Lessons for the UK’. Nuffield Trust comment, 16 March 2015.