AHEAD: A New Health Care Experiment With Familiar Flaws

In our previous article, we examined Vermont’s health reform plans and the systemic cost-shifting challenges inherent in Medicare and Medicaid. Now, the state has turned its sights to the AHEAD model—States Advancing All Payer Health Equity Approaches and Development—a federal initiative aiming to transform the health care system. While ambitious, AHEAD carries the fingerprints of both the Obama and Biden administrations, echoing familiar challenges that threaten to perpetuate the very problems it seeks to solve.

The AHEAD Model: A Federal Experiment

AHEAD, introduced by the Centers for Medicare & Medicaid Services (CMS) in October 2023, builds on the value-based care principles established by Obama’s Affordable Care Act (ACA). It focuses on aligning payments across Medicare, Medicaid, and private insurers while introducing equity-based adjustments to address health disparities. Under the Biden administration, equity has taken center stage, shaping AHEAD’s design to channel resources toward underserved populations.

For Vermont, participation in federal models like AHEAD is less a matter of choice and more a necessity. With the state heavily reliant on federal dollars to sustain its health care infrastructure, there’s little room to refuse these experiments, even when they come with significant risks. Critics argue this dynamic resembles a dependency, where Vermont—much like a junkie beholden to their dealer—has no option but to embrace federal programs, regardless of their long-term viability.

Vermont, already a testing ground for federal health innovation, eagerly applied for the AHEAD program, citing its experience with the All-Payer Accountable Care Organization (ACO) Model. However, if the ACO Model had worked as intended, why is AHEAD necessary? The reality is that the ACO Model proved too expensive and failed to deliver the promised savings. Critics argue this demonstrates that Vermont’s approach is doubling down on unproven solutions, with little evidence that the next big thing will fare any better.

The Cost-Shifting Problem

At the heart of AHEAD lies an uncomfortable truth: the program does little to address the cost-shifting challenges endemic to Medicare and Medicaid. These federal programs underpay hospitals and providers, forcing them to recoup losses by charging higher rates to private insurers and out-of-pocket payers. The result? Skyrocketing premiums and health care costs for those outside the public systems.

Vermont’s reliance on global budgets—a key feature of AHEAD—tries to stabilize finances by giving providers a fixed amount of funding for the year, regardless of how many patients they see or the services they deliver. For example, a small rural hospital might receive a generous fixed budget to keep its doors open, even if it only treats 500 patients in a year. Meanwhile, a busier urban hospital with far more patients and complex cases might receive only a slightly larger budget—or even less funding per patient—despite its higher workload.

Proponents argue that this ensures rural facilities stay operational and that providers can focus on care rather than chasing payments. However, critics point out that the system creates glaring inefficiencies:

The small rural hospital is overfunded relative to its patient needs, while the urban hospital struggles to stretch its limited budget to cover high demand.
By decoupling funding from actual services, global budgets remove any incentive to increase efficiency or expand access to care where it’s needed most.

Ultimately, this model seems more like a tool for governments to cap spending than a meaningful solution for providers or patients. Providers who receive fixed budgets may feel the pinch of rising costs, limited revenue potential, and growing patient dissatisfaction when services are inevitably cut.

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Equity Payments: A Controversial Mechanism

AHEAD’s promise of health equity introduces another layer of complexity. The program proposes adjusting payments based on social determinants of health, including race. Proponents argue that such mechanisms are necessary to close health gaps, but critics see this as a flawed approach.

Using race as a factor raises significant legal and ethical concerns. Opponents argue that socio-economic status, not race, should guide resource allocation. A low-income rural white family in Vermont may face the same health challenges as a low-income urban African American family in Detroit. Yet AHEAD’s race-based adjustments risk overlooking the common denominator: poverty, inadequate education, and limited access to essential services like healthcare.

These equity payments also reflect an assumption that systemic disparities can be resolved through funding alone. Critics point out that AHEAD, like its predecessors, fails to address deeper issues that perpetuate disparities, such as insufficient investments in preventive care, poor public health education, and limited infrastructure in underserved areas. By focusing on symptoms rather than root causes, the program risks misdirecting resources and leaving the underlying problems unresolved.

What’s Left on the Table?

The AHEAD model’s shortcomings highlight missed opportunities to address health disparities through more practical and inclusive approaches:

Focus on Socio-Economic Factors: Instead of equity payments tied to race, policies could target communities based on income, education levels, and geographic access.
Expand Nutritional Education: Providing individuals with the knowledge to make healthier choices can have long-term impacts, especially in food deserts and low-income areas.
Invest in Local Solutions: Tailored interventions at the community level can better address unique challenges than broad federal mandates.

Conclusion

AHEAD represents yet another attempt to tackle systemic issues in health care, but its foundations rest on old ideas with familiar flaws. By relying on cost-shifting mechanisms, introducing contentious equity payments, and leaning heavily on federal funding, the program risks perpetuating the very problems it seeks to solve. Vermont’s participation will serve as a test case, but for now, AHEAD appears to be another iteration of an overambitious federal experiment with significant unanswered questions.

Dave Soulia | FYIVT

#fyivt #healthcare #policy #vermont

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