by Gregg Anthony Masters, MPH**
Managing Director, Health Innovation Media | Executive Producer, Healthcare NOW Radio
Let me be direct: the American healthcare system is being dismantled from two directions simultaneously, and the policy conversation hasn’t caught up with either of them. From above, the blunt instruments of DOGE, Medicaid block grants, and NIH funding cuts are stripping out the public health infrastructure that keeps populations and the downstream economics of accountable care functional. From within, the chronic structural failure of a system never designed to produce health continues its quiet, grinding work. What we are witnessing is not a reform debate. It is a stress test. And the question, for those of us who’ve spent careers building the scaffolding of value-based care, is whether the architecture survives.
I’ve been tracking this since the early days of the Medicare Shared Savings Program, through the HMO era, the IPA spin-offs, the second-generation PPO build-out, the ACA’s accountable care frameworks, ACO REACH, and now the pending LEAD model. Each cycle has produced the same maddening dynamic: genuine innovation at the margin, real savings in isolated pockets, and a system-level inertia that absorbs every reform effort without fundamentally reorienting incentives. We bend cost trends. We don’t break them.
The LEAD Transition: Reform Signal or More ‘Reform’ Theater?
Start with what’s happening right now at the program level, because it matters and it’s being dramatically underreported in most of the spaces where healthcare leaders actually make decisions.
ACO REACH, the model launched in 2021 to extend accountable care to higher-need, smaller, and more equity-focused provider organizations, is scheduled to end December 31, 2026. That’s 161,765 providers across 103 ACOs who will need to either transition to MSSP or exit the program altogether. The too often operationally challenged policy nerds will tell you this is manageable. The providers living it will tell you it’s destabilizing. Both are right, and the tension between them is the story.
CMMI’s Center for Medicare and Medicaid Innovation) answer is the Long-term Enhanced ACO Design (LEAD) Model, a 10-year voluntary program slated to begin January 2027. There’s a lot to like in the design intent: better benchmarking, stronger incentives for specialist integration, explicit focus on dual eligibles and homebound patients, and a performance period long enough to actually build something. The AMA has endorsed the direction. Aledade the innovative ACO enablement company founded by the former ONC Coordinator for Health IT, Farzad Mostashari, MD, is cautiously optimistic. And the 10-year runway is genuinely important, i.e., you cannot reorganize care delivery in 3-year agreement periods, which is what the MSSP’s structure has historically demanded.
But the critical details, including benchmarking methodology, rebasing approach, risk adjustment, etc., weren’t public as of the RFA release date. And that’s not a footnote. That’s everything. The ACPT benchmarking dysfunction that plagued MSSP in 2024 and 2025 – a fixed projected growth rate that systematically misestimated actual spending – is the kind of technical failure that quietly destroys financial viability for ACOs even when their clinical performance is strong. CMS (Centers for Medicare and Medicaid) has acknowledged the problem and issued partial fixes. That’s progress. But “partial fix” is not a business model, and organizations are being asked to make multi-year risk commitments on an actuarially unstable foundation.
Meanwhile, after nearly a decade of administrative burden on physicians. CMS is simultaneously proposing to phase out MIPS and expand MSSP participation incentives, including raising the Level E basic track shared savings rate from 50% to 60%. The signal is clear: the agency wants more providers (physicians) in value-based arrangements. The mechanism remains contested. And the underlying physician payment crisis. i.e., a 33% inflation-adjusted decline from 2001 to 2025 per AAFP (American Academy of Family Physicins), makes every shared savings calculation land on a financial substrate that’s already cracked.
The Medicaid ‘Floor’ Is Dropping
Here’s what makes this moment genuinely different from every prior reform inflection point I’ve lived through: the federal policy environment is actively hostile to the population health infrastructure that accountable care models depend on.
The 2025 reconciliation law, i.e., the One Big Beautiful (really ugly, IMJ) Bill, contains an estimated $911 billion in federal Medicaid cuts over 10 years. The most significant financing changes don’t fully land until October 2027, but the effects are already arriving: DSH (disproportionate service hospitals) payment reductions of approximately $8 billion annually beginning fiscal year 2026, new prohibitions on state provider taxes that have historically backstopped Medicaid financing during revenue downturns, and work requirement implementation scheduled for January 2027 that CBO projects will result in millions losing coverage.
Let me put that in accountable care terms, because this is an ACOwatch.me conversation and the audience here understands the math. ACOs, particularly those serving dual eligibles and high-need populations, are built on the premise that coordinated, proactive care reduces downstream utilization costs. That model depends on covered patients. When Medicaid enrollment drops, safety-net providers lose revenue, reduce capacity, and exit markets, too often the exact markets that ACO REACH was specifically designed to ‘reach’ – if you will. You cannot build an accountable care infrastructure on a population base that’s being proactively shrunk.
The KFF (Kaiser Family Foundation) analysis makes the math explicit: over half of those projected to lose coverage under the new work requirements, i.e., roughly 5.3 million people, are currently in Medicaid expansion populations. These are working adults, often in physically demanding jobs with unpredictable hours, for whom the administrative burden of documenting work activity functions as a coverage barrier, not a coverage incentive. The evidence from Arkansas’s 2018 work requirement experiment struck down by courts after research demonstrated it caused coverage loss without increasing employment has apparently not informed current policy design. We’ve been here before. We know what happens. And we’re doing it again.
The Public Health Infrastructure That Accountable Care Actually Runs On
There is a conversation happening in accountable care and population health circles that treats DOGE-era cuts to public health agencies as a separate issue, i.e., background noise to the main ACO policy storyline. I want to push back on that framing hard.
Social determinants of health account for 80 percent or more of health outcomes, i.e., the ‘boring but high impact blocking and tackling or public health’, is NOT a talking point, it’s the accumulated finding of decades of epidemiological research. When you defund housing assistance, you are defunding a health intervention. When you dismantle USAID’s (US Agency for International Development) disease surveillance networks, you are removing the early warning systems that give healthcare systems time to prepare, the same logic that led the Johns Hopkins Bloomberg School of Public Health to estimate a severe respiratory pandemic could cost the global economy $570 billion annually, compared to the fraction of that figure required to maintain prevention and surveillance capacity.
The NIH funding cuts follow the same logic. Fred Goldstein said it plainly in our ‘Enough Is Enough‘ episode:
every federal NIH dollar generates roughly $2.57 in economic activity, per the United for Medical Research 2026 report. The mRNA platform that produced COVID vaccines was the product of decades of federally-funded basic research. The HIV/AIDS treatment arc, from mysterious immunodeficiency syndrome in 1981 to PrEP reducing acquisition risk by 99%, took 40 years of iterative, self-correcting publicly-funded science. You cannot shortcut that timeline by cutting the investment. You just push the reckoning forward in time while making it more expensive.
For accountable care specifically: an ACO serving a high-need population in a community with deteriorating housing stock, reduced public health department capacity, gutted food assistance, and eliminated disease surveillance is operating in a fundamentally different environment than the one the actuarial models assume. The social determinants that ACO REACH’s equity-focused design tried to address are, in the current policy environment, getting worse, not better and faster than any care coordination intervention can compensate for.
The Structural Problem That Predates All of This
I want to be careful not to let the acute crisis absorb all the analytical oxygen, because the chronic disease in American healthcare, i.e., the structural incentive failure, is still running underneath all of this, quietly compounding.
The brutal arithmetic hasn’t changed: a health plan that keeps its population healthy collects premiums on a healthier pool, generates fewer claims, and in the ACA’s medical loss ratio framework may find itself returning money if the loss ratio drops too low. The financial incentive structure doesn’t reward health – it rewards the management of illness at a profitable margin. This is not an opinion. It is documented in the health economics literature going back to Enthoven and Reinhardt. It’s what Gil Bashe was getting at in Healing the Sick Care System when he argued the healthcare system views itself as the client, not patients.
Fee-for-service (FFS) continues to dominate because it is predictable, legally defensible, and rewards volume. Value-based models have bent cost trends from 4 percent to 3.5 percent in some analyses, but they have not broken them. MSSP in 2024 generated a record $2.4 billion in savings and paid bonuses to 75% of participating ACOs. That’s meaningful. It’s also modest relative to the total Medicare spend. The question is whether those savings compound over time as the LEAD model’s 10-year structure intends or whether the political environment destabilizes the program before the compounding can occur.
Physician burnout (moral hazard, the weight of the ‘healthcare Borg’) is the system’s most expensive symptom and the one we talk about the least honestly. The investment in producing a single physician, i.e., four years of undergraduate, four years of medical school, three to five years of residency, often fellowship, represents an enormous national human capital commitment, with medical student debt averaging $212,341 for the class of 2024 per the AAMC. AMA research has documented the relationship between administrative burden, moral injury, and psychological cost clearly enough that it should be treated as a policy crisis, not a wellness program opportunity. When physicians leave clinical practice for administrative roles or entrepreneurial ventures, it is not a personal failure. It is a structural indictment.
What the Moment Actually Requires
Silence is acceptance, and I’ve been in this space too long to pretend the status quo is defensible. So let me be direct about what the current moment requires from those of us who care about accountable care and population health.
First: defend the public health infrastructure as if accountable care depends on it, because it does! The disease surveillance networks, the NIH research enterprise, the Medicaid coverage floor, the social determinants funding: these are not separate from value-based care. They are the substrate it operates on. You cannot build population health management on top of a collapsing public health system.
Second: demand specificity from LEAD before committing. The 10-year performance period is right. The equity focus is right. The benchmarking methodology, once published, will tell you whether this is a real reform or another well-intentioned model that fails providers on actuarial grounds. The ACPT experience should make everyone cautious about signing a multi-year risk contract until the numbers are visible.
Third: name the structural problem rather than managing around it. ACOs have demonstrated they can improve care coordination and generate savings. They have not demonstrated they can solve the fundamental misalignment between a payment system that rewards illness management and a population health goal that requires keeping people well. That is not a critique of accountable care. It is an honest description of the policy environment in which it operates, and it should inform every advocacy conversation about what the LEAD model, future MSSP modifications, and any real primary care investment actually need to accomplish.
The arc of healthcare reform is long. I’ve watched it bend and spring back more times than I can count. But the current moment is different in one specific respect: we are not just arguing about the pace of change. We are arguing about whether the public systems that make change possible will survive the political season. That’s a different argument. And it requires a different response.
Speak up. The silence is too expensive.
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Gregg Anthony Masters, MPH is Managing Director of Health Innovation Media and Executive Producer of Healthcare NOW Radio programs including PopHealth Week, Health Stealth Radio, Health Unabashed, and Inside the Revival. He has tracked ACO and value-based care policy since the early MSSP era. He can be found at @GreggMastersMPH and at ACOwatch.me and HealthInnovationMedia.com.
**AI Use & Editorial Standards Disclosure: In producing this content, the author employs AI language tools in a defined supporting role: research aggregation, structural organization, and draft suggestion. The author retains sole editorial responsibility for all published content. Every citation has been independently confirmed as accurate and accessible prior to publication. AI-generated language is treated as raw material, recast in the author’s established voice and subject-matter expertise before publication.
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