A key selling point of the Affordable Care Act was that it would bring down the level of health care spending in the U.S.

Like so many bright and shiny promises of the early Obama period, that turns out not to be true.

The claim rested upon the idea that the Accountable Care Organizations, or ACOs, a new model in which hospitals and physicians functioned as teams, would reduce costs. The ACO system featured a bonus for ACOs that reduced spending. But don't put that bonus money in the mail yet!

A new report from the Department of Health and Human Resources indicates that this is a bust.

HHS Secretary Sylvia Mathews Burwell gamely claimed in a little-noticed speech that the report shows that the ACOs have indeed brought down the costs.

The Wall Street Journal, however, read the document.

It appears that the Medicare “Pioneer” ACO, which included 32 systems that HHS designated for membership because they were already reducing costs, is less effective when not viewed through Ms. Burwell's rose-colored spectacles.  Half the 32 already have left because they spent too much.  And bonuses for cost cutting weren’t that frequent:

In year one, spending increased at 14 sites and only 13 of the 32 qualified for a bonus. In year two, spending increased at six of the remaining 23 and 11 received a bonus. Spending did fall somewhat overall, driven by a few high-performance successes. After netting out the bonuses and penalties, the Pioneer ACOs saved taxpayers a grand total of $17.89 million in 2012 and $43.36 million in 2013. All in, per capita spending was a mere 0.45% lower compared to ordinary fee for service Medicare.

Yet the upfront start-up investments for the pioneers (in administration, compliance and information technology) ran to $64 million, so at best the program is a wash. More to the point, the Medicare budget for 2013 was about $583 billion and these are supposed to be the most experienced providers.

Another ACO is called the Shared Savings program—a name that turns out to be overly optimistic.  Only 29 out of 114 teams reduced their expenses and got bonuses in 2012.

They saved $128 million and were paid $126 million in bonuses. In 2013, only 64 of 243 participants hit the targets.

Perhaps original ObamaCare supporters are embarrassed? Not a bit…

Liberals are celebrating these disappointments as a victory for experimentation and “learning” about health-care delivery, but they haven’t learned anything. ACOs are failing because HHS’s regulations are a classic case of counterproductive and arbitrary central planning: The government is paying hospital groups to generate slightly lower bills. As the quitters may have discovered, it is more remunerative to stay with the old system, with higher hospital bills but no bonuses.

In particular, HHS also refused to involve seniors or give them any reason to choose ACOs over other providers. An inscrutable Medicare algorithm called a “prospective-retrospective attribution model” assigns patients to an ACO, even if they later leave the group or seek additional care from outside providers.

So patients often never know they are being treated by a given ACO and spending is then attributed (or not) that the ACO was or was not responsible for. Such turnover, or “leakage,” runs as high as 40% annually. Since the ACOs cannot accurately know which patients belong to their organization, they cannot understand how they are performing in real time or the standards to which they will eventually be held.

Notably, the integrated health systems that ACOs are supposed to recreate—Mayo Clinic, Geisinger, Kaiser Permanente and the rest—refused to become pioneers when the ACO regulations first appeared. HHS is now revising those regulations for next year. In comments to the agency this year, Mayo wrote that both ACO programs “are still too complex in their structure and requirements. They are excessively detailed and restrictive in ways that have significantly limited the number of interested groups.”

A better alternative would give patients the incentive and usable information about prices and value a la Paul Ryan’s defined-contribution Medicare reform. Doctors and hospitals will quickly adapt to compete for their business. That might mean ACOs or something else.

But of course this is ObamaCare in a nutshell: too complex to even be evaluated financially and not giving clients—patients—enough information to make decisions.

Democrats erroneously claim that ObamaCare is not an issue and that Republicans have no alternative with which to replace it.

Meanwhile, the issue is playing in Virginia, where Ed Gillespie is getting some traction from it.