Second: It's a taxpayer-financed political slush fund.
In its report, the GAO said the size of the pilot project "dwarfs all other Medicare demonstrations -- both mandatory and discretionary -- conducted since 1995 in its estimated budgetary impact and is larger in size and scope than many of them." If it offers no benefit to quality and it uses more debt financing as "savings," then what reason but politics does it have for existing?
HHS spokeswoman Erin Shields claims that the pilot program's bonuses (which Obamacare would effectively eliminate for savings) help Medicare improve quality, as they "build on the improvements due to star quality ratings to learn how to best incentivize quality while we bring payments down." The most ironic aspect of all is this: There is already just such a program available that does exactly what this pilot program proposes to do; it offers more choices, incentives for saving and lower costs through competition. Best of all, it doesn't cost $8.5 billion to implement. It's called market competition.
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