The Next Stage of Health Care Reform: Controlling Costs by Paying Health Plans Based on Health Outcomes

Abstract:     
The predominant form of paying for health care in the United States (Fee-for-Service) creates inefficient incentives and leads to rising costs. A number of changes were incorporated into the health care reform legislative package of 2010, but these changes will not stop rising costs. Instead, this article proposes that the reimbursement structure for the Medicare Advantage program be revised so that medical plans receive their payments based on delivery of health outcomes, not delivery of health services. This approach utilizes centralized enforcement at the level of the plan, to provide incentives for the plan to encourage its providers to improve health outcomes.

Number of Pages in PDF File: 40

Keywords: Health Care Reform, Medicare Advantage, Health Outcomes, Federalism

JEL Classification: I18, H51, K32

Accepted Paper Series