An Overlooked Argument for a Single-Payer Healthcare System: Eliminating Misalignment Among Payment Models

Abstract

The past decade has seen health care payors shift away from fee-for-service and experiment with alternative payment models that incentivize providers to find innovative ways to improve patient outcomes while lowering healthcare costs. Unfortunately, these efforts have yielded mixed results, as few providers have fundamentally changed how they care for patients. A key reason for these disappointing results is the multi-payer system itself─when providers contract with a mix of payers, they face an array of conflicting, muddled payment rules and diluted financial incentives. This in turn deters many providers from entering into alternative payment arrangements, while complicating others’ attempts to transform their practices. Moreover, attempts to coordinate payment incentives and rules across payers face substantial obstacles. Multi-payer alignment initiatives are thus unlikely to achieve their alignment aims. This Article argues that a single-payer healthcare system, however, can succeed where a multi-payer system has failed. Specifically, a single government insurer can apply a common set of payment rules and incentives to a provider’s entire patient panel. When combined with financial and technical support for under-resourced providers, this would give providers the necessary tools and motivation to reorient the U.S. healthcare delivery system toward more effective and efficient ways of caring for patients.

Keywords: multi-payer alignment, single-payer, alternative payment models, administrative complexity, diluted financial incentives, conflicting financial incentives, healthcare delivery reform, provider capacity building