Providers and health insurers will continue to consolidate to enable themselves to operate more efficiently in a fee-for-service world. However, some nongovernmental health insurers (e.g., Blue Cross in Massachusetts, with its Alternative Quality Contract) are working with some of these consolidated provider systems (e.g., Atrius Health, Caritas Christi) to create financial incentives for higher quality and more cost-effective care. There are other efforts planned, or under way, by governmental and non-governmental health insurers, to control the cost, and improve the quality, of healthcare services, such as pay-for-performance standards, bundled payments, and capitation.
These are important experiments that could use the resources and economies of scale of large provider systems to transform the delivery, and financing, of healthcare, and, ultimately, to make access to health insurance for the uninsured more affordable. The consolidated provider systems have the capacity, and a wary willingness, to be partners in these efforts.
The federal government could powerfully support these efforts by subsidizing access to healthcare insurance for the poor, and authorizing Medicare and Medicaid payment reform efforts that reward providers based on the quality and cost-effectiveness of care provided to patients. Or the federal government could, as it did in the 1990s, stand aside (other than ultimately imposing draconian, deficit-driven Medicare and Medicaid rate cuts), and let the fee-for-service arms race continue, leading to the continuation of spiraling healthcare costs with no significant improvements in quality or access. We hope for the former, while fearing the latter.