Some advocates of health care reform argue for a single-payer system, while others prefer reliance on the market and insurance subsidies. This article suggests that a hybrid approach has the potential to achieve both universal coverage and improved efficiency. The author argues for aggregating employer contributions across multiple workers and jobs in order to avoid the fragmentation and inefficiencies of sponsored plans.
A single risk pool covering everyone who might consume health care would cover the types of high-cost events that cause voluntary models to fail. An expanded income-based subsidy would guarantee inclusion of individuals with low incomes. Payment structures for inpatient and similar services would build on the Medicare model by using diagnosis related groups (DRGs), expanding them to include the professional fees and services associated with an episode of care. In addition, clinicians and facilities would create formal or informal care delivery teams (CDTs) to treat patients and allocate funds among themselves. The remaining expenditures, 75 percent of the episodes and 38 percent of the costs, could be paid for with a debit card or by using a health plan. Market-disciplined carriers would facilitate payment, provide information and respond to patient preferences. The government's role in the operation of the system would shift to ensuring information availability and transparency in payment.