All-payer

All-payer rate setting is a price setting mechanism in which all third parties pay the same price for services at a given hospital. It can be used in a healthcare context to refer to the system where all health insurers pay the same price for the services provided by healthcare providers. This is in contrast to the more common system where different insurers negotiate different prices with providers.

History[edit | edit source]

The all-payer system has its roots in the Health Maintenance Organization Act of 1973. This act was designed to encourage the creation of health maintenance organizations (HMOs) and provided federal funds for that purpose. The idea was that HMOs would provide a counterbalance to the fee-for-service system, which was seen as promoting excessive care.

In the 1970s and 1980s, several states, including Maryland, New York, and New Jersey, implemented all-payer systems. Maryland's system, which is still in place today, is often cited as a successful example of all-payer rate setting.

Advantages and Disadvantages[edit | edit source]

Advantages of the all-payer system include the potential for cost control and the reduction of administrative costs. Because prices are set uniformly, there is less need for negotiation between insurers and providers. This can also lead to more predictable costs for patients.

However, there are also potential disadvantages. These include the possibility of reduced competition and innovation, as well as the potential for cost shifting to other areas of the healthcare system.

Current Use[edit | edit source]

Today, the all-payer system is used in several countries, including Germany, France, and Japan. In the United States, Maryland is the only state that still uses an all-payer system.

See Also[edit | edit source]

All-payer Resources
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