The Healthcare Lie Exposed: The Simple Fix America Was Never Supposed to See

ByTimothy Alexander

For decades, Americans have watched healthcare costs rise faster than wages, inflation, and economic growth. We’ve seen insurance premiums explode, deductibles skyrocket, and family budgets stretched to the breaking point. Yet the most devastating part of the story is this: despite spending more than any country on Earth—by a wide margin—the United States consistently delivers worse health outcomes than its peers. Lower life expectancy. Higher chronic disease. Higher infant and maternal mortality. More preventable deaths. More medical bankruptcy.

We spend more. We get less. And the system keeps getting harder to afford.

When the Affordable Care Act (ACA) passed in 2010, it promised to change this narrative. It promised access, affordability, and a more rational healthcare system. But more than a decade later, by most meaningful measures, the ACA failed to deliver. Premiums remain high. Deductibles remain punishing. Millions remain uninsured or underinsured. And the underlying economic engine that drives inefficiency—America’s fee-for-service payment model—was left largely unchanged.

The law expanded coverage, yes. But it did not fix the structural incentives that reward quantity over quality, chaos over coordination, and sickness over health.

If America truly wants better health outcomes and lower costs, we must confront the foundational problem: we pay for procedures, not results. That single design flaw has created a sprawling system that profits most when Americans are sickest.

This feature explores a transformative alternative: a fee-for-outcome system. Instead of paying doctors, hospitals, and pharmaceutical companies for the number of services they provide, a fee-for-outcome model rewards them for tangible improvements in patient health. It aligns economic incentives with public wellbeing—a principle that, when implemented correctly, has produced dramatic success in countries around the world.

This is not a minor tweak or a technocratic adjustment. It is a fundamental redesign of how American healthcare functions. And it may be the only path to breaking the cycle of high spending and poor outcomes that has plagued the United States for generations.

I. The American Healthcare Paradox: Sky-High Spending, Mediocre Results

Before discussing reform, we must understand the scale and nature of the problem.

The U.S. Spends More Than Any Other Country—By Far

The United States spends nearly five trillion dollars a year on healthcare. That’s around 18 percent of our entire GDP—almost double what other wealthy democracies spend. On a per-person basis, the U.S. spends roughly twice as much as nations like Germany, the Netherlands, or the United Kingdom.

Yet the return on this massive investment is shockingly poor.

Life Expectancy and Outcomes Lag Behind

While peer nations have steadily increased life expectancy, the United States now ranks near the bottom of industrialized countries. Chronic disease rates—diabetes, heart disease, obesity—are far higher. Preventable deaths are more common. Hospital readmission rates are higher. Maternal mortality is several times worse than most European countries.

So What Went Wrong?

The problem is neither a lack of spending nor a shortage of medical innovation. The U.S. has world-class hospitals, advanced technologies, and some of the most skilled clinicians anywhere. The problem is that we deploy these resources through a payment system that rewards inefficiency, prioritizes volume, incentivizes overtreatment, and treats outcomes as an afterthought.

This is the dysfunction at the heart of American healthcare. And it is the dysfunction the ACA failed to meaningfully address.

II. The Affordable Care Act: What It Fixed—and What It Didn’t

The ACA achieved two major successes:

  1. It expanded coverage through Medicaid and private-market subsidies.

  2. It implemented important patient protections, such as banning pre-existing condition exclusions.

But coverage is not the same as affordability or value. And the ACA left the underlying cost-drivers intact.

Premiums and Deductibles Keep Rising

Marketplace premiums surged again in recent years, with some states seeing double-digit increases. Deductibles for Bronze and Silver plans routinely reach five, six, or seven thousand dollars—rendering insurance practically unusable for many families.

A person may be “insured” on paper yet still unable to afford care.

Millions Remain Without Care

Millions remain uninsured. Tens of millions more are underinsured, delaying or avoiding treatment out of fear of financial ruin. Surveys consistently show that nearly half of Americans skip care due to cost.

The ACA Did Not Change the Incentive Structure

The law did little to alter the fee-for-service payment model. Doctors still get paid when they order more tests, schedule more visits, conduct more procedures, and deliver more billable services. Hospitals still earn more when they perform more surgeries, more diagnostic work, or more inpatient days.

The ACA attempted to pilot some value-based reforms, such as Accountable Care Organizations (ACOs), but these initiatives remained peripheral to the broader system and often generated modest or inconsistent results.

The central engine of waste and inefficiency was left untouched.

Why the ACA Struggled

The root issue is not insurance—it’s incentives. The ACA wrapped more insurance around a dysfunctional system without changing the system itself.

To truly reform American healthcare, we must redesign how care is paid for, measured, and rewarded.

This is where the fee-for-outcome model comes into focus.

III. From Fee-for-Service to Fee-for-Outcome: A Necessary Redesign

Fee-for-service pays providers for each service delivered. A visit, a test, a scan, a surgery—each generates revenue. Quality may be rewarded, but only indirectly. Efficiency is punished. Poor outcomes rarely reduce a provider’s income.

Fee-for-outcome flips the incentives.

Instead of asking, “How many procedures did we bill?”
The system asks, “Did the patient get healthier?”

What Do We Mean by ‘Outcome’?

Outcomes include:

  • Clinical improvement (blood pressure, blood sugar, mobility, pain reduction)

  • Reduced hospitalizations

  • Lower rates of complications

  • Patient-reported quality of life

  • Longer-term stability for chronic disease

  • Avoided emergency events

  • Prevention success (vaccinations, screenings, early interventions)

A fee-for-outcome system ties payment to these measurable results.

Why This Matters

When outcomes drive payment:

  • Providers focus on prevention

  • Care teams coordinate more effectively

  • High-risk patients get proactive support

  • Hospitals emphasize safety and quality

  • Avoidable complications decline

  • Wasteful or unnecessary services drop

  • Total costs shrink over time

The system becomes aligned with patient wellbeing—not with maximizing billable transactions.

This model is already succeeding in other countries and in select U.S. systems, offering powerful evidence that it can work nationally.

IV. How a Fee-for-Outcome System Would Work Across the Healthcare Ecosystem

A complete shift in incentives must touch every corner of the healthcare system: hospitals, primary care, specialists, pharmaceuticals, and insurers. Here is what the transformation could look like.

1. Hospitals: From Volume Factories to Health Hubs

Hospitals today earn more when more patients fill beds, more procedures are performed, and more complications occur that require more treatment.

In a fee-for-outcome system:

  • Hospitals receive bundled payments for entire episodes of care—heart failure, pneumonia, hip replacement, cancer treatment.

  • Payments are partially contingent on results, such as low complication rates, successful recovery, or limited readmissions.

  • Avoidable infections, surgical errors, and preventable readmissions reduce payment.

  • Strong discharge planning and post-acute coordination are rewarded.

When hospitals profit from healthy outcomes, they invest more in nursing staff, infection control, follow-up care, and patient education. They treat patients as long-term health partners rather than high-value billable events.

Countries like Sweden, which tie orthopedic surgery payments to patient-reported pain improvement and complication rates, have seen dramatic reductions in both cost and harm.

2. Primary Care: Prevention Becomes the Center of Gravity

Primary care is the backbone of any high-functioning system. Yet in the U.S., primary care receives only a tiny fraction of total spending, and doctors often burn out under the pressure of high patient volume and complex billing requirements.

A fee-for-outcome approach would:

  • Pay primary care providers monthly per patient (capitation), with bonuses for improved outcomes.

  • Reward clinicians for controlling chronic diseases, reducing ER visits, and keeping patients stable.

  • Encourage proactive management: reminders, check-ins, coaching, nutrition counseling, medication monitoring.

  • Support team-based care: physicians, nurses, care coordinators, mental health professionals.

Systems that have adopted this model—like Kaiser Permanente—have seen improvements in hypertension control, fewer heart attacks, and reduced hospitalizations.

When primary care thrives, the system saves money because it avoids expensive crises.

3. Specialists and Surgeons: Quality and Precision Over Quantity

Specialists and surgeons currently operate in one of the most profitable zones of fee-for-service care. Scans, procedures, and surgeries are lucrative. Complications generate more revenue, not less.

In a fee-for-outcome model:

  • Specialists receive bundled payments for entire episodes (e.g., knee replacement including surgical prep, procedure, and rehabilitation).

  • Payments are contingent on successful recovery and minimal complications.

  • Hospitals and specialists share accountability for overall patient outcomes.

  • Preventable re-operations, infections, and readmissions reduce payment.

Sweden’s national orthopedic bundles cut complication rates by 20 percent and lowered costs by nearly 17 percent. Germany’s Martini Klinik, which ties clinician compensation to outcome metrics, leads the world in prostate cancer surgical outcomes.

Precision and quality become the economic drivers.

4. Pharmaceuticals: Paying for Results, Not Promises

The price of prescription drugs is one of the most contentious issues in American healthcare. But the deeper issue is not just price—it’s value.

A fee-for-outcome model reshapes pharmaceutical economics by:

  • Requiring outcome-based contracts for high-cost drugs.

  • Paying full price only if the medication works as promised.

  • Mandating refunds or price reductions when drugs fail to produce expected benefits.

  • Encouraging innovation toward measurable clinical success.

Countries like Italy and the U.K. routinely negotiate such arrangements. Some U.S. private insurers have started experimenting with similar models.

Paying for results, rather than hope, creates a more rational and fair system.

5. Insurance Companies: From Claims Processors to Health Partners

Insurers in the U.S. make money through premiums and often thrive on complexity and billing volume. In a fee-for-outcome model:

  • Insurers negotiate value-based contracts across networks.

  • They reward providers who deliver strong prevention, safe care, and low-cost outcomes.

  • They provide data, analytics, and care management tools to providers.

  • They reduce administrative waste by moving away from line-item billing.

  • They become accountable for the health outcomes of their members.

Insurers are uniquely positioned to facilitate outcome measurement and data sharing, making them essential partners in a redesigned system.

V. Why Fee-for-Outcome Improves Outcomes and Reduces Costs

The logic is straightforward, but the mechanics deserve deep exploration.

1. Incentives Shift Toward Prevention

When providers make money by keeping patients healthy, prevention becomes a top priority. Early intervention reduces hospitalizations, ER visits, strokes, heart attacks, surgeries, and amputations. Prevention is far cheaper—and far more humane—than late-stage intervention.

2. Wasteful and Harmful Treatments Decline

Fee-for-service encourages overtreatment. Fee-for-outcome discourages it. Providers have no incentive to schedule unnecessary procedures when doing so risks worse outcomes and lower payments.

3. Care Coordination Improves

Patients often fall through cracks between specialists, hospitals, and primary care providers. When outcomes determine payment, these entities must coordinate to ensure seamless transitions, follow-ups, and medication adherence.

4. Chronic Disease Management Gets Stronger

Chronic diseases account for the majority of healthcare costs. Fee-for-outcome allows clinicians to invest more in patients with complex needs and rewards successful stabilization.

5. Administrative Waste Shrinks

Billing complexity is one of the biggest drivers of U.S. healthcare waste. Bundled and outcome-based payments reduce that complexity.

6. Innovation Shifts Toward Health, Not Throughput

Pharmaceutical firms, device manufacturers, and care systems begin competing on actual health improvements, not marketing budgets or procedure volume.

7. Long-Term Costs Settle Down

Every country that has moved toward value-based structures—like Sweden, the U.K., and parts of Germany—has seen lower long-term cost trajectories than the U.S.

VI. International Models: Proof That Paying for Outcomes Works

Several countries have already implemented outcome-based systems with clear success.

The United Kingdom

The Quality and Outcomes Framework (QOF) was introduced to reward primary care providers for achieving measurable disease management outcomes. Chronic disease indicators improved significantly after implementation.

Sweden

Sweden’s value-based orthopedic bundles are often cited as the gold standard. Complications fell dramatically. Costs went down. Patient satisfaction rose.

Sweden also maintains some of the world’s most comprehensive health registries, making outcome measurement robust and precise.

Germany

Germany’s healthcare system is not fully outcome-based, but specialized centers like the Martini Klinik demonstrate the model’s power. When doctors are compensated based on patient-reported and clinical outcomes, surgical quality skyrockets.

The United States (Selective Examples)

Kaiser Permanente and other integrated systems already operate on principles similar to fee-for-outcome. Their chronic disease outcomes often surpass national averages while keeping costs comparatively controlled.

These examples show that paying for outcomes is not a theoretical exercise. It’s a proven strategy.

VII. Obstacles and Considerations: What Must Be Addressed for Reform to Work

A transformation of this scale requires careful planning.

Outcome Measurement

We must invest in robust, fair, risk-adjusted outcome metrics to ensure providers aren’t penalized for treating sicker or poorer populations.

Transition Costs

Shifting payment models requires temporary financial flexibility for hospitals and payers transitioning from fee-for-service revenue streams.

Political Resistance

Entrenched interests—industries benefiting from the current system—will resist change. Fee-for-outcome reduces revenue for those reliant on high volumes of low-value care.

Public Understanding

Americans must understand that reform is not about rationing care—it’s about eliminating waste and rewarding what works.

Equity

Outcome measures must account for socioeconomic factors, ensuring that vulnerable populations aren’t left behind.

VIII. What a Fully Realized Fee-for-Outcome System Could Look Like

Imagine an American healthcare system redesigned from the ground up.

Doctors Work in Teams

Physicians, nurses, pharmacists, mental-health workers, and community health specialists work together because their collective performance is tied to outcomes.

Hospitals Are Paid to Heal, Not Bill

Complications, infections, and readmissions no longer generate revenue—they reduce it. Safety becomes a financial asset.

Chronic Diseases Are Managed Proactively

Patients receive continuous support: nutrition counseling, medication coaching, health monitoring, telemedicine check-ins. Emergency crises become rare.

Drug Prices Reflect Actual Clinical Value

Drug companies are rewarded for therapies that deliver measurable improvements, not those promoted through aggressive marketing.

Insurers Compete on Health Outcomes

Plans advertise success rates for disease control, preventive care, and patient satisfaction—not the complexity of their provider networks.

Patients Benefit Most

Americans get earlier treatment, safer care, lower costs, and more transparency.

This is not utopian. It’s a logical extension of models already proven to work elsewhere.

Conclusion: America Can Do Better—And Fee-for-Outcome Is the Path Forward

The United States does not suffer from a shortage of medical expertise or innovation. It suffers from a shortage of rational incentives. The Affordable Care Act, for all its ambition, did not redesign the system. It expanded coverage but left the economic engine unchanged.

A fee-for-outcome model fixes what is truly broken. It aligns payment with health. It rewards prevention. It penalizes avoidable harm. It encourages efficiency. And it lifts the burden of unnecessary cost from families, employers, and the federal budget.

This is not a partisan idea. It is not a left-wing or right-wing proposal. It is a structural reform rooted in logic, economics, and global evidence. Americans deserve a system that rewards health, not sickness. And a country with our wealth and innovation capacity can absolutely build one.

A healthier America is not only possible—it is necessary. And the shift to fee-for-outcome may be the single most important step in getting there.

References

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