Article at a glance:

Overhauling the US health care payment system

• The hugely inefficient US health care payment system is ripe for transformation.
• The inefficiency is concentrated in the $250 billion that consumers pay doctors and hospitals and the $1.3 trillion that insurers send to these providers. The heart of the problem is a mix of high transaction-processing costs and the lack of an efficient way to make consumer-to-provider payments.
• Over the next five years, rapid innovation may lead to a restructuring of the value chain of health care payments and to a shift in the sector’s balance of power. Financial institutions have an opportunity to take on a more prominent role, while payers risk losing influence to new entrants. Providers stand to benefit as fewer dollars are wasted on transaction-processing inefficiencies.