What are the prospects for an overhaul of the US health care payments system? The recent passage of comprehensive health insurance legislation only adds to the pressure for transforming the system that manages medical bills, claims, and payments. We foresee big changes in coming years, with billions of dollars of value at stake.

The June 2007 McKinsey Quarterly article “Overhauling the US health care payment system”¹ argued that the greater “electronification” of health care transactions, the growing adoption of standards, and increasing innovation by cross-industry entrants would lead to a major restructuring of the US health care payments value chain. Two and half years later, we are still waiting for that massive overhaul. But we believe that major change in the payments landscape is inevitable because of fundamental industry dynamics, such as the proliferation and increasing complexity of health care transactions, the increasingly prominent role of the consumer in payments, and the rising importance of medical and financial risk management for providers. And the pace of change will only accelerate with the rolling out of the new health care law, as more individuals become insured and begin to generate more health-related transactions and industry participants face greater pressure to reduce administrative costs.