# "All Payer rate Setting" Healthcare Plan?

**URL:** <https://boards.straightdope.com/t/all-payer-rate-setting-healthcare-plan/833135>\
**Category:** Great Debates\
**Created:** [April 27, 2019, 5:14pm UTC](https://boards.straightdope.com/t/all-payer-rate-setting-healthcare-plan/833135 "2019-04-27T17:14:00Z")\
**Posts on this page:** 1\
**Page:** 2

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**Author:** ![Max\_S](https://avatars.discourse-cdn.com/v4/letter/m/46a35a/32.png) [@Max\_S](https://boards.straightdope.com/u/Max_S)\
**Post date:** [May 8, 2019, 6:39pm UTC](https://boards.straightdope.com/t/all-payer-rate-setting-healthcare-plan/833135/21 "2019-05-08T18:39:51Z")

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> [@DSeid](#):
>
> “All Payer Rate Setting” appears to be another proposed option, one that [Buttigieg](https://www.pbs.org/newshour/politics/what-does-pete-buttigieg-believe-where-the-candidate-stands-on-7-issues) endorses as a stepping stone to single payer.
> 
> As described -  
> Advantages allegedly include better bargaining power and decreased administrative costs.
> 
> Reality would run into the fact that different populations often end up [costing more](https://www.ncbi.nlm.nih.gov/pubmed/29783031)than others, based on a variety of risk factors, from identifiable medical co-morbidities, to membership in soicioeconomically disadvantaged communities.
> 
> And it seems to ignore the move away from pure fee-for-service to a rise of so-called “value-based” shared population level risk products (inclusive of within Medicare) which have gotten healthcare systems/groups to innovate on providing [better quality at lower cost](https://revcycleintelligence.com/news/value-based-care-reduces-costs-by-5.6-improves-care-quality).
> 
> This approach is of course not mutually exclusive with opt-in to Medicare, which of course would likely continue to allow the purchase of Medicare supplement insurance products.
> 
> Not sure what I think of this approach. Any thoughts?

I’m not a fan\*. The big problem here is that you are tipping the balance of power towards insurance companies, to the disadvantage of providers. Currently, each provider or hospital negotiates with each insurer. All-payer rate setting usually means each provider or hospital negotiates with all the insurers combined. Which means insurers make an offer that the provider _must_ accept, or the provider literally loses every single customer.

Buttigieg seems to have a different idea of all-payer rate setting. Instead of each provider negotiating with all insurers at once, all providers negotiate with all insurers at once. Smart, but not too smart. There are geographic variations in the cost of living and **one rate for a service will not work nationwide**. Even Medicare does not have a national fee schedule for provider services, they set different rates for each locality. A provider in New York City making what we make here in Florida won’t be able to afford his food, let alone rent.

So then you have some quasi-all-payer rate setting system, where localities of providers negotiate with all insurers. I’m not sure if you accomplish much with that aside from the administrative burden of getting everyone together; insurance companies already approach my office with offers like “I can’t pay more than X% of the Medicare rate for your region”.

\*full disclosure, I manage a medical office.

~Max

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