PERSPECTIVE n engl j med 361; 2 nejm. org july 9, 2009 110 value. We must introduce regulations to end coverage and price discrimination based on health risks or existing health problems. In addition, health plans should be required to measure and report their subscribers’ health outcomes, starting with a group of important medical conditions. Such reporting will help consumers choose health plans on the basis of value and discourage insurers from skimping on highvalue services, such as preventive care. Health insurers that compete this way will drive value in the system far more effectively than government monopolies can. Second, we must keep employers in the insurance system. Employers have a vested interest in their employees’ health. Daily interactions with their workforce enable employers to create value by developing a culture of wellness, enabling effective prevention and screening, and directing employees to high-value providers. Employers can also foster competition and drive broader system improvement in ways that are difficult for government entities to replicate. To motivate employers to stay in the system, we must reduce the extra amount they now pay through higher insurance costs to cover the uninsured and subsidize government programs. We must also create a level playing field for employers that offer coverage by penalizing employers that are free riders. Third, we need to address the unfair burden on people who have no access to employer-based coverage, who therefore face higher premiums and greater difficulty securing coverage. This means first equalizing the tax deductibility of insurance purchased by individuals and through employers. Fourth, to make individual insurance affordable, we need large statewide or multistate insurance pools, like the Massachusetts Health Insurance Connector, to spread risk and enable contracting for coverage and premiums equivalent to or better than those of the largest employer-based plans. Regional pools, instead of a national pool, will result in greater accountability to subscribers and closer interaction with regional provider networks, fostering valuebased competition. We also need a reinsurance system that equitably spreads the cost of insuring Americans with very expensive health problems across both regional pools and employers. Fifth, income-based subsidies will be needed to help lowerincome people buy insurance. These subsidies can be partially offset through payments from employers that do not provide coverage but whose employees require public assistance. Finally, once a value-based insurance market has been established, everyone must be required to purchase health insurance so that younger and healthier people cannot opt out. This will bring substantial new revenues into the system, lowering premiums for everyone and reducing the need for subsidies.

Although most US health care reform efforts have focused on coverage, the far bigger longterm driver of success will come from restructuring the delivery system. That is where most of the value is created and most of the costs are incurred. The current delivery system is not organized around value for patients, which is why incremental reforms have not lived up to expectations. Our system rewards those who shift costs, bargain away or capture someone else’s revenues, and bill for more services, not those who deliver the most value.