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How Obama’s $3 Trillion Health-Care Overhaul Would Work

Medicare wants to end the fee-for-service system, but it has a long way to go
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Michele Tantussi/Bloomberg

The Obama administration has announced plans to accelerate a shift in how the U.S. pays its $2.9 trillion annual health-care bill. Officials at Medicare, which covers one in six Americans, want to stop paying doctors and hospitals by the number of tests and treatments they do. Instead, the government wants to link payments to how well providers take care of patients, not just how much care they provide.

This transition is already under way. Millions of Americans are now covered in experimental programs created by the Affordable Care Act designed to reduce unnecessary care and incentivize doctors to focus on quality, not quantity. The administration wants to vastly expand such programs to include half of all Medicare payments by the end of 2018. Here’s what you need to know: