Conflicting Incentives Are Eroding U.S. Healthcare, New Report Finds

The U.S. healthcare system is experiencing a tragedy of the commons, where each stakeholder prioritizes self-interest over collective well-being. This dynamic lies at the heart of a new report from Trilliant Health, released this week.

As a healthcare analytics and market research firm, Trilliant analyzed six emerging trends using its claims database, price transparency data, and government and industry sources.

“All six trends converge on the tragedy of the commons—the notion that individual incentives drive behaviors the collective cannot sustain,” explained Allison Oakes, Chief Research Officer at Trilliant Health. “Everyone in the system optimizes for their own revenue and profits, yet no one bears responsibility for improving health outcomes.”

The six trends identified are:

1. The healthcare system is failing to function as an integrated whole: Approximately 70% of Americans view the system as being in crisis or having major problems, while costs continue to climb. Employee deductibles and premiums are rising faster than wages and inflation.

“Americans worry more about affording healthcare than about gas, housing, utilities, or groceries,” Oakes noted. “This affordability crisis is reaching a breaking point.”

2. Population unwellness reflects systemic failure: Poor diet, physical inactivity, and social isolation are driving declining health across the U.S. population, yet incentives still favor sick care over prevention.

Pediatric behavioral health visits for pervasive developmental and anxiety disorders rose sharply from 2019 to 2025. By 2025, 6.4% of children were taking five or more medications, and over 10% of patients in 11 states received opioid prescriptions from three or more providers.

3. Demand and supply are misaligned: Behavioral health and primary care physician shortages persist. By 2038, overall physician supply is projected to meet only 87.7% of demand, with adult psychiatrists at 49.8% adequacy and primary care physicians at 80.4%.

Meanwhile, advanced imaging and behavioral health visits grew faster than primary care visits from 2019 to 2025, as consumers increasingly turn to self-testing and nontraditional health approaches.

4. Value is neither incentivized nor measured: Although CMS oversees more than 800 active quality measures, only 27% link to outcomes. Hospital negotiated rates also show little correlation with quality, as higher prices do not necessarily correspond to lower 30-day mortality rates.

5. Fraud, waste, and abuse thrive under misaligned incentives: For-profit hospices increased 11.2% from 2019 to 2024, while nonprofit hospices declined 2%. In 2023, for-profit hospices posted a 13.7% Medicare margin compared to -1.3% for nonprofits.

6. A negative-sum game: New medications are disrupting the traditional revenue model based on patient volume and procedures.

The rising use of GLP-1s and SGLT2 inhibitors coincides with declining procedure volumes, suggesting drugs may increasingly replace or reduce demand for costly interventions.

Photo: champc, Getty Images

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