Breaking the “Iron Triangle” of Healthcare

As applied to the modern American health care system, the iron triangle is a model that inter-locks health patient access, costs, and care quality in a directly inverse and reactionary way such that changes in any one have an opposite change in the other two. (Lehman, 2015)

The “access corner” or third of the triangle relates to whether patients are able to consult with a health care provider. Traditionally, this meant in-person in a hospital or ambulatory care center. Moreover, a lack of access has traditionally been presumed to be because of unaffordability because of a lack of medical insurance; however, recent surveys have shown 79% of the 62 million Americans with reduced health-care access have medical insurance. (Ritchie, 2014)

The “quality corner” or third has traditionally been measured by the quantity of patients impacted, by both morbidity and mortality, by medical errors, and their downstream consequential and preventable costs. (Charles Andel, 2012) Quality health care also encompasses preventable medical complications such as bacterial infections. (Peter J Pronovost, 2015) Other quality measurements include the Physicians Quality Reporting System, an initiative sponsored by the US Center for Medicare and Medicaid Services (CMS), (AMA, 2016) and the Healthcare Effectiveness Data and Information Set (HEDIS), an 81-point rubric across five areas of care used by a majority of the medical insurance carriers (payers) in the US. (NCQA, 2016) Other rubrics for quantifying quality of patient care include the percentage of patients who receive recommended care (nationally estimated in the US at 54.9% in 2003), or the patients’ perceptions of how well they were treated, which is more anecdotal and often based on perceptions of customer service more than medical care. (Elizabeth A. McGlynn, 2003)

The “cost corner” or third is typically quantified in two ways: (1) per capita health care spending (per citizen); and, (2) health care spending as a percentage of gross domestic product (GDP). As of 2013, the United States per capita health-care spending was $9,086, which constituted 17.1% of its GDP. The next closest country to the US, by way of quantifying its deviation from norms, was Switzerland at $6,325 per capita, and France at 11.6% of its GDP. (Commonwealth Fund, 2016) Because costs are perceived as a negative in health care, a more precise name of this corner of the triangle is “cost containment.” (Walter Tsou, April 24, 2007)

Ostensibly, when costs increase in this health care “Iron Triangle” arrangement, for example because of decreased Medicare reimbursement rates or increased premiums often from a less healthy cohort of insures, it limits patient access and MAY increase quality of care. Conversely, open access may reduce the quality of care because of high demand on a limited supply of health care professionals.

Critics claim that politicians are either willfully avoiding discussions about prioritizing these, and the inherent tradeoffs, or knowingly misleading the general public to secure approval and votes by suggesting that modern health legislation (e.g., the “Patient Protection and Affordable Care Act” (ACA) of 2010, etc.) can somehow miraculously ignore these realities and improve all three at once. (Carroll, 2012) Whether this is true depends largely on the sides of the triangle, meaning the interrelations between those making care, cost, and quality decisions.

It is informative to understand that the introduction of an “iron triangle” into the health care lexicon, and its history, did not originate in the United States nor was it in reference to access, cost, or quality. Its early health care use was to describe the relationship created by Japan’s first post-World War II President, Taro Takemi, between government leaders, the bureaucrats that work for them, and the country’s association of 159,000 medical providers. Nor though does the term relate only to health care as it has also been used to describe any fixed three-way interdependent relationship between whereby the government influences or controls pricing and supply. (Kondo, 2008) It is believed to have been first coined by American sociologist C. Wright Mills in his 1956 book The Power Elite, in which the “iron triangle” was a model describing American political corruption wherein rule makers, enforcers, and providers colluded to control markets. (Mills, 1956 ) As such, some have questioned whether the “iron triangle” of health care is truly an “iron” law or rule that binds the US health care system, or is an observational effect or descriptive term for a revocable arrangement. (Davis Liu, 2012)

The “iron triangle” of health care in the US is a useful lens through which to analyze and evaluate the current shift in American health care from fee-for-service treatment to value-based purchasing (VBP). Inversely, VBP is also a productive lens by which to evaluate whether the “iron triangle” of health care is a fundamental rule of the US health care system, or merely an observation of a state of being created for a specific purpose, and what that purpose may be

The VBP system, as it is currently known, is a CMS initiative to attempt to financially incentivize hospitals to reduce costs without off-setting reductions, or possibly even improvements, in quality thereby increasing value. (CMS, 2016) Theoretically, reductions in costs while maintaining or improving quality improve value. Comprehensive studies after 10-years of use have had mixed results as to whether these initiatives have a net benefit. (RAND, 2014)

However, a key question is “value to whom?” Regardless of whether the “iron triangle” is a rule or observational affect, the implementation of VBP does impact the third corner of patient access. Theoretically, lower health-care costs improve patient access because more patients can then afford health care; however, therein is an erroneous and unstated presumption. Namely, VBP applied to the “iron triangle” presumes that reductions in costs achieved by VBP will be passed on from payers to patients to make health care more affordable, and subsequently, accessible; however, that’s not true because it doesn’t happen. When health care costs to payers are reduced because of providers’ efforts, payers keep the new savings as new profit or retained earnings and have not, historically, reduced patients’ premiums whatsoever. On the contrary, after passage of the Affordable Care Act, payers have increased patients premiums by 22–88% per year. (Pear, 2015)

A better way to integrate patient access into the VBP model is redefine the “cost” third of the “iron triangle” to “price.” Price implies the cost to the patient, not the cost to the payer, thereby correcting the erroneous presumption that a reduction in cost to payers shall also benefit patients. For example, it is often far more cost effective to have patients examined remotely using video-conferencing, which dramatically reduces the overhead of provider facilities. Imagine if the price patients paid was reduced by being evaluated remotely instead of at a facility and that said savings was shared between payers and patients. In other words, the patients’ premiums, or portion they pay, would be reduced as would the payers’ portions, thereby aligning the interests of patients and payers, which under the current “iron triangle” model, are adverse to each other. Moreover, in this example, patient access to providers increases because providers could remotely exam many patients from one properly equipped room without the need for nursing staff, medical assistants, etc. Finally, the savings would be sufficient to permit more than one provider, for example a panel of physicians, to exam the same patient at the same time, thereby reducing medical errors and increasing the speed and accuracy of a diagnoses, improving the quality of patient care (while increasing access and reducing costs).

In conclusion, by redefining the “iron triangle” corner from “cost to payers” to “price to consumers,” and aligning payer and patient interests in the value of patients’’ health care choices, quality of care may increase while reducing unnecessary costs and increasing access, the failed promise of the Affordable Care Act. It also may settle the debate about whether the “iron triangle” of health care is a rule or an effect of a form of political corruption, as the term was originally intended, by improving all three “corners” at once and breaking the “iron” rule.

Works Cited

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Ritchie, A. (2014, March 20). Access to primary care remains a challenge for 62 million Americans. Medical Economics, pp.

Walter Tsou, M. M. (April 24, 2007). Health Policy 101: Why America Wants NHI. Congressional Forum (p. Washington, DC: Physicians for a National Health Program.