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For much of the last seventy-plus years, healthcare providers in the United States have been paid under the fee-for-service system, where providers are reimbursed for procedures performed, not outcomes obtained. Providers, insurers, and consumers are motivated by different individual and organizational incentives; costs and burdens of patient care are shifted from one part of the system to another. The result has been a system that combines exploding costs without concomitant increases in quality. Healthcare economists and policymakers have reacted by proposing a number of policies designed to reign in costs without sacrificing quality. One approach is to focus on the ultimate goal — improving health outcomes — by measuring those outcomes and reconfiguring incentives and structures to deliver healthcare in ways that are both efficacious and efficient. One particular strategy is pay for performance, under which providers are paid to improve health by whatever medically-appropriate method they choose. This means providers are no longer paid for simply doing a given “something” but, rather, are paid for doing “something effective.”

In this Article, I argue that the criminal justice system is similarly fragmented, expensive, and inefficient, marked by many of the same distorted individual and organizational incentives that have plagued health care. Most significantly, in all but a handful of jurisdictions, states wholly subsidize commitments to prison — the fee-for-service model of doing “something” — without tying any of these subsidies to outcomes obtained in prison. This means prison is paid for even if it is neither effective nor efficient. These similarities with the healthcare system suggest that an outcome-oriented, pay-for-performance framework borrowed from healthcare economics might, if applied to criminal justice, improve its efficacy and efficiency. I envision this Article as the first of several applying healthcare economics to criminal justice. It will focus on the similarities of the two systems, the ways in which an outcome orientation might provide a useful framework for controlling costs without making quality subservient, and the suggestion that we begin considering sentencing choices within that framework.

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