A problem with capitation, the system under which pay is determined by the number of patients enrolled in a plan or or a practice rather than by the number of procedures performed, the approach being urged on Massachusetts is that it doesn’t eliminate adverse selection, it merely transfers it from insurance companies to physicians.
While I believe that fee for services is at the heart of the out-of-control costs in the healthcare system, it’s not clear to me that the alternatives are any better. The problem with capitation is noted above.
The other alternative is the system of British National Health. Physicians are paid a flat salary which presumably differs by specialty and seniority. The burden of cost control is then passed to the bureaucrats running the system.
The trouble with handing the burden of cost control to bureaucrats is that the cost of the bureaucrats gets out of control Here are some fun facts I learned about Britain’s NHS:
In 1948, when the NHS was formed, there were 480,000 beds and 350,000 staff.
By 2002, there were 186,000 beds and 882,000 staff.
As of September 2008, there are 160,000 beds and 1,368,200 staff.
Ann Keen, the Health Minister, said; “The NHS workforce is now at record levels and has increased by almost 300,000 over the last ten years.”
The NHS is now the third largest employer in the world; surpassed only by the Indian National Railway and the Red Army.
More insight here:
http://www.adf.com.au/archive.php?doc_id=113