Just had my latest paper published in the Journal of Healthcare Risk Management:
Cox, T. (2011), Exposing the true risks of capitation financed healthcare. Journal of Healthcare Risk Management, 30: 34–41. doi: 10.1002/jhrm.20066
The key points:
Small insurers are inefficient insurers: They have lower probabilities of achieving modest profit goals, higher probabilities of incurring operating losses, and higher probabilities of insolvency than larger insurers when both randomly select policyholders from the same populations.
Small insurers also have to cut benefits to match larger insurer’s probabilities of achieving modest profit goals, avoiding operating losses, and avoiding insolvency.
Despite this, and the obvious impact it has on service quality and quantity, almost every proposal for trimming health care costs assumes that putting health care providers into roles as their patients’ insurers is some sort of panacea.
Pandora’s Box would be a more fitting analogy.