As my regular readers know, I'm not a big fan of our current health care system. Our bloated, industry-driven system manages to deliver less effective care at a higher cost than most other industrialized nations. The system is Byzantine, unnavigable, and dangerous, and is kept that way in the name of the Holy Market. But health care can benefit from practices that are decidedly un-capitalist, at least in the Milton Friendman or Ron Paul sense.
Like aviation, health care must apply risky and expensive practices to large numbers of people in dangerous situations. This process is made safer by certain sorts of standardization, such as checklists. Data suggest we would also benefit from developing widely applied, evidence-based best practice guidelines, and from increasing the use and interoperability of electronic health systems. But that's not how we do things here.
Our culture is strongly biased against centralized anything, which is often a useful instinct. But in health care, the market does not necessarily drive best practices, but most profitable ones. One of the worst hybrids of the ultra-free market ideal and the more communitarian ideal is the HMO. It's not that the idea is inherently bad, but its implementation has often been problematic.
An HMO is an agreement between a patient, a physician, and an HMO. The patient pays a premium to the HMO, and co-pays to doctors and other providers. These fees are usually significantly lower than in other types of plans. The HMO assigns them to a primary care physician and agrees to pay for care the PCP recommends, within the guidelines of the plan. This puts the PCP in the position of "gatekeeper" for more complex medical care. The doctor is often payed less to care for HMO patients, but in exchange the HMO sends them patients and keeps them busy. But this system is often a loss for both the doctor and the patient.
A common way doctors get paid by HMOs is "capitation", that is, getting paid per head. An HMO will offer a doctor x dollars per month per patient. This reduces the incentive for the doctor to provide unnecessary but potentially profitable care. In fact the incentive is exactly the opposite: the more patients the doctor enrolls, and the fewer services she provides, the more she and the HMO will profit. Basically, HMOs are designed (in their classic form) to give the appearance of providing efficient low cost care, while actually providing inefficient, low cost care that can be minimalist at best.