Capitation And Fee For Service

Many people agree that health economics is ethical, political, and monetarist the views on scarcity within the health care industry. The economic evaluation of the U.S. health care system includes two major insurance groups to consider, Capitation, and Fee-for-service, of which, can help determine effective health policy. The role of economics in health care focuses primarily on the function of a market-price economy, thus the value of supply and demand can determine the quantity and price of input and output in the marketplace. Price in the health insurance market exchange is an indicator of the degree of influence on the behavior of buyers and sellers.

The goal of this evaluation is to identify why certain health insurance plans are more driven by cost than their competitors are.

The long-debated issue concerning the significant growth of managed care within the healthcare industry. Both toward the substantial cost saving to managed care as well as their heavily controlled patient care model. The one concern less published during the onset of large enrollments of the new members of managed care was the risk adverse structure. The managed …show more content…
Capitation payment incentive providers to exercise risk aversion; the provider is able to contractually include a risk premium that is equal to the amount the physician adopts. Capitation is a payment method, by which contracts with Independent Practice Providers (IPA) known as, health care organizations (HMO) develop. Payments to these providers are a fixed dollar amounts, adjusted according to the annual enrollment. The healthcare provider is paid a specific rate, which is based on the patients’ projected medical utilization of which the price is higher for patients with an extensive medical background. The managed care system has changed the way health care organizations operated and made financial