Cannon doesn't exactly have a way to rebut this disjuncture between what the market hasn't done...

Lack of competition and mandates of coverage hardly constitute a free market.

I admire your dealing with health care, a hideously complicated issue. I can only make sense of a single payer system or entirely free market system. All this muddle in the middle adds to the expense, as far as I'm concerned, precisely because it is terribly hard to assess various claims.

I favor single payer. Even when I was a libertarian and not a Democrat, I believed in a guaranteed income that included health care.

I'm only saying this, because if the two more understandable plans were debated more, we might be able to get out of this muddle.

I say this even though I'm not sure what your ultimate position on health care is.

Actually, I think your both a little wrong: PPO systems have tried to (re)introduce modest amounts of capitation into the process, because it's the only way to rationally get costs under control. And Cannon's right that fee for service is a problem for cost control, and the pushback he's getting from doctors is telling (as it was when those Medicare "never event" stories" made the papers): doctors see capitation not just as an income limitation, but as an impingement on their ability to practice as they see fit. The answer, though, is what Ezra notes: a Universal, capitated system that takes fee for service off the table... which seems to fly in the face of Cannon's faith in free market solutions. But then, the irony is kind of double, when you consider that many progressives are advocating "Medicare for all" or, essentially, nationally run fee for service. The solution, in our complex American system, is probably a hybrid: a capitation model for basic care, and fee for services that go beyond most people's basic needs. And I suspect, really, that's where we're lurching, both as a public/private hybrid, and as a payment methodology. The harder questions now are... will patients understand what it means, and will doctors and hospitals still be able to game the system. Either one being the case, we're unlikely to make a lot of progress.

Uh, Ezra, you need to read about Diagnosis Related Groups (DRGs) which is how hospitals are compensated. It's a system of hospital fee capitation employed by Medicare.

J Bean - that's mean! I wish an understanding of DRGs on no person. Plus, you're caught in the weeds there - if you know what DRGs are then you already know that gaining a working understanding of just how it is that doctors and hospitals get paid is something that takes many years. While this knowledge is interesting, I believe it muddles rather than enlightens when talking about national policy. Finally, everyone needs to understand that California is is not Texas. Healthcare is very different from state to state and managed care penetration (a.k.a. capitation) varies widely based on many factors.

Uh, Ezra, there is a whole lot you need to read about. Just to once again point out how pathetic your research skills are;

Where do you classify Kaiser and other staff model HMOs? Comming from CA and claiming to be a healthcare expert how you could call capitation a niche concept just displays your usally perpencity for ignorance. 20% of private insureds are covered by HMOs, in CA it was pushing 50%+.

Your own link says;

"Professional capitation is thriving, thank you, in California, South Florida, and some Midwestern markets"

Figures I saw earlier today put HMO enrollment at 30-40 million, thats one hell of a niche.

Haven't you discussed Medical Homes in the past? How do you think they are paid? Here in Minneapolis where they are popular and the state is pushing them they are partially capitated. Other Federal and State Medical Home projects also capitate the PCPs. The concept is almost predicated on capitation.

Pre-Paid dental plans are very popular in parts of the country,those are capitated.
EAPs, For Ezra and other HC newbis thats Employee Assisatance Program, all almost 100% capitation. Capitated organ transplant programs are popular.

Capitation required congressional action to make it legal, so contrary to your claim you can closely track the popularity of capitation to congressional action. When the courts and congress clamped down on HMOs and ERISA plans they where clamping down on capitation as that is what makes an HMO an HMO. When Congress subsidized HMOs capitation was more popular as it was when they required employers offer HMOs. When congress repelled the law forcing employers to offer HMOs it started to swing the other way.

If you had even a basic understanding of Healthcare you would know it is illegal in most states for a employer plan to directly capitate a provider. Thus as self funding gains and loses popularity capitation changes as well. If you even had basic understanding of the reform concepts you discuss you would know one of the biggest hurddles to medical homes is the fact large self funded plans can't capitate providers.

Great hack post as usual.

Did he mention how he feels about malpractice lawsuits? Because the real stick to beat doctors with is their malpractice premiums.

But if he (Cannon) is for "tort reform," then he's just another wolf in sheep's clothing.

I grant you, Ezra, that Obama can inspire people, but I think his popularity in Iowa might have a little bit to do with his support for corn ethanol, and McCain's vehement denunciation of it.

Plus, he inspires people.

Private commercial payers are actually just now getting around to eliminating payments for "never events" after the Medicare model, as they do with most of their procedures.

the paper that most people in my hometown regard with the sort of sad bemusement usually reserved for cranky relatives who still use the word "Orientals" in conversation

I love the way you write.