Managed Care vs. Fee-for-Service
In David Cutler’s book, “You Money or Your Life”, he compares two types of health insurance systems, fee-for-service and managed care. The first, fee-for-service, was the predominant health insurance scheme in place for most of the 20th century. Its main objective was for the insurance companies to pay whatever doctors or hospitals charged for certain services. The doctors were free to determine what particular type of care was needed and how much it would cost to provide those services. Cutler goes on to explain that as a result of practicing such a system, high tech care was more prevalent than less intensive care. Doctors saw this as an opportunity to capitalize on the higher cost of high tech care over the lower cost of less intensive care, therefore increasing their salaries substantially. This system is based more on the intensity of the service rather than the value of it. One positive outcome of practicing this type of......
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