Capitation's cheap trick: Treat only healthy young adults

Abstract

The insurance industry will tell you capitation is a cost-effective way to control rising medical costs. What it will not tell you is it is reverse insurance. Typically, an insurance company accepts the risks relating to protecting your life, your house, your car, your health or whatever — for a fee. It makes money by spreading that risk over huge populations. Sometimes it even will spread the risk further by sharing the risks with other insurance companies through an insurance broker like Lloyds of London.