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​​​​​​​Reform of doctor's incentives & Insurance reforms

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Reform of doctor's incentives
Critics have argued that the healthcare system has several incentives that drive costly behavior. Two of these include:

Doctors are typically paid for services provided rather than with a salary. This payment system (which is often referred to as "fee-for-service") provides a financial incentive to increase the costs of treatment provided.
Patients that are fully insured have no financial incentive to minimize the cost when choosing from among alternatives. The overall effect is to increase insurance premiums for all.

Insurance reforms
The debate has involved certain insurance industry practices such as the placing of caps on coverage, the high level of co-pays even for essential services such as preventative procedures, the refusal of many insurers to cover pre-existing conditions or adding premium loading for these conditions, and practices which some people regard as egregious such as the additional loading of premiums for women, the regarding of having previously been assaulted by a partner as having a pre-existing condition, and even the cancellation of insurance policies on very flimsy grounds when a claimant who had paid in many premiums presents with a potentially expensive medical condition.

Various legislative proposals under serious consideration propose fining larger employers who do not provide a minimum standard of healthcare insurance and mandating that people purchase private healthcare insurance. This is the first time that the Federal government has mandated people to buy insurance, although nearly all states in the union currently mandate the purchase of auto insurance. The legislation also taxes certain very high payout insurance policies (so-called "Cadillac policies") to help finance subsidies for poorer citizens. These will be offered on a sliding scale to people earning less than four times the federal poverty level to enable them to buy health insurance if they are not otherwise covered by their employer.

The issue of concentration of power by the insurance industry has also been a focus of debate as in many states very few large insurers dominate the market. Legislation which would provide a choice of a not-for-profit insurer modeled on Medicare but funded by insurance premiums has been a contentious issue. Much debate surrounded Medicare Advantage and the profits of insurers selling it.

Certain proposals include a choice of a not-for-profit insurer modeled on Medicare (sometimes called the "government option"). Democratic legislators have largely supported the proposed reform efforts, while Republicans have criticized the government option or expanded regulation of healthcare.

The GAO (Government Accountability Office) reported in 2002 (using 2000 data) that: "The median number of licensed carriers in the small group market per state was 28, with a range from 4 in Hawaii to 77 in Indiana. The median market share of the largest carrier was about 33 percent, with a range from about 14 percent in Texas to about 89 percent in North Dakota."

The GAO reported in 2008 (using 2007 data for the most part) that: "The median number of licensed carriers in the small group market per state was 27. The median market share of the largest carrier in the small group market was about 47%, with a range from about 21% in Arizona to about 96% in Alabama. In 31 of the 39 states supplying market share information, the top carrier had a market share of a third or more. The five largest carriers in the small group market, when combined, represented three quarters or more of the market in 34 of the 39 states supplying this information, and they represented 90% or more in 23 of these states....the median market share of all the BCBS carriers in 38 states reporting this information in 2008 was about 51%, compared to the 44% reported in 2005 and the 34% reported in 2002 for the 34 states supplying information in each of these years."


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