Note part of obamacare tried this. insurers had to spend 85% of their premiums on care. Thereby limiting profits cause there is a cost of the CEO, and all the people they hire... but what did they do? PBMs baby.. Same overall profit for the company just shuffled into whatever silo makes the most business sense.
hence the recent article that showed optum pays its physicians (really not the docs but the docs employers) more than it does for non UHG docs/groups.
Here is the deal. As a patient when you are fully disconnected from the cost of care your decision is always "I want more". Why wouldn't you?
imagine going to a restaurant and you could get A5 japanese wagyu for the same price as a big mac. You pick..
Probably a better analogy is you could get bottled water or tap water and they are the same price (lets say free). 99% of people are taking the bottle. The disconnect is real and is the problem. i think we have a lifetime cap on medicare. If you don't spend it half of it goes to your family when you die.
For example lets say the avg medicare beneficiary spends 250k during their time on medicare. (A quick search showed 223k, so my guess was pretty good). You get lifetime spending of 350k. After that you are on your own or you can buy some other insurance if you want. But medicare spending will be capped.
If you only spend 200k your family gets 75k and the government keeps 75k (by not spending it).
This would lead to you being able to price shop. No pre-auth nonsense etc. If you die without spending a penny then your family gets 125k.
The numbers don't seem to make sense do they? However I would bet most people would behave differently which would save money. Families would think twice before keeping their GCS 3 family member alive. Our spending is very much skewed. While the mean spending is 223k the median is lower.
To estimate the magnitude and age distribution of lifetime health care expenditures. Claims data on 3.75 million Blue Cross Blue Shield of Michigan members, and data from the Medicare Current Beneficiary Survey, the Medical Expenditure Panel Survey, ...
pmc.ncbi.nlm.nih.gov
For survivors to age 85, more than one-third of their lifetime expenditures will accrue in their remaining years.
We also know a significant amount of spending (reportedly 50%) of health spending is in the first and last year (or 6 months, I cant recall) of life.