Backers of capitation argue that fee-for-service insurance contains perverse incentives for doctors to enrich themselves by overtreating patients.
"With unconstrained fee-for-service insurance, no one stands between doctor and patient," said Robert D. Reischauer, former director of the Congressional Budget Office.
At California Pacific now, only 4 percent of patients have traditional fee-for-service insurance, paying generous fees with little question.
Employees with traditional fee-for-service insurance declined to 37 percent from 48 percent.
"Some of our members are finding traditional fee-for-service insurance plans to be unaffordable," Susanne C. Bowman, the association's director of insurance services, said.
In the past, traditional fee-for-service insurance and managed care often provided reimbursement schedules that encouraged waste and ineffective care.
Because I have "traditional" fee-for-service insurance, I never had to wait for referrals or to find doctors who accepted my insurance.
People in the industry say the number of Americans still covered by traditional fee-for-service insurance - which pays medical charges, no questions asked - declined again sharply in 1989.
Age-adjusted rates of breast cancer screening with mammography were substantially higher in the two HMO settings than under fee-for-service insurance.
Instead, companies are stepping up efforts to shift employees into preferred-provider organizations, plans that are much closer to old-fashioned fee-for-service insurance.
