Perverse Incentives in Healthcare

 In Healthcare

“If you pay someone to do something, they’re going to do it as many times as you’ll keep paying them.”


From every root cause analysis I’ve done for the health industry, the #1 problem I find is the way in which we pay for healthcare. In America, most of our health care is paid by for-profit health insurance companies that are funded by Wall Street banks. These insurance companies are beholden to their shareholders and the maximization of profit, not to the patients they are providing a service for or the providers that care for them.

You might not see it, but the incentives that health insurance creates lead to terrible behaviors which negatively impact our health. Let me unpack this for you:

We put for-profit insurance corporations in the middle of our healthcare experiences and expect (even trust) them to have our best intentions in mind. These corporations are always trying to pay doctors less and provide less coverage to patients. THIS IS THEIR BUSINESS MODEL. With the premium money we pay them, just like a bank, they take that money and invest in stocks, bonds, real estate, and various other revenue generating assets. So while they are raking in the money, we (the patients & providers) are paying more and more each year in premiums.

At the heart of the health insurance model, we have the patients, employers, payers, and the providers. Three of these players are getting screwed and one is getting rich. Do you know which is which?