Aggregate Surplus by Portfolio Size

We want to insure all Americans so Table 1 Row 10 shows, the total Surplus needs, in Billions of dollars, by portfolio size. $NHI$ and $B$ can insure everyone with $0.00 aggregate Surplus, while 308 $PI$'s need $61.6 Billion. But, 3,080 $D$'s need $4.6 Trillion, and 30,800 $E$'s need $172 Trillion. By ignoring small insurers', and risk assuming health care providers' Surplus needs, capitation advocates missed the greatest flaw in capitation, small insurers (risk assuming health care providers) need Trillions of dollars in Surplus. Inadequately capitalized, risk assuming health care providers have been failing, clinically and financially for decades (Mayes, 2005). In the aftermath of Hurricane Katrina, patients died because health care facilities were inadequately staffed and provisioned and could not continue to deliver care, despite having been paid, in advance, through capitation.

Before becoming health insurers, risk assuming health care providers should have diverted most of their assets to capitalizing their inefficient insurance operations, becoming inefficient clinicians because Surplus assets are not available to produce clinical services. Capitated providers continue their inefficient and under-capitalized insurance operations because capitation advocates refuse to admit that capitation cannot work in efficient health care (finance) systems.

While daunting, these aggregate Surplus levels are understated because $S_{N}$ protects single insurers. Bonferroni corrected aggregate surplus requirements for small insurers and risk assuming health care providers are much higher.