This is Richard Posner, writing at the Becker/Posner blog:
Third-party payment is a pervasive feature of American medicine. Why anyone should want health insurance other than “major medical”—that is, insurance against catastrophic medical bills—is a great mystery, as is the fact that Medicare subsidizes routine health care of upper-middle-class people. Since disease and injury tend to be unpredictable, health insurance smooths costs over time, which is efficient, but a person could achieve that smoothing simply by saving the money that he now pays in health-insurance premiums and investing it to create a fund out of which to pay future health expenses as they occur.
But we are stuck with third-party payment, and it systematically favors specialists over primary-care physicians, because specialists tend to provide discrete procedures, which are easier for the insurers, whether they are private insurance companies or government, to cost. The care provided by primary-care physicians has, to an extent, an elastic and discretionary quality. If a hypochondriac constantly pesters his primary-care physician with imaginary symptoms, how much of the physician’s time dealing with the pest should be compensated by insurance and at what rate? How long should an annual physical exam take? How much time should the physician spend urging his patients to give up smoking? Wear car seatbelts? Avoid fast foods?