Final answer:
The capitation approach to charging for health care is the fixed fee per patient model used by Health Maintenance Organizations (HMOs), aiming to encourage efficient care but posing challenges like adverse selection.
Step-by-step explanation:
The capitation approach to charging for health care benefits is characteristic of Health Maintenance Organizations (HMOs). In contrast to the fee-for-service model where providers are paid for each specific service they perform, capitation involves paying health care providers a set fee per patient regardless of how many services the patient receives.
This payment model encourages efficient allocation of health care resources, but it can also lead to challenges such as adverse selection, where individuals with higher health risks are more likely to utilize insurance benefits than those with lower risks, potentially leading to imbalanced costs for the insurance company.
Government involvement, such as in social insurance programs, aims to address some of these challenges by spreading the risks across a larger pool of insured individuals. Nonetheless, designing a health payment system that mitigates the risk of adverse selection and promotes equitable care distribution remains complex.