for beginners in this Atul Gawande New Yorker piece. It does a good job of showing how medical care is payed for and some of the problems. He doesn't have the solution, but eithe does anyone else.
I would say the pay set-up for attendings at the Brigham is pretty free enterprise (they get paid for surgery and are charged for expenses, at least after a few years of straight salary support). I (and I think many academic physicians) am paid a salary with a small (10-15% of salary) incentive payment depending on productivity and academic achievement. I don't know which is best, but the piecework system clearly creates incentive to increase the amount of medical care provided.
The hassles with insurance are unbelievable. One advantage of practicing at an academic institution is that there is a huge bureacracy to deal with these issues.
The downside is it is done less well than I'd do it if my pay depended on it (our incentive is based on RVUs billed not collection) and all those people are expensive so I make less than I would in private practice. I recently found out that I was not accepting patients with several different insurance plans because my credentialling hadn't gone through. I found out by accident (I had spoken with a pediatrician about a patient and asked the schedulers to add him on, but they told me they couldn't because of his insurance) and started asking around. I found out I was indeed accepted by those plans but for some reason the scheduling program wouldn't accept me as a provdier, so the schedulers were just booking those patients with other physicians. Apparently, no one thought to look into fixing thisAaargh. Of course if I was running my own practice I'd have been more on top of this (or fired the people who didn't do anyting about it).