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Viewpoint: Analysis of the free market incentive model



Craig M. Wax, DO
Even if fundamental healthcare reform doesn't materialize, tighter government control and expanded regulation are likely. Rather than the health insurance industry mistreating patients, physicians, health care facilities and employers with soaring costs, poor reimbursement, care denial schemes, useless administrative procedures and endless red tape, perhaps a radically different model will succeed.

Health insurance companies profit from insurance premiums for healthy patients. Sick patients, on the other hand, have more inherent risk and, therefore, cost more to insure.

Penalizing physicians with countless inane bureaucracies doesn't work (PPOs, HMOs, P4P, etc.) It raises healthcare costs and engenders bad will between insurance companies, physicians and their patients.

Consider the following two points: 1. Physicians can heal the sick and advise them how to stay well. 2. Patients can change unhealthy habits and adopt heathy lifestyles.

My concept for reform is called the "free market incentive model" for healthcare delivery, healthcare insurance and healthy lifestyles.

The solution lies in free-market competition, not government mandates or insurance company coercion. To keep prices down, physicians would compete with each other for patient "business." Hospitals would compete with other hospitals. Labs would compete with labs. Pharmaceutical companies too would compete directly with each other based on price. Insurance companies would also compete across state lines for business.

Patients pay directly for their care. They shop for quality and price, just like consumers do for all other products and services. They are free to choose physicians and services based on their needs, wants and resources, not their insurance provisos.

People are incentivized to promote and maintain their good health, and it thereby becomes a self-fulfilling cycle. Under this model, insurance companies can financially incentivize their insureds by providing discounts for healthy lifestyle habits and "free" coverage for preventive care and exercise facilities.

Patients will keep costs down because they will pay all of their costs for physicians, testing, and generic medications. They will be motivated to stay healthy and save themselves money.

This system works for other types of insurance, including car insurance. People buy gas, change their oil, rotate tires, etc. Car insurance kicks in only for huge accidental losses.

Unmanaged, unfettered and unimpeded competition is the only solution. Fair market value, determined by competition in the marketplace, would be the price people pay for every aspect of their care.

Under the free-market incentive model, all parties involved would benefit and the health of America would improve and thrive.








Craig M. Wax, DO, is a family physician in Mullica Hill, New Jersey. Send your feedback to
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