Health Maintenance Organization Functioning - Essay Example

Some of them find it advantageous on their part to reduce services or quality of care once there would be implementation of easy savings from discounting and substitution. In other words, HMOs have always mean business and this leads them to expect to experience favorable or adverse selection. Considering the number of commercial employees, especially in large companies, there might be great savings on both the demand and supply sides due to substantial numbers in a group, and the risk selection process might not be that tough on the part of HMOs to ward off loss and optimize profitability. This is because working individuals in various large companies are regularly had to ensure their health safety to optimize their productivity. As a result, the commercial employee benefits market in states with large numbers of immigrants and service-based economies may have a higher percentage of insured individuals compared to those in states with strong unionized industrial and manufacturing bases (Kovner & Knickman, 2011, p.33). As a result, Kovner and Knickman added 80 per cent of uninsured are in families with either full or part-time workers in small businesses. This would particularly increase HMOs' magnitude of selection bias in this type of commercial employee benefits market, as they would also consider the profit they could create. On the other hand, there would be more profit for HMOs if less medical care is provided (Holcombe, 1995, p.136). Considering the need for medical services in the US is an upward spiral, especially for the low-income population (Andersen, Rice, & Kominski, 2007, p.22), the medical market on the part of HMOs should have a wider scope of the risk selection process and even bias at some point just to ensure profitability will not be set aside.

Incentives that are most likely for the patients’ advantage are what would matter to physicians who would want to keep their patients happy. For instance, under Medicare’s Prospective Payment System (PPS), patients’ fee is determined by illnesses and required treatment, and determined by the diagnosis-related group (DRG) (Culyer, 2000, p.1118; Getzen, 2010). Under this treatment, a physician may therefore wish to acquire alternatives to minimize the costs to be shouldered by the patients. For instance, doctors nowadays could use preventive medicine and pay more attention to patient safety and satisfaction (Tice, 2012). This is highly relevant to the Affordable Care Act requiring Medicare to formulate shared-savings programs with doctors to provide the best care while cutting costs. In the case of Mr Jones, a cranky old man who smokes and drinks so much, preventive medicine may be employed in his case to cut costs, while keeping him satisfied in the process. Therefore, incentives that are not only optimizing profit but trying to initiate quality health care at a substantially lower cost on patients’ part are what essentially would keep the patients’ satisfied. In other words, putting a high value on patients should be the basic requirement for healthcare incentives that would make a patient happy and satisfied. These incentives would also guarantee the level of care is optimized. In the case of the Affordable Care Act, the happier the patients are and satisfied with the service, doctors will eventually earn more. So it is the most logical point doctors would eventually seek out things that patients look for in a health care service.