Health Economics Essay Example | Topics and Well Written Essays - 500 words

Health Economics - Essay Example For Getzen, some HMOs may be undertaking risk selection by only accepting healthy patients in order for them to create optimum profit. 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 to 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 due to the fact that working individuals in various large companies are on a regular basis had to ensure their health safety to optimize their productivity. As a result, the commercial employee benefit market in states with large number of immigrants and service-based economy may have higher percentage of insured individuals compared to those in states with strong unionized industrial and manufacturing base (Kovner & Knickman, 2011, p.33). As a result, Kovner and Knickman added 80 percent 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 benefit 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 low-income population (Andersen, Rice & Kominski, 2007, p.22), the medical market on the part of HMOs should have wider scope of risk selection process and even bias at some point just to ensure profitability will not be set aside. 2. What incentives