Incentives to Seek the Most Economical Means of Treatment

In the Forward, written by American economist Kenneth J. Arrow, of the text, Health Economics And Financing 3rd Edition (2007, ISBN: 9780471772590), by Professor Thomas Getzen, there is the following statement: “But insurance reduces the incentive of an individual patient or physician to seek the most economical means of treatment. As a result, new institutions and regulations develop to overcome this “moral hazard,” as it has been termed— institutions such as health maintenance organizations (HMOs), managed care by insurance companies, and regulations such as those that govern Medicare expenditures.”

I challenge the validity of the above statement: My view is that insurance doesn’t reduce this incentive because the incentive wasn’t there to begin with and that it’s right and good that this incentive is NOT part of the clinical decision making, which occurs within the context of a sound, ongoing, non-conflicted doctor  patient relationship. Thus, these new institutions developed to deal with a moral hazard of their own creation thereby establishing themselves as another type of insurance carrier within the business of medicine and reaping huge revenues and profits based on the underlying rhetoric that we must have this incentive to deal with a moral hazard emanating from the doctor patient relationship.

Can doctors create a dollar conflict within the doctor  patient relationships which they are part of? Absolutely YES! My view is that this should NOT OCCUR. To prevent it from occurring or to deal with it when it does, there are several approaches including the most important one: An absolute demand that all of our doctors come to the fore with an attitude that the dollar bill is NOT their primary motivation in seeing patients and that their patients can develop a TRUST in them regarding this.

Self-serving 3rd party payer manipulations pressing upon the clinical decision making of the doctor  patient relationship need to be exposed and seen for the garbage that they are! Indeed, 3rd party payers are a moral hazard!


R. Garth Kirkwood, MD  (

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