“To keep the good of the patient as the highest priority. There may be other conflicting 'good purposes,' such as community welfare, conserving economic resources, supporting the criminal justice system, or simply making money for the physician or his employer that provide recurring challenges to physicians.”

— From the Hippocratic Oath

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The invisible hand of the marketplace that economist Adam Smith (late 1700s) defined as that invisible relationship between suppliers and sellers that determine what products and services are offered to the market. Adam Smith could not have foreseen the development of healthcare and the dichotomy between competition of the market and the Hippocratic Oath.

Are there areas where free market economics don’t effectively work? I am a proponent of free markets but have continually become disillusioned with my own healthcare by my service provider, who will remain unnamed (shhh, it's Humana). They overruled decisions made by my physicians caused the University of Louisville group from accepting Humana at their practice.

I have an issue with blood pressure that is owed in part to heredity. I exercise and eat fairly healthy. I was on a prescription medication for my blood pressure and it worked effectively to keep it in check. I received a letter from Humana asking me to have my physician switch me to a cheaper medication on Humana's formulary. That actually did not bother me as I understand their need to keep costs down. Within two months my ankles were swollen caused by the new medication that Humana requested. To counter that problem I had to take yet another medication. Let's recap. To cut costs for the health provider I switched medications and now I am taking three medications instead of the one.

Last week, I received letters from two physicians (surgeons) that informed me that they were dropping my service provider. I need surgeons as I am at the age where “procedures” are needed and I want people I trust and have a trusted and established relationship.

What needs to be done about health insurance in the United States? I don't necessarily advocate socialized medicine but we do need to re-evaluate. The Hippocratic Oath states that the good of the patient should be considered foremost and above competing interests such as economic gain. While economic gain in the Hippocratic Oath is gain by the physician or his employer. In today's economy, I believe that by extension this should include the insurance provider.

As with my experience, short-sighted cost cutting on the part of the insurance company derailed my treatment and ended up costing Humana more for my treatment. This is but a minor example as I am sure many readers can attest to other examples.

Just as I was proofing this column I got a phone call from Humana offering a free service of consultation with a pharmacist to help keep my prescription costs down. How fortuitous. I mentioned my problem to the lady from Humana who stammered a bit. She told me that I would receive a letter in the mail detailing the service and how to reach the pharmacist.

I would have to think that Humana CEO Mike McCallister and his chief innovation officer must have a high level of ethics as corporate officers to both make a profit and provide good service for us as consumers.

Making a profit from healthcare stands places physicians in the position of operating as minions of the insurance companies ensuring lowest costs and highest profits. Physicians must be free to prescribe what is best for their patients based upon their training and expertise. Physicians have a responsibility to use their best judgment in their decisions.

While I do not advocate socialized medicine, things have gotten out of hand and people who are not medically trained are setting policy based upon costs and profit. To say that insurance companies are not driven by profit motive would be a statement of denial.

Economically, insurance systems must typically deal with two inherent challenges: adverse selection, which affects any voluntary system, and ex-post moral hazard, which affects any insurance system in which a third party bears major responsibility for payment, whether that is an employer or the government.

Insurance companies use the term "adverse selection" to describe the tendency for only those who will benefit from insurance to buy it. Specifically when talking about health insurance, unhealthy people are more likely to purchase health insurance because they anticipate large medical bills. On the other side, people who consider themselves to be reasonably healthy may decide that medical insurance is an unnecessary expense; if they see the doctor once a year and it costs $250, that's much better than making monthly insurance payments of $400.

A common example of moral hazard is third-party payment — when the parties involved in making a decision are not responsible for bearing costs arising from the decision. An example is where doctors and insured patients agree to extra tests which may or may not be necessary. Doctors benefit by avoiding possible malpractice suits, and patients benefit by gaining increased certainty of their medical condition. The cost of these extra tests is borne by the insurance company, which may have had little say in the decision.

In a country like ours with the best trained physicians and the best technology, it is a crime that at least 16 percent of the population is without healthcare.

The question is this; who pays to have everyone covered? Ultimately, if the healthcare burden is adopted by the government, the individual will have to pay for the government to insure protection from high medical bills. As in all economic choices and decisions it comes down to a tradeoff. Are we willing to pay more in taxes to decrease the burden of healthcare? Many of us are only one major medical mishap from bankruptcy.

The late economist Milton Friedman coined it best “there is no such thing as a free lunch.”

Tim McDonald is an educator, lecturer, author and doctoral student. He can be reached at timothy.mcdonald@agsfaculty.indwes.edu