Final answer:
The main difference between fee-for-service healthcare and HMO systems is in their payment and incentive structures, with HMOs providing a fixed payment and focusing on preventive care to reduce unnecessary services.
Step-by-step explanation:
The key difference between a fee-for-service healthcare system and a system based on health maintenance organizations (HMOs) lies in the payment structure and incentives for healthcare providers. In a fee-for-service system, healthcare providers are reimbursed for each service they provide, which could encourage an increase in the quantity of care. In contrast, HMOs provide a fixed payment per enrolled patient, incentivizing providers to focus on cost efficiency and preventive care to minimize unnecessary services while ensuring patient health, thus addressing the moral hazard problem. Additionally, HMOs may offer diverse wellness programs such as stress reduction, routine physicals, and smoke cessation programs, but they typically do not cover services not deemed medically necessary, such as certain diagnostic testing services not related to preventive care or immediate health concerns.