A new effective index optical model is presented for the analysis of lateral waveguiding effects in vertical-cavity surface-emitting lasers. In addition to providing a concise formalism for reducing the dimensionality of the Maxwell equations describing the lasing mode, this model also provides new insights into waveguiding phenomena in vertical-cavity lasers. In particular, it is shown that the effective index responsible for waveguiding is dependent only on lateral changes in the Fabry-Perot resonance frequency. This concept leads naturally to new design methods for these lasers that are expected to result in more efficient devices with superior modal characteristics.