Quentin D. Young
President and CEO, Community Service Society, New York City
The Case Against Profit-Driven Managed Care
Presented at
Envisioning Ethical Atlernatives in Health Care
9 December 1996
I think I have to apologize, or at least warn you, that I possess a strange mixture of apocalyptic vision and mindless optimism that you might find a little confusing. The apocalypse, of course, is the horror that is being visited upon our country's health. And I'll try to convince you it is even worse than you have heard and read.
The optimism is a basic optimism that for-profit health care is generating animus which is going to be transformed into political action, that we will get thorough-going reform faster than you think—not late in the next century, not decades from now, but faster than you think. I believe that is the likelihood.
Background of primary care and pre-paid group practice
Currently, and for most of my life, I have worked in a small group of primary care internists, on a fee-for-service basis. But
also, I spent ten years in government service, at Cook County Hospital, where I was Chairman of Medicine. So you will find
no enthusiast for government bureaucracy here. I also worked in a prepaid group practice in a union health center for a lot of
years before I took the government job. And so I know the varieties of incentives and arrangements. And when I say that
piquant phrase, "prepaid group practice," the older people will recall that's what we called those remarkable developments in
the 1940s: Kaiser Permanente, Group Health Cooperative of Puget Sound, HIP, Group Health in Washington, and so on.
Those were wonderful innovations--economy of scale and group prac-tice and emphasis on prevention--that brought health care to a lot of working people in America. They're not to be confused with today's for--profit1 corporate-run HMOs. Until we get that clear, we are going to be using a jargon that makes no sense.
Profit-making corporations march to the wrong drummer
I've just identified the enemy. The danger in all the things we are talking about originates not from prepaid group practice. That
is actually a very good way to run things at times. But it is these profit-driven, publicly held corporate arrangements that are
marching to the wrong drummer. The efficient managers of those systems are charged morally, ethically, fiscally, and legally to
maximize profits for the investors. A proper health care system. on the other hand, is animated, or should be animated
ultimately to heighten the health status of the nation's population. Their contradictory drives put them in conflict.
Need for national health insurance
We hear that our uninsured numbers are rising at the rate of a hundred thousand people per month, added to the already 40
million uninsured (Hellander, Moloo, Himmelstein, Woolhandler, & Wolfe, 1995). Now, that is the work product of the
corporate system. They are the ones that are creating that reality, and they can't be exonerated from it. Our failure to do two
or three obvious things has put us in this plight and when we as a nation come to understand it, we will get out of it.
First of all, we need national health insurance. I've checked Scriptures. I've checked the Constitution. It is nowhere written that the workplace is where health care must be paid for. All of these business people who are looking at rising premiums (they'd like quality too, but cost obsesses them) arc being driven by an ideological rigidity that does violence to their clear-headed business sense: they must resist ''government medicine."
Health care is a right
Instead. they should let the United States join the rest of the human race, at least the Western industrial world, and recognize
that health care is a right. It is a responsibility of society to assure health care. Because there's no correlation between illness
and capacity to pay, except an inverse one, civilized societies must attend to that. We are in the process of abandoning our
social responsibility for health care. We cannot let that happen. We need to enact a national tax-based insurance, Medicare
for everybody, and end the destructive linkage of insurance with employment.
Ironically. the older not-for-profit HMOs, that is, prepaid group prac-tices, are being caught in a vampire effect that requires them to emulate the for-profit HMOs. They, too, are being driven to speed up doctors, to cut cost, and, yes, to cherry-pick desirable patients to avoid the people who cost money, that is, sick people.
Dissatisfaction with managed care documented in recent studies
In the Commonwealth Fund Report of July, 1995 workers enrolled in managed care plans in three major cities-Boston, Miami
and Los Angeles----reported greater dissatis-faction with their health care than those enrolled in traditional fee-for-service
plans. According to a Harris poll of 3,000 adults, 15 percent of managed care members rated the quality of health care
services as fair or poor, compared to 6 percent of fee-for-service patients. Low-income managed care members, ominously
earning less than $15,000, and workers who had no option but to join a managed care plan, captives as we know, were twice
as likely to be dissatisfied, 32 percent. Managed care members are also far more likely than fee-for-service members to rate
their plans as fair or poor for access to services, including specialty care, 23 versus 8 percent; emergency care, 12 versus 5
(Commonwealth Fund Press Release, 1995).
In surveying sick people, and beware surveys that don't focus on sick persons, a study was commissioned by the Robert Wood Johnson Foundation done by Harris and the Harvard School of Public Health, which can be described with the title, "Sick Persons in Managed Care Have Difficulty Getting Services." Sick persons and disabled patients in managed care plans reported more problems getting health care, 22 percent versus 13 percent, than their counterparts in fee-for-service plans, ac-cording to a telephone survey of 2,400 randomly selected non-elderly patients. Sick persons in managed care were more likely than fee-for-service patients to say they were unable to obtain needed specialist care, 21 versus 15 percent, and for diagnostic tests, roughly the same ratio.
Destruction of carefully crafted arrangements
My concern about this system is that it's not merely bad, or that simply, some regulation will fix it. It is pernicious. It is
destroying carefully crafted arrangements in this country. Patient choice is disappearing. Physician incentives are subversive.
Infrastructure is being pulled out. The nursing profession is being deprofessionalized as we talk. It has been accomplished with
breathtaking speed Two years ago, there was a shortage of nurses. Today, we have all these untrained people who are
displacing nurses at great patient peril. And, of course, the same kind of thing is going to happen to the medical profession
next.
Flawed stewardship of physicians
Certainly, I share the harsh criticism that is due physicians as a group and organized medicine in particular for the excesses, the
abuses, the unnecessary surgery, the inappropriate testing, the exorbitant fees, and the flawed stewardship that opened the
door to this terrible, terrible catas-trophe. For awhile, in the current leglative clirnate, the AMA seemed to be flirting with
words such as 4'universal care," but they have given that up. They are now instead supporting "access." For $3 billion in
concessions to physicians—that was the 30 pieces of silver—the AMA has sold out to the Gingrich plan.
Unfortunately, it is familiar behavior for the AMA. It opposed, bitterly and successfully, Medicare itself until 1965. Then Lyndon Johnson. trading on the national depression over Kennedy's assassination, achieved passage of the Civil Rights Act, the Voters Rights Act and, yes, Medicare, but it was a tough one. Roosevelt, with huge Congressional majorities, couldn't even get it out of committee, nor could Truman.
In the interests of full disclosure, I must confess that I am a member of the AMA. Because I live in its home city, being a member allows me, every time I see AMA leaders, to remind them that I've been a member for whatever number of years, 45 at the moment, and that I have agreed with their policies for one and a half minutes. But be assured that the disarray in the House of Medicine about their profession is significant. It's politically significant.
Doctors having a crisis of nerve
Doctors are having a crisis of nerve. They say such remarkable things as, that they would not choose to go into medicine
again. But they say worse things than that. They say they do not want their children to go into medicine. They are dispirited
and they do not know what hit them.
But these are the only doctors we have, and that is an important concept, as we bash doctors. We have to win them over to taking a responsible course within the health system. To borrow from Yogi Berra, "When you come to a fork in the road, take it.'1 There is a fork in the road—Doctors are being forced to choose in a very fundamental way, whether they're going to ride with the hounds, which I equate with supporting the corporate takeover, or with the hares, their patients.
The only way physicians can survive as a profession, with their morality intact, their prestige intact, and their ability to care for patients intact, is if, in larger and larger numbers, they see the need for unity with the patients in these desperate times.
There has been a degradation of the medical profession—caused by market incentives—which has resulted in two-thirds of American doctors practicing as highly priced specialists. hyperspecialization is a curse. While it is not likely that gastroenterolgists will be driving taxi cabs in New York, we have, at the best estimate, 145,000 too many specialists. This disproportion was caused by paying much higher fees to "procedur-alists," while diminishing the status of primary care physicians.
Corruption of physicians
It does not have to be that way. We do not need the marketplace to discipline physician behavior. It doesn't discipline
anyway; it discrimi-nates. The market selectively seeks patients who are healthy; it denies care as best it can. It also moves
into corruption. I refer you to an article in The New York Times (Feder, June 14, 1995) describing how CareMark, one of
the biggest corporate providers1 was fined $161 million. They agreed to the fine when they were allowed to continue their
Mcdicare business. They could have lost their Medicare connection under the law, but since that was spared, they settled for
the $161 million fine. Their stock went up. The fine, incidentally. was for kickbacks to doctors for inappropriately prescribing
CareMark's home health care products. The opportunities to scam are enormous and they are learning every way.
Need national health insurance
What is the answer? The answer is to join the human race. We need a national health insurance, thank you, and we need to
do it like Canada, but different, because we're richer; we have more resources; and most of the problems Canada is facing,
we won't have to face. I anticipate somebody saying, "Oh, Canada is in deep trouble with their health care system. There are
fiscal difficulties." There are fiscal difficulties. Canada is a poorer country than ours, with double our unemployment for
example. But if Canada had our health system. Saudi Arabia would have bought it at an auction ten years ago.
We have a system that costs one trillion dollars-$3,400 per year for evry person in the country. The nearest country to us is Canada with 2,200, 40 percent less. Does anybody here think we could not have a fantastic health system, taking care of everybody, taking care of the seniors, home care, long-term care, everything, at $3,400 per person?
From oligopoly to monopoly
Of course it can't happen if we have the kind of arrangement we have now where we have huge administrative waste, where
we allow huge profits for these corporations from that trillion. The economics have to be mentioned. They are astounding. My
favorite Wall Street Journal headline was in December, "HMOs pile up billions in cash, try to decide what to do with it"
(Anders, December 21, 1994). English translation, "They are making so much money, thcy don't know what to do." But they
do know what to do: buy more hospitals and doctors' practices, and buy out their competitors.
We are already approaching an oligopoly. The economist John Kenneth Gaibraith has said, "Oligopolies don't compete. They share." And that is what, of course, is happening. We're getting down to six ot eight big HMOs, and it has been suggested that, as in Minnesota, it will become one or two big ones. And despite all that has been said, these HMOs are, at this stage, on their good behavior. They are trying to win people and penetrate markets. If you want to see how tough they can be, wait until they control a market.
This country has a wholesome, rich mistrust of monopolies. Our legisla-tive tradition, our national political history, is replete with successful struggle against them. While that struggle is in grave trouble now, it is my expectation that the passion for fair play in American politics is being rekindled.