Ethics and Managed Care

To the Editor: Dr. James Sabin has valiantly tried over the years to hold managed care providers to some ethical standards in the face of critics like myself who suggest that ethical managed care is an oxymoron. The brief account of the fate of Medicaid patients in Harvard Pilgrim Health Care (HPHC) in the October 1999 issue (1) indicates that he and his coauthor, Professor Norman Daniels, now clearly recognize the destructive forces spawned by what I have described as an oligopsony market (2), one in which a few buyers have a substantial market advantage over the many sellers. The oligopsonist can drive down the premium price of a regional health plan like Harvard Pilgrim Health Care by threatening to take all its low-risk patient business elsewhere. Oligopsony market power is increasingly being exploited by government and by corporate America. Forced to be lean and mean, providers have no choice but to cut back care. The entire American health system is being driven by this market into a race to the bottom.

Sabin and Daniels had hoped to study the comparative advantages of providing behavioral services to Medicaid patients in an integrated versus a carved-out system of care. HPHC was to be the site of the integrated care, but its management found the projected $10 million loss for meeting this obligation unacceptable. The Medicaid patients' behavioral health services were carved out first to a wholly owned HPHC subsidiary, which then subcontracted to a for-profit managed care company.

The lesson to be taken from these developments is that even high-minded doctors with the best of intentions and prestigious reputations cannot resist market forces. This is not to denigrate the valiant mental health professionals who continue to serve Medicaid patients; it is to emphasize the impossible financial constraints they face. Public-sector psychiatrists have always worked with limited resources and fixed budgets; under such circumstances, rationing care to provide the greatest good for the greatest number made sense. Furthermore, since the mental health professionals had no personal financial incentives in their decisions about distribution of care, there were no obvious conflicts of interest. Under such circumstances, I would agree with Sabin and Daniels that one can sensibly talk about ethical managed care that makes the best of the resources available.

But once the care of these patients is contracted out to a for-profit managed care organization, the ethical situation becomes problematic. Every rationing decision has an impact on the caretaker's own personal bottom line. It must be emphasized that Dr. Sabin's colleagues at HPHC and its subsidiary felt they could not provide medically necessary care, whether integrated or carved out, without unacceptable financial losses. Now the Medicaid patients have been handed over to a plan that expects, presumably within the same budget, to make a profit for its shareholders.

The original Harvard Community Health Plan with which Dr. Sabin is associated began its mission as a health maintenance organization promising to serve all socioeconomic strata and age groups. It did not try to screen out poor, high-risk patients. The physicians who organized the plan hoped that low-risk corporate health plans would participate in this communitarian effort.

Given their commitment, one can understand how Dr. Sabin and his colleagues would think of themselves as ethical—they were. But as market forces pressured their health plan, they have increasingly invoked the duty of stewardship in defense of their ethics. Sabin and Daniels are still calling for "stewardship" as financial constraints are driving down the quality of care being delivered. At some point "stewardship" becomes a pious hypocrisy, a justification for the destructive market forces and for politicians, entrepreneurs, and physicians who are exploiting the situation.