The ACP Advocate Blog
by Bob Doherty
Thursday, August 6, 2009
Is Making Money on Health Care a Bad Thing?
From time to time, I get an email from an ACP member decrying for-profit health care. One member wrote: "It seems that the other parts of the medical system will do fine under the new plan - for profit insurance companies will make even more money while exerting a strangle hold on how we practice and how we are paid. Pharma, medical device manufacturers, hospitals will all do fine. I don't understand how internists will be better off under this new system then we were before."
Another internist wrote: "We pay enough taxes that health care can be given to all Americans only if the greed and abuse by powerful businesses were excluded. Millions of people file for bankruptcy and millions of businesses die every year due to unaffordable healthcare cost. My HMO agent came to deliver my new Plan and told me that my premium will be up by 8% this year. For what? I hardly use it and my wife uses it 1-2 times per year and so does my kids. How fair is this? For Profit HMOs are not synonymous with better and affordable healthcare of Americans."
The Physicians for a National Health Program, which advocates for a single-payer health care system, points the finger at "for-profit" health care as the culprit behind the problems in the U.S. health care system:
"The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans' health dollars."
An opposite perspective is offered by Stephen L. Carter, a law professor at Yale. In a commentary posted on the Washington Post web site, he argues that, "High profits are excellent news. When corporate earnings reach record levels, we should be celebrating. The only way a firm can make money is to sell people what they want at a price they are willing to pay. If a firm makes lots of money, lots of people are getting what they want." When it comes to health care, he says this:
"Indeed, one reason the 'public option' health insurance program under debate may turn out to be more expensive than advocates suggest is that here, unlike in Europe, we are unlikely to put up with government restrictions on what sorts of care will be available, especially for seniors. A board of experts might decide to limit access to hip replacements, for instance, but there is little chance Congress will let them get away with it. Private insurers, by contrast, will cut whatever they can. This puts them at constant war with regulators and patients, but beneath this tension is a certain useful discipline. We want health care to be cheaper, and the for-profit health-care industry has every incentive to make it so."
I can see why many ACP members are troubled by health care profit-making - the idea of making money off sick people just doesn't ring right to people who have dedicated their lives to treating the sick. (Although truth-be-told, most doctors - including I would imagine some members of PNHP - make healthy incomes off the sick.) But I also believe that elimination of profit-making in U.S. health care could stifle innovation that leads to better treatments and efficiencies in health care delivery. Besides, making money in America is ... well ... as American as apple pie - sold by your local baker to make a profit, for course!
Today's question: Do you think profit- making is good or bad for the U.S. health care system
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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