Two huge
mergers have recently been announced in the health insurance sector. First,
Aetna announced its intention to acquire Humana for $35 billion, creating a
behemoth. Not to be outdone, Anthem (the enormous group of formerly non-profit
Blue Cross/Blue Shields that have gone for-profit) announced it will buy Cigna
for $47 billion. Consolidation in the industry is moving fast, and soon there
will be oligopoly. Robert Reich, in his July 5, 2015 article The Choice Ahead: A Private
Health-Insurance Monopoly or a Single Payer discusses these mergers,
observing that
Executives say these combinations
will make their companies more efficient, allowing them to gain economies of
scale and squeeze waste out of the system. This is what big companies always
say when they acquire rivals.
Yes, indeed. They always say it, and while sometimes they achieve
efficiencies-- this usually involves firing people -- it almost never benefits
the consumer; prices almost always go up. Remember airline mergers? Bought a
ticket lately? Despite the rhetoric of capitalism about competition, virtually
all companies would prefer to be
monopolies, control the industry, and set prices, guaranteeing huge profit. If
they cannot, the next best thing is oligopoly, control by a few companies, with
collusion so that they all make huge
profits. Competition is their bugbear. Yes, we have federal regulators, but the
result of their regulation has been those airline mergers. And
telecommunications mergers. And financial services mergers. And banks too big
to fail. So don’t count on them.
Health insurance companies are not the only mega-corporations profiting
from “health care” by siphoning off money that could actually be spent
improving health, or at least providing medical care. Obviously, there are drug
companies (as I recently discussed in Chemotherapy,
Quality of Life, and Corporate Profit on July 26, 2015), but also big
pharmacy chains (like CVS, Rite Aid, and Walgreens) as well as other retailers
that usually have a pharmacy (like Walmart, Kroger and Target) that have now
branched out into providing health care, through what are known as “retail
clinics”.
In the New England Journal of
Medicine on July 15, 2015, John
Iglehart writes about “The expansion of retail clinics—corporate titans vs.
organized medicine”.[1] Here the
case against the corporations is less
clear, or at least the case in favor of
organized medicine is. Iglehart points out that the opposition from
organizations like the AMA, the American Academy of Family Physicians (AAFP),
and American Academy of Pediatrics (AAP) have focused on the lack of continuity
of care and “disruption of the patient-physician” relationship. Recently,
opposition has softened (I guess folks know when they’ve lost) except from the
AAP. It seems to me that these clinics provide a menu of services that
primarily is focused on acute care for relatively minor infections and
injuries, immunizations, and monitoring of chronic diseases like high blood
pressure, and are pretty popular with the people who use them. They are
conveniently located (for the people who use them), generally have little or no
wait, and are staffed by professionals (usually nurse practitioners) who know
what they are doing.
The problems with such retail clinics fall into two broad categories.
First, when people use them inappropriately, not for acute or minor conditions,
but as their usual source of care. For healthy younger people, this may be all
they need. For older folks and others with chronic conditions such as high
blood pressure, diabetes, hyperlipidemia, chronic lung disease, heart disease,
etc., they are not sufficient. The danger is when people only seek care when
they have symptoms, such as (particularly) pain, whether to such a retail
clinic, traditional physician’s office, or emergency room, and ignore
prevention and management of their chronic conditions. I do not fault the providers
in these settings; there is evidence that they urge people with such needs to
follow up with their primary provider. But, once the acute symptoms are gone,
they may not. Some of this, sadly, may be financial.
The other problem is more interesting, and gets back to the financial
issue. Providers and the organizations representing them (“organized medicine”)
has real concerns because such retail clinics “cherry pick”, or skim the easy
cases that pay for (or more than pay for) themselves, leaving physicians with
the care of patients with diseases that take more time and are reimbursed less
per hour (or minute) of work; this destroys the business model of primary care
practice. As long as we depend upon a fee-for-service,
reimbursed-for-care-provided, private medical model, this puts a real burden on
physician practices which, while looking bigger than the small retail clinics,
are usually tiny compared to the corporations that own those clinics.
Another medical area in which there is a clearer case of fear of
competition disguising itself as virtue is in the shrill hostility of US-based medical
schools, represented by the Association of American Medical Colleges (AAMC) to
off-shore (mainly Caribbean-based) medical schools, as described by Robert
Goldberg in Discrimination
against foreign medical schools is bad for your health in the
online publication “The Hill”. The argument against such schools from the AAMC
is in part that the students are “lower quality”, the ones rejected by US
medical schools. The flaw here is that there are many highly-qualified students
who do not get into US medical schools, demonstrated by the recent dramatic
expansion of the number of US schools and the class size of existing schools.
Are there Caribbean schools of poor quality? Yes. Is the academic preparation
of students in Caribbean schools, on average, lower than those in US schools?
Probably. Is this a reason to try to put them out of business, by both
bad-mouthing and trying to limit the access that their students have to
educational loans? I don’t think so.
Our US medical schools get talented students, and then put them through
a process that ends up producing doctors underrepresented in the primary care
specialties and overrepresented in urban – and especially suburban – areas. As
I have often pointed out, we produce the wrong mix of doctors who practice in
the wrong mix of places. If (and it is, of course, an if) graduates of
off-shore medical schools are likely to fill the medical needs not being met by
graduates of US medical schools, then the title of Goldberg’s piece is correct.
The same might be said for retail clinics, if indeed they were mostly present
in underserved communities, but, based on the business models of their owners,
they are generally not.
So, then, we see a spectrum of corporate involvement in health care
ranging from the off-shore, for-profit medical school, to the acute care
clinics run by large retailers, to the consolidation into oligopoly of health
insurance companies, to the large pharmaceutical manufacturers. We also see a
response of tepid regulation of the latter two, and protectionism by organized
medicine and organized medical schools to the first two. None of these are good
for our health. What would be good for our health would be the rational use of
health care dollars to provide health care, for everyone, of the right kind in
the right setting.
Reich ends his article with
If we
continue in the direction we’re headed we’ll soon have a health insurance
system dominated by two or three mammoth for-profit corporations capable of
squeezing employees and consumers for all they’re worth – and handing over the
profits to their shareholders and executives. The alternative is a
government-run single payer system – such as is in place in almost every other
advanced economy – dedicated to lower premiums and better care.
Which do
you prefer?
I feel like raising my hand and waving it in the air saying “I know, I
know!”
[1]
Iglehart JK, The expansion of retail clinics—corporate titans vs.
organized medicine, NEJM 15 Jul 2015;373(4):301-303
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