September 1999

Corporate greed triumphs over patient need

David Lubar is the author of a funny Q&A piece about HMOs that has made the rounds on the Internet. It begins: “Q. What Does HMO stand for? A. It is really an abbreviation of ‘Hey, Moe!,’ and it comes from Dr. Moe Howard, who discovered that a patient could be made to forget about the pain in his foot if he was poked hard enough in the eyes.”

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Today’s health care system does seem like a Three Stooges schtick, and it has certainly delivered a poke in the eye to both us patients and our doctors, benefitting no one but the handful of corporate executives whom we suddenly find in charge of health care for a nation of 270 million people (well, 225 million if you subtract the 45 million of us have no health coverage at all). Barely a decade ago, the insurance giants and their puppets in Washington were direly warning us about the grotesque evils of “Socialized Medicine”—bureaucrats would make medical decisions rather than doctors, they would not let us choose our own doctors, patients would be denied treatments they needed, health care money would be siphoned off to feed the bureaucracy, and the costs of the whole system would go through the roof.

Hello? Ten years later, this is the reality of health care in America. While the insurance companies had us watching in fear for any sign of socialized medicine, they snuck around behind us and created Corporatized Medicine.

In the last few years, what is now referred to as the health care industry has fallen into fewer and fewer hands. Met Life, Prudential, New York Life, Travelers, and John Hancock are among the major HMO competitors that were there a moment ago, but are now gone, gulped down whole, like a boa constrictor eats a pig, by the likes of Aetna, Cigna and UnitedHealth Group. Not only are these three already the dominant national players, but they divide up the country, city by city, which gives them near-monopoly power because most people don’t leave town to go to the doctor.

"Two wrongs don't make a right, but three left turns do." --Jim Hightower


Aetna, which is notorious for squeezing the care out of health care, has captured 40% of the Philadelphia market, nearly 60% in several New Jersey cities, and a third in Atlanta, Orlando, and San Antonio. As Consumers for Quality Care points out, “With greater market share in key cities and states, Aetna [has] put itself in a higher position to offer more patients less coverage for ever higher premiums.” Two-thirds of the entire market is now in the hands of the 10 biggest companies.

Already, the consolidated HMO industry is acting not in competition, but in concert — in 1998, the biggest national firms decided virtually on the same day to dump their Medicare service for rural seniors, and in 1999 every one of them uniformly hiked premiums for all of their patients.
Spending on everything but healing

Not only are premiums up dramatically, and going higher again this year, but more and more of the money we spend is going, not to our health needs, but to corporate bureaucracies and CEO paychecks. The growth in the number of beancounters has far outstripped growth in nurses and doctors—there are now four times more clerks and managers than there are doctors.

It’s not unusual for HMO administrative costs to soak up a third of our health care premiums, and some take a half.

These funds go to wasteful bureaucracy, huge advertising budgets, posh corporate headquarters, and, last but far from least, the CEOs themselves. The average CEO salary at the nation’s 11 largest HMOs jumped 79% in 1998 to $28.2 million. And that excludes lucrative stock options, which last year added up to $7.4 million for the boss hog at Oxford, $10.3 million at Aetna, and $33.6 million at UnitedHealth Group.

Meanwhile, doctors have been reduced to hirelings of the HMOs, no longer empowered to use their own medical judgment to decide what treatment we get, which specialists we should see, whether we go to the hospital or not, and how long we stay there. All of these decisions must now be “authorized” by the HMO hierarchy.

The Kaiser Family Foundation reported on a survey of doctors in July: 72% say the HMO system has decreased the quality of care for sick people, 77% say it has decreased the ability of patients to get the tests and treatment they need, 83% say it has decreased the amount of time doctors spend with their patients (some HMOs require doctors to see eight patients an hour—an average of seven minutes each, conjuring the image of Charlie Chaplin’s assembly line), and 86% say it has decreased the ability of patients to see specialists they need. But . . . 95% say HMOs have increased one aspect of the doctors’ job: Filling out forms!

Who’s in control?

The central issue in health care can be summed up in one word: Control. And not just controlling costs, which is how the issue has been cast by the politicians and lobbyists in Washington. Indeed, if controlling cost is the primary goal, HMOs are miserable failures. We do need to control waste, fraud, and excesses—like more million-dollar MRI machines than we really need—but the bottom line is that good health care for 270 million Americans is going to be costly . . . but worth it.

A key measure of our success as a society is whether our fabulously wealthy nation is going to devise a system of providing good care for all. It’s a worthy expenditure—just ask Canadians and people in the European nations that pay a lot in taxes for their systems, but get excellent coverage in return. Their systems enjoy phenomenal approval by the populace.

We pay even more than they do when you add our health-care tax dollars (the equivalent of $2,500 for every American—more than any nation except Switzerland) to the billions in annual premiums and out-of-pocket costs we pay—yet we get poor coverage, and the system is about as popular as mad cow disease.

The control that I’m talking about is of the system itself. Why the hell would we think that giving control to a handful of for-profit corporations would give us what we want rather than what they want? Their entire incentive is not to deliver the best to the most, but the least they can get away with in order to pocket more profits and jack-up their stock prices. This has nothing to do with good or bad intentions by HMO executives, but a corporate imperative—the CEO’s job is to fatten stockholders wallets (and CEOs are themselves stockholders). Period. It’s one thing to let this singular and selfish incentive control widget making . . . but the delivery of health care?

“The entire medical enterprise exists for the benefit of patients. This principle, honed over several millennia, is now being undermined by a system where the central aim is to maximize profits,” says Dr. Bernard Lown, winner of the 1985 Nobel peace prize and chair of the Committee to Defend & Improve Health Care.

The first step is to reject the insidious notion that health care is an industry. It’s not—it’s a basic human need.

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Canada’s figured it out

The system will not improve unless there is democratic control of this basic need, which means something akin to Canada’s single-payer system, in which patients come first. Neither a corporate nor a government bureaucracy runs the system there— patients go to their own doctors and get the treatment they need. The role of the government is to collect the taxes and pay the bills (making it the “single payer” in the system), which reduces administrative costs to only about 11 cents per dollar spent on health care, versus the 25 cents that our bureaucratized system rips off.

Paul Ellwood, who coined the term “HMO” and founded the pro-business Jackson Hole Group, recently startled a Harvard audience by saying that “government intervention” is needed to improve the quality of health care. Motiva-tion to improve the quality of care “is not going to come from within” the system, he said. “Market forces will never work to improve quality, nor will voluntary efforts by doctors and health plans.”

Washington is not going to push meaningful reform, because both parties are mired in the corrupting muck of corporate campaign money. In last year’s congressional races, HMOs put $3.4 million into the pockets of lawmakers, and the insurance/HMO industry spent $77 million to lobby these same lawmakers—$10 million more than the tobacco industry spent on lobbying!

The power of this money showed itself in the disgraceful performance of the Republican leadership in July when it snuffed out the Patients’ Bill of Rights, which would have provided some minimal protections against HMO arrogance and avarice.

And don’t hold your breath for the phrase “single-payer” to be uttered by any major party candidate in the 2000 presidential race—certainly not by George W., who already has banked more than $1 million from HMO executives and has had a longtime (and personally lucrative) business relationship with the principal owner of Columbia/HCA the huge HMO. Neither will Al Gore or Bill Bradley step forward, since both are financially shackled to the insurance-pharmaceutical-HMO status quo.

Democratizing health care requires the kind of grassroots rebellion that is already moving in various cities and states where citizens are pushing their own initiatives to put people in charge of the system. The good news is that the people are ready for the rebellion. A 1998 poll finds that 90% of Americans would support legislation to improve the quality of care and assure patients their choice of doctors. Likewise a July poll finds that the number one health-care priority of the people is to cover “everyone.”

As usual, the people are way ahead of the politicians, and this creates an enormous opportunity for an unabashedly progressive political movement (third party or insurgent Democrat or both) to fill the void.

Behind the shrub

George W.’s Compassion for HMOs

Phil Gramm, the odious senator from our fair state of Texas, is infamous for trying to defeat legislation on behalf of special interests, and then, if a bill he opposes passes anyway, rushing to claim credit for its passage. “Grammstanding,” it’s called here.

Apparently, George W. Bush has been taking lessons in the fine art of Grammstanding. Recently, the governor-who-wants-to-be-your-president was asked about his position on a patients’ bill of rights to give people a fighting chance against the abusive behavior of HMOs. Prince George furrowed his brow and in his most compassionate conservative tone informed the reporter that, “We’ve had good legislation in my own state—as to making sure that there are patient protections in the law.” What he failed to mention is that he had vetoed that legislation.

State Senator David Sibley of Waco, a conservative Republican, had sponsored the “Patients Protection Act” in the 1995 legislative session, giving people greater freedom to choose their own doctors, and giving doctors greater freedom to decide what treatment, medicines, and specialists their patients needed—reforms that the HMOs were dead-set against. The Texas Medical Association (the lobby group for doctors) was strongly for Silbey’s bill, as were consumer groups and the general public, so it passed the legislature overwhelmingly. But Gov. Compassion just said no, asserting that government should not be interfering in the “free market” for health-care. Among those in the Texas HMO market who not only had a special interest in squelching this legislation but also had a very special relationship with the governor was Richard Rainwater. He’s a Fort Worth billionaire who ranks among the 100 richest Americans and just happens to be the big dog at Columbia/HCA, one of the largest HMOs in the U.S. of A.

Rainwater is tighter than the bark on a tree with George W. Bush (see March 1999 Lowdown for more of the dirty details). He was a major player in the 1989 buyout of the Texas Rangers baseball team, and he brought Bush—then a twice-failed businessman and goofy, overaged frat-boy—into the team, making the President’s son the front-man for the Rangers. It was a highly-visible, public position that five years later let W. claim to be a business success and run for governor, with the substantial monetary backing of Rainwater and other Ranger partners.

Lo, it came to pass that while Bush was governor, the team was sold . . . and Prince George was given a $12.5 million “bonus” by Rainwater and the other partners. Of course, this profitable personal relationship had nothing to do with his veto of the Patients Pro-tection Act, which was adamantly opposed by Columbia/HCA.

In the ’97 legislative session, Sen. Sibley was back with his “Patients Protection Act,” this time adding a provision that patients can sue their HMOs—a provision that HMOs abhor. It passed, making Texas the only state in the country with a law opening up HMOs to liability for the medical harm they do. This time, facing a re- election campaign and planning a presidential run, Bush was not in a position to veto a popular bill, especially since this time it would likely have been overridden. But, as a gesture to his HMO backers, he didn’t sign the bill either. A Texas governor can weasel on a bill that has passed, letting it become law but not putting his or her signature on it. It has no practical impact, but it can be useful politically for it allows a guv to tell one group, “I was opposed to that skunk of a bill, and I want you to know I refused to sign it,” while telling another group, “I’m pleased to tell you that under my guidance, this vital protection is now the law of the land.”

BUSH CLIPPINGS

Whether or not GWB used cocaine, one thing we do know is that he signed into law a bill making mere possession of less than 1/20th of an ounce of cocaine punishable by jail time. . . . Number of people in Texas prisons for nothing but marijuana possession: At least 5,000. . . . Number of people executed by the state of Texas while Bush has been governor: 99 and counting.

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