Correspondence
The Health Care Market
N Engl J Med 1998; 338:476February 12, 1998
- Article
To the Editor:
In the article entitled “Trends in Health Care Coverage and Financing and Their Implications for Policy,” Smith (Oct. 2 issue)1 analyzes the health care market and concludes that the market has failed to provide adequate amounts of uncompensated care. Actually, the market has not failed at all. It is the belief that everyone can have all the health care they want at the expense of everybody else that has failed.
Markets are mechanisms for creating wealth through voluntary exchange. Insurance companies, as market entities, are not tax-supported welfare agencies. If they do not make a profit, by providing a service at a price customers are able and willing to pay, they run out of money with which to continue providing the service, and shareholders invest their hard-earned money somewhere else. The insurance companies that do not make a profit go out of business. Even nonprofit companies must provide goods or services that others will voluntarily pay for and raise at least as much money as it costs to do so to continue to exist.
1 ReferencesSandy Shaw
Spectrum Technology Service, Tonopah, NV 890491
Smith BM . Trends in health care coverage and financing and their implications for policy. N Engl J Med 1997;337:1000-1003
Full Text | Web of Science | Medline
To the Editor:
If there is a single thread connecting the problems of health care coverage and financing that Smith considers, it is that corporations are under intense pressure from Wall Street to produce ever-increasing quarterly earnings. Consequently, they are reducing employee health costs. They do this directly by dropping health coverage entirely, or subtly by forcing employees into health maintenance organizations (HMOs), which then decrease access to and the quality of care. The recent stock-market boom may have been financed in part by this decrease in employee health benefits.
For-profit HMOs and corporate health care providers are under the same pressure. HMOs use their economic clout to negotiate lower prices from providers (and higher premiums from individual members and small businesses), deny coverage for expensive treatments, and encourage young, healthy people to enroll while shunning potential subscribers who are old or sick. They refuse to cover “preexisting conditions” and increase their economic clout through mergers and acquisitions. For-profit hospital chains are buying up nonprofit hospitals, laying off staff, increasing their economic clout through mergers and acquisitions, and refusing to provide uncompensated care, even when they have the resources to do so. Since the private sector is the cause of these problems, it is unlikely that the private sector will provide the solution.
Robert J. Yaes, M.D.
15 Quantum Pl., Gaithersburg, MD 20877Author/Editor Response
Ms. Smith replies:
To the Editor: Although Shaw and Yaes appear to approach the issue of declining insurance coverage and the increasing need for uncompensated care from opposite perspectives, their letters reflect agreement that the operation of the private insurance market in and of itself will not lead to expansions of coverage. This indeed is the main thesis of my article: that the growth of managed care and the market consolidation that followed has resulted in cost containment but at the expense of decreased insurance coverage, which will lead to substantial financial instability of the health care delivery system as well as to broader social instability.
The measure of the private health care market's success must be whether it operates both to contain costs and to expand coverage; otherwise, the issue of health-system stability and the issues of quality of care and access that are affected by financial instability will go unaddressed. Both correspondents agree that the market will not operate to expand coverage and that such expansion will not occur in the absence of government intervention. Where they differ is in whether or not they view the expansion of coverage, stability of the health care delivery system, and access to care as values worthy of government intervention. That disagreement frames the political debate that will almost certainly accompany any effort to expand insurance coverage in this country.
Barbara Markham Smith, J.D.
George Washington University Medical Center, Washington, DC 20006
