The current headlong rush into managed care provides yet another example of the pitfalls associated with introducing radical changes into a complex system when you don’t really understand either the system or what you are doing to it. You cannot fix a hemorrhage with a splint, or a broken bone with a tourniquet. And you can’t take power over health care decisions out of the hands of the health care providers and their patients and give it to profit-making insurance companies or private stock-holder ventures without ultimately causing a serious distortion in the outcomes produced by the system. The profit motive may be a way to create incentives for economic efficiency, but only if it is constrained, just as “free” markets are constrained by rules against unfair competition, monopoly practices and the like. This argument can be found even in Adam Smith, notably in his “The Theory of Moral Sentiments” (1759).
What’s to be done? Among other things: (1) exposure of “dysfunctional” behavior by HMOs (2) competition among HMOs wherever possible (3) well-policed laws and regulatory restrictions (e.g., “portability” for health insurance) (4) greater emphasis on developing measures of “outcomes” to evaluate performance. But perhaps the most promising longer-term solution (if it is not already too late) is an idea that has been piloted in a few communities. It involves a locally-financed and locally-controlled HMO — a not-for-profit joint venture between physicians, hospitals, other health care personnel and various community agencies, with broad community participation. With this model, most of the dollars and all of the control remain in the local community. In the past, such collaborative ventures were not politically possible. What makes them feasible now, quite simply, is the threat that some Wall Street for-profit chain might come in and gobble up a community’s health care system if the “players” don’t unite and take joint action. It is yet another example of the “common enemy” syndrome.