Resources for the Civic Conversation
National Council of the Churches of Christ in the U.S.A

Note: This is our initial "conversation starter." We encourage you to respond directly and critically to any or all of the issues raised here, or to write an independent statement of your own regarding the advent of for-profit managed care. We look forward to a lively discussion

The Economic Restructuring of Health Care
Shredding the Social Safety Net?
by
Rev. Dr. Donald W. Shriver, Jr.
Gary Matthews

Health Care Restructuring and the Civic Conversation
The national health care system has been a volatile public topic for at least the past decade. It was perhaps most visible in 1994 during the Clinton Administration's health care reform initiative. That initiative generated ferocious opposition from the insurance industry (among other special interest groups) and was aborted after failing to achieve its most basic objective of mandating health insurance coverage for the approximately 37 million Americans who were not covered at the time. Ironically, this "failure" in fact accelerated an already ongoing reorganization process within the health care industry itself. This major shift is often referred to generically as managed care. More specifically, the explosion of privatized, for-profit managed care has spread rapidly to all parts of the country. In New York City its full impact will be sudden, and most likely severe.

Resources for the Civic Conversation is a project sponsored by the National Council of the Churches of Christ in the U.S.A., in conjunction with four New York City theological seminaries (General, Jewish, New York, and Union) and four universities (Columbia, CUNY, New School for Social Research, and NYU). We are seeking to facilitate the church's vocation to help create public space for moral reflection on urgent er private insurance, medical care has been financed through federally-mandated Medicare and Medicaid programs, or through hospital-provided care for the uninsured subsidized via various cost-shifting mechanisms. Physicians have been the primary profit centers in this system, and at their best have also been patient advocates. Hospitals and doctors received fees for each service performed, a mechanism which encouraged more (sometimes excess) care rather than less, and escalating costs for health care in general. Medical care emphasized was in-patient and specialty-oriented.

In contrast, the emerging managed care system is moving quickly toward private, for-profit integrated delivery, where business combinations and mergers are creating larger, regionally-based health care networks. Managed care financing focuses on cost-cutting and the overall coordination of medical care "from cradle to grave." Primary fiduciary responsibility in these market-driven private enterprises shifts from patients to owners and investors. While the government is allowing and/or in some cases mandating managed care for Medicare and Medicaid populations, care for the uninsured is not integral to or encouraged by the managed care model. Indeed, "uncovered lives" (those without insurance) are virtually invisible in this new system. Instead of profit centers, physicians are now cost centers. Their role as patient advocate is being superseded by that of gate-keeper. Hospital and doctor fees are becoming "capitated," thereby providing for rigid cost controls and incentives for reduced care as the financial risk of providing health care is shifted to the providers themselves. Medical care emphasized is out-patient, primary care.

It should be pointed out that these brief descriptions of the traditional and managed care systems are presented in "snapshot" form for the sake of brevity and comparison, and that both are therefore distortions of one ongoing conversion process which is happening at different speeds, in various parts of the country, and in different ways. In particular, the managed care model described is an advanced, for-profit model which has certainly not yet been realized in NYC.

Theological Essentials
An ecumenical, yet specific, theological response to managed care is a challenging exercise. The faith traditions involved in our project are marvelously diverse. Yet as already stated, they share common roots in the God of Abraham and Sarah. This one God is the creator of the entire cosmos, and of a community of people within that cosmos. Particularly from the perspective of the Jewish and Christian traditions, this community of people at once recognizes both its separateness from God, and its call or vocation to live in a covenantal relationship with God and with each other, a covenantal relationship which emphasizes trust and responsibility, and above all love.

Living in this covenantal relationship with God is an ongoing process, a moral tradition that can be viewed as a pilgrimage toward salvation for the whole cosmos, which God will ultimately bring about with the participation of humankind. What does this "new creation" look like? It is a vision of life flourishing, of "abundant" life for all (Jn. 10:10). This is a spiritual and an ecological, material abundance, but it is not materialistic. Neither should it be dismissed as simply a naïve, utopian dream. It is, rather, a clear biblical mandate which recognizes a fundamental condition of survival. That life on earth which flourishes continues to exist ("like trees planted by streams of water, which yield their fruit in season.."(Ps 1)). That which fails to flourish perishes ("like chaff that the wind drives away." (Ps 1)).

A community which lives faithfully within this moral tradition can be said to live a life of shalom and holiness which issues forth in the oblem?

"A likely scenario is that [the managed care] revolution will successfully run its course, and in doing so, transform the way health care is delivered in the United States, and ultimately, elsewhere. In fact, it is likely the United States, not Europe or Canada, will emerge as the model for health care reform in the 21st century. Costs will go down, quality will go up, efficiency will improve, and near universal coverage will be achieved."

Statements like the above quotation indicate clearly that managed care represents not only reform, but a fundamentally new vision (both current and future) for health care delivery. People of faith need to ask themselves whether this particular vision of health care is commensurate with a theological vision of human wholeness within a covenantal, moral community.
One way to approach this is to examine the substantive (and moral) claims of this vision offered by proponents of for-profit, managed care. Working with the above quote, let's take a closer look:

Costs will go down
Managed care says it will reduce costs. This is important and has been badly needed. But is managed care delivering on its claim? The evidence so far is not conclusive. Capitation pricing (i.e., the doctor or hospital receives a flat, periodic fee per patient for all enrollees of a particular managed care company, regardless of actual services rendered) is a powerful mechanism which shifts financial risk to the provider. This provides a substantial incentive to reduce costs.

However, our covenantal theological vision requires us to ask how this cost cutting will come about. Thus far, it is being implemented primarily by "rationalizing" assets in the form of mergers, downsizing, layoffs, and reduced services, a fact which raises a host of moral questions, not the least of which is employment. A recent study by the Health Systems Agency (HSA) in New York City predicts that as many as 80,000 health care workers will lose their jobs as a result of managed care in the next three years. This represents 20+% of total health care employment, the largest employment sector in the city. What is being done to cushion the economic blow for these people and their families, not to mention the communities in which they live? Are there retraining programs which might be implemented by managed care companies so that more might keep their jobs, even if in different capacities? When seen in the light of covenantal relationship, it seems evident that a just health care system has certain moral responsibilities to the thousands of workers whose livelihoods are tied directly to health care employment, and whose own health and participation in the city's economy is threatened by unemployment.

Quality will go up, efficiency will improve
Managed care says that by focusing on better and more efficient coordination of services, and on well care and prevention, it will improve the overall quality of care. Will it? In a competitive, market-driven health care system, quality becomes a carrot to attract health care consumers. This type of quality is adapted to the wants and desires of the large employer/buyers of health care and to the "covered" life community, as opposed to the needs of the entire (covenantal) community. At the same time, peoples' wants and desires are increasingly manipulated by the barrage of advertising campaigns from the newly-created integrated delivery systems and managed care organizations. Meanwhile, unless "uncovered" lives become part of the health care market (which simply put, requires money), their particular community needs are likely to go unnoticed by health care providers shackled by the bottom line.

Also, it is primarily competition which drives even this limited notion of quality care. A covenantal theological vision, however, requires that we look a little further into the future. The end result of the present integration of health care delivery and finance will undoubtedly be the formation of medical oligopolies or monopolies within given geographical regions (witness, for example, the recently-announced merger of the NYU and Mt. Sinai Medical Centers). Typically in such a process, competition is fierce in the beginning as the "winners" and "losers" are sorted out. There will clearly be a shakeout later as the losers, including many big inner-city hospitals, begin to fall by the wayside. (HSA predicts that 15-20 New York City hospitals will close in the next few years as a result of managed care.) As this shakeout deepens and the health care sector oligopolizes, competition will begin to wane. Indeed, as the quest for profits via cost reduction becomes predominant, both price and quality collusion can be expected.

Near universal coverage will be achieved
Managed care says it will significantly reduce barriers to access. How? By reducing the cost of care and thereby the price of coverage. In other words, lower costs translate directly into wider coverage. However, much evidence points in the other direction. While health care is being managed, more and more Americans are losing access to health insurance. In 1994 during the national debate over universal coverage, 37 million Americans were without health insurance, consisting primarily of the working poor and the lower middle class. Today, the number is about 42 million and rising. Mergers, downsizing, etc., mean that hospitals will close, particularly in the poorer urban and rural areas. These hospitals are often the only means that the poor and the "uncovered" have to any kind of medical care. As already noted, former health care employees also lose coverage, part of the growing number of employees being "downsized" in virtually all U.S. industries.

In addition, proposed cuts in Medicare and Medicaid in Washington, D.C. as well as waning support for uninsured care provision at the state level (both ancillary consequences of a vision that sees the market as sufficient for taking care of our medical needs) mean that there will be fewer dollars with which hospitals are able to provide for the poor (working and non-working). Moreover, even those with Medicaid benefits cannot use them if there are few or no hospitals or doctors in their local area, a condition which now threatens in many city and rural neighborhoods.

Also at stake is whether certain populations of patients (the elderly, AIDS patients, the disabled, the poor) will be disproportionately hurt in the shift to managed care. In profit-centered health care, there are significant financial incentives to avoid "high-cost, high-risk" populations. This is borne out by noting that managed care companies to date have overwhelmingly sought to acquire relatively healthy populations for inclusion in their plans, which also explains the relative dearth of managed care presence in poorer urban and rural areas. Even now, as state governments are requiring managed care for Medicaid recipients and HMOs rush to compete for these captive populations, there is much evidence pointing to "cherry-picking" here as well.

Whatever its virtues, a market economy serves only those who have enough money to participate. A covenantal theological vision requires that an adequate level of quality health care be available for every person in the community, especially those in the community who are poor, marginalized, or sick. This requires that the issues of universal access and coverage be placed squarely back into the public/moral discussion of health care reform in this country.

Other Moral Questions
Distribution of benefits/cost savings
The question here is, "Who reaps the benefits of reduced medical care costs, assuming there are some?" Lower costs could be passed on in the form of lower insurance premiums, which directly benefit payors and more indirectly consumer/patients. They could be used for public health protection programs and health care job retraining. Lower costs could be distributed to managers and shareholders in the form of increased profits and/or buyouts. Of course, some benefits might go to each of rm of HMO protest over federal regulations concerning the "gag" clauses, and the Clinton administration's surrender as a result - NYTimes 7-8-96.) On the other hand, as for-profit managed care entities become larger and more powerful, they will probably begin to lobby government for their own version of legislation and regulation, that which serves to protect their business, rather than the consumer.

Integrity of the physician/patient relationship
One of the key issues here is that of choice. In fact, especially for the many in this country who have been covered by indemnity insurance under the traditional system, choice of provider is very highly valued. Choice is one method by which health care consumers maintain competition and therefore quality and affordability. However, choice suffers at the hands of managed care companies, largely through the gatekeeper mechanism which requires patients to consult and get approval from their network primary care physician for specialty care treatment. Other elements of choice include whether patients (especially the chronically ill and disabled) can choose physicians outside their managed care networks, whether they can continue caring and valuable physician relationships, and whether they are free to choose among managed care plans. These are crucial issues which affect people in all economic classes.

Also crucial is the moral dilemma faced by physicians as they attempt to practice medicine ethically in an environment which provides them significant financial incentives not to provide care, even care they deem clinically necessary. "Gag" rules which prohibit doctors from divulging such incentives to their patients further aggravate these conflictual situations. Can a truly covenantal relationship between physician and patient survive in such an environment?

Vision
Finally, as faith-based and other community groups assess their positions concerning the moral issues surrounding health care restructuring, perhaps their most crucial question will be: "What is our community's vision of a just and compassionate health care system?" What are the particular needs of our community population? What are the specific elements of health care delivery (clinics, ambulatory centers, more doctors, locations, etc.) which are needed, or lacking? What about finance mechanisms? How do we make health care affordable and available for everyone?

We have suggested that a faithful theological vision of health care requires at a minimum that adequate quality care be available to all people in the community, especially the poor, the marginalized, and the sick. This will most likely require a national mandate for universal coverage and access to health care. It will also require different specific policy actions in particular local communities with varying medical needs. It will surely require public and governmental response and participation to supplement the market mechanism.

Of course, all of the issues discussed above affect our visions of health care. The more we learn from each other about them, the more refined our vision will become and hopefully, the more effective our actions in enabling them to become realized. This statement is an initial offering in what we view to be an ongoing public process and "civic conversation." We welcome and encourage your replies and comment as we move toward a "visioning" conference on health care later this year, hopefully in December.

'Bouma, Hessel III; Diekema, Douglas; Langerak, Edward; Rottman, Theodore; Verhey, Allen. Christian Faith, Health, and Medical Practice. Grand Rapids, MI: William B. Eerdmans Publishing Company, 1989, chap. 3. "Sheehy, Barry; Bolch, Ellen; Rosengart, Carl. Don't Blink or You'll Miss It: The Reformation of U.S. Health Care is Underway. La Jolla, CA: Medical Leadership Forum of the Governance Institute, 1995, 1 (authors' emphasis).