The Economic and Political Structure of Medical Practice
We have seen the consequences of a beneficence-based medical ethics that fails to look beyond the individual doctor-patient relationship. Traditional medical ethics in which the "patient comes first" inculcates paternalistic attitudes toward patient care, belittling the patient's negative freedom. In addition, the "patient comes first attitude" blinds physicians to the institutional context of care. Specifically, the beneficence model exacerbates the moral hazard created by the physician's relationship to the insurers of medical care, and it has thus fueled the increase in health care costs.
As I have argued, medical ethics is not simply a private matter between doctor and patient. Physicians must realize that at least some of the ethical nature of their practice depends on the recognition that, while the altruistic features of traditional ethics must be preserved, they practice medicine in the liberal state. This understanding has motivated my effort to describe medical ethics as just doctoring. Just doctoring explicitly recognizes the norms and underlying moral structure of the modem liberal state and describes a medical ethics consistent with liberalism, but it also retains the altruism of traditional medical ethics. In particular, just doctoring envisions health care as a sphere of cooperative activity within the modern liberal state, an enterprise that helps to establish a sense of community. Such spheres of activity within the liberal state remind us that the polity is more than liberal law and a free market; it is also a community in which concern for others means more than economic freedom.
Of course, the modern liberal state is grounded in the concept of negative freedom. In a perfect world, negative freedom, operating in a market economy, ensures equal concern and respect for each individual. Each person may pursue what he values without interference. But the modern liberal also recognizes that we do not live in a perfect world. Individuals have unequal talents and start their lives with different advantages and disadvantages. In order to show equal concern and respect for each person, the market must be modified, and the negative freedom of some must be limited so that all can have opportunity to thrive under liberalism. For example, we have progressive taxation, which funds programs that help provide appropriate nutrition and housing to the poor. Moreover, we fund public education. In the health care area, we underwrite care for the poor and elderly. The modem liberal countenances these necessary restrictions on the market, even to the point of allowing government control of some areas.
Much of the democratic activity of the modern liberal state concerns the ways in which we limit individual freedoms so as to benefit the welfare of all. The liberal state explicitly recognizes that there should be restrictions on the market in order to promote equality. Nonetheless, the liberal also acknowledges that there are limits on resources. Taxation spent on housing means that less is available for health care, unless new taxes are instituted. Thus there is a dynamic relationship between individuals' negative freedom, the market, and the commitment to equal concern and respect.
Since spheres of cooperative activity within the liberal state are there to promote a sense of community, it follows that attention to equality is especially focused within those spheres. This is true in medical care, as we have seen. The notion of just doctoring is offended by inequality of care. The patient must be attended to, whatever his affliction or socioeconomic background. This much is clear from our analysis of the AIDS epidemic and of rationing of care. This is not to say that just doctoring ignores negative freedom. To the contrary, in its commitment to informed consent and to limits on care, just doctoring reiterates the importance of the patient's right to choose.
Since the compromise between negative freedom and equality is so central to liberalism, and since that compromise is expressed in the economic and political structure of institutions in the modem liberal state, it follows that just doctoring, as opposed to traditional medical ethics, must be intensely concerned about the economic and political structure of medical practice. Of course, this is the issue that has mo-
tivated much of the discussion in this book, but to this point we have not discussed the specifics of the institutions of medical care.
Several parameters must guide the discussion. First, the negative freedom of the patient must be considered. The public morality of the liberal state must be respected. Second, the compromise between equal concern and respect, on one hand, and negative freedom and the market, on the other, plays a role. Third, the status of health care as a sphere of cooperative activity weighs heavily. From the foregoing arguments, it might be concluded that the market should be highly regulated in health care so that equal concern and respect can be shown to all patients.
This is not, however, entirely the case, as I suggested in chapter 4. Increasingly, many advocate the wider use of market concepts in medical care. To understand why efficiency concerns have become so prominent, and to assess how just doctoring fits into the structure of health care institutions, we must review the forces that have led to calls for broader use of the market in medical care.
Markets in Medical Care
Health care in the United States has been defined for the last fifty years by the interrelationships of doctors, hospitals, and health insurers. The patient usually provides payment for medical care through an insurance relationship. He, or his employer, purchases insurance that covers all, or most, of medical care expenses. The insurer pays the provider directly or reimburses the patient for the expenses incurred by hospitalization as well as for the physician's fee. Even those patients whose medical care is provided by the federal government fit into this overall framework.
The independence of the physician from third-party payers as well as hospitals has been critical to the structure of medical care in this country. The physician has typically billed the patient or the insurer separately from the charge for hospital services. Thus the physician works as an isolated economic entity, even as a member of a group practice. This ensures the economic independence of the doctor-patient relationship, an imperative of traditional medical ethics.
Another important facet of the structure of medical care in this
country has been the passivity of the health insurer. In the three decades after the Second World War, health insurers rarely, if ever, interfered with the doctor-patient relationship. Indeed, the first and still most influential of insurers, Blue Cross and Blue Shield, were formed by a coalition of hospital organizations and physicians. Their support of traditional physician-hospital relationships remained solid until the 1980s.
Another important clement of the traditional structure of medical practice has been the not-for-profit status of the majority of hospitals in the United States. As discussed in some detail in chapter 3, hospitals arose out of alms houses and other charitable organizations in the late eighteenth and early nineteenth century.1 Most were incorporated as nonprofit institutions under both state and federal law, and have maintained their original standing under the Internal Revenue Service Code.2 At the beginning of the 1980s, 70 percent of all hospitals were nonprofit or voluntary, while another 22 percent were governmental or other special hospitals.3 Only about 8 percent of hospitals were for-profit institutions.
Hospitals have retained their nonprofit structure for a number of reasons. Historically, hospitals evolved out of charitable organizations and most likely have found it easiest to retain that corporate structure. The not-for-profit status also provides access to ready sources of capital through philanthropy.4 But perhaps a more cogent reason behind the nonprofit structure has to do with the nature of patients as consumers of health care.
Henry Hansmann has argued that not-for-profit institutions are a sensible choice when a client is a poor consumer and must trust the good will of another.5 When consumers arc particularly uneducated about a product, they are at risk in the market. They may have no way to evaluate the product being offered and thus will find it difficult to take advantage of the efficiency and fairness of the market. In this situation, consumers may opt for not-for-profit institutions, which presumably have little interest in maximizing their profit at the expense of the consumer. Therefore, the consumer can trust the producer's assertions about a particular product. In this manner, a not-for-profit institution makes more sense than a for-profit institution, even in an economic universe otherwise dominated by markets and profits.
This seems to be a reasonable way of understanding nonprofit health care institutions. The patient is usually a poor consumer of health care and takes whatever is offered, because it is very difficult to
assess the quality and appropriateness of the product (it is even very difficult for the producer to assess the quality and appropriateness of the product). Rather than having to act as a consumer, the patient may therefore wish to trust the physician and the hospital to provide good quality care. Specifically, the consumer relies on a fiduciary relationship with the hospital and the physician. This of course goes hand-in-hand with traditional medical ethics, which asserted that patients should trust physicians and that physicians in turn will do what is best for the patient.
There is another way in which the "patient comes first" ethic has been served by not-for-profit hospitals. Since most hospitals retain this form, there have traditionally been few strong administrators. Moreover, managers of nonprofit hospitals have no shareholders to whom they must answer (although until the mid-20th century, there was typically a very active lay board of governors).6 Instead, hospital administrations have typically shared power with physician medical staffs. This means that physicians have largely been able to dictate policy and direction for not-for-profit hospitals. In essence, then, the not-for-profit hospital can be interpreted as having acted as a physicians' cooperative,7 which has assured, in turn, that the hospital does not interfere with the isolated doctor-patient relationship. Physicians have admitted patients to hospitals, and hospitals have provided the unregulated setting for patient care. Traditional medical ethics, steeped in physician paternalism, has thus been protected by nonprofit hospitals.
Economists have noted that there are also obvious financial motives for structuring hospitals in this manner.8 In a "physicians cooperative," doctors can maximize profit while evading oversight by outside institutions. Robert Clark has argued that the clearest reason for maintaining the not-for-profit status of hospitals is income maximization for physicians.9 Moreover, he makes the case that such a status allows physicians to hide this motive from patient. He believes that the nonprofit structure creates no incentives for improving the quality of care or for critical evaluation of appropriateness of procedures. The antidote, from his point of view, is increased utilization of market methods in health care, and in particular, increased emphasis on profit taking by health care institutions. His hope is that an emphasis on profit will lead to better education of consumers and a curbing of physician prerogatives.
As we have seen, insurers have until recently done little to interfere
with the physician's clinical judgment. Since many insurance companies have been closely associated with or controlled by providers, they have usually chosen to pay bills rather than scrutinize them. This being the case, physicians have had every incentive to provide as much care as reasonably possible. In other words, physicians have faced great financial temptations, to which they have sometimes succumbed. Even the most moral physicians have found little need for evaluation of cost effectiveness or appropriateness of procedures or diagnostic modalities. It is in this light that we must view the lack of information on even the simplest of procedures. Of course this has led to higher and higher hospital and health care costs, with the national health expenditure going from $12.7 billion in 1950 to $604.1 billion in 1989. Even more disturbing has been the increase in per capita costs, from $82 in 1952 to $2,354 in 1989.10
Although concerns about costs have been well expressed for over thirty years,11 by the late 1970s government began to develop ways to restrict capital outlays by hospitals, as we discovered in chapter 8. States considered12 and enacted certificate of need laws.13 Others undertook prospective budgeting.14 But these measures have been viewed as only partially successful.
Many analysts have advocated that there should be more for-profit enterprise in medicine, both to curtail hospital costs and, no less important, to constrain the behavior of physicians. Those who take such a position are largely persuaded by the contention that physicians have been able to take advantage of the existing framework of medical practice to maintain control over medical care and to maximize profit. This perception, at least in part, underlies the general effort to institute a competitive marketplace ethic into medical care. More broadly, competition is meant to help mitigate the increases in health care costs, whether through changes in the structure of health care or through curbs on physicians' prerogatives. In any case, the two goals must be seen as interrelated.
This understanding of the role of competition in medical care reiterates a theme that runs throughout this book. That is, many of the recent legal and political efforts to change medical practice have shared the implicit goal of limiting physicians' power and promoting patients' negative freedom. In the health care marketplace, patients are to be consumers: in other words, they should have choice in their medical care. In a competitive marketplace, providers present to the patient their approach to health care, and the patient chooses an approach that is, theoretically, the least costly and most efficient. Openness and hon-
esty in medical care, the theory goes, will result from use of market concepts. The ambitions of the marketplace are well expressed by E. P. Melia and colleagues:
Using management consultants from the insurance companies and panels from the medical staff hospitals, in this optimistic view, will cause cost control mechanisms to contain costs within contract limits. To ensure quality while controlling costs, physician groups will develop diagnostic protocols and standard treatment plans where they are appropriate. Sanctions will be imposed on nonconforming group members that will include required attendance at noon conferences and grand rounds as well as required use of protocols jointly agreed on by physicians, hospitals and insurance companies; required courses in medical education focused on individual weaknesses or needed skills and strengths.... Both hospitals and physician groups will find that the quality of care does not suffer but that in fact it is improved by the reduction of unnecessary tests, procedures, treatments, hospital days and surgery.... Some hospitals and groups will prove to be more efficient than others or will provide a higher quality of care and this difference will be reflected in furore contract negotiations, thus encouraging hospitals and physician groups to compete with regard to care and quality of care.... Cost effective preventive care, health education and self-help will be more readily accepted by consumers and practitioners, further reducing costs and improving the public health.15
Thus great hopes are held out for marketplace approaches that constrain physicians and other providers' prerogatives and allow the consumer-patient to make reasonable decisions about health care. Most promarket analysts believe that any change in the direction of an efficient market is to the good because it transfers the locus of decision making, to use Clark Havinghurst's term, from physicians and hospitals to patients as consumers.16 Moving from the regulation of health care by physicians to an open market that increases consumer choice is thought to be critical. Indeed, many market advocates would argue that rate setting and certificate of need regulations by states are inappropriate interventions because the institution of market concepts will replace any need for state regulation. Again, the most important aspect of the market approach appears to be the reinforcement of the negative freedom of the patient as consumer and the curbs on the physician's ability to control the shape of medical practice.
Not all observers are so sanguine about a shift toward the competitive marketplace. Eli Ginzburg, for instance, argues that a once rather flexible system of care has been completely destabilized by the introduction of marketplace concepts.17 He is concerned specifically about the demise of the small community hospital, an institution that he feels has great symbolic as well as medical value. He also argues that a
competitive market will be incompatible with notions of cost containment. In fact, he argues that health care costs may increase as a result of the implementation of marketplace concepts.
These fears are echoed by Arnold Relman, who has consistently stated that moral hazards faced by physicians in an insurance relationship pale in comparison to the potentially difficult ethical problems that arise when physicians are placed in profit-seeking institutions.18 Relman argues that profit taking is an unacceptable practice for physicians. He relies on altruistic notions of medicine which suggest that physicians ought not profit at the expense of patients. Indeed, even a leading health care economist, Mark Pauly, suggests that medical care may be a different sort of good than other goods that are distributed through the marketplace.19 This is a view many people may share. (I am always surprised to find in the classes I teach at the law school that students frequently relate that they believe individuals are poor consumers of health care and that the notion of patient as consumer is inappropriate.)
Certainly, many doctors believe that their patients are often mystified by issues of medical practice. Of course, just doctoring requires that physicians make every effort to inform and educate the patient. Even when this goal is pursued vigorously, however, it may be that patients are not perfect consumers, and that great mischief awaits a system of medical care totally integrated into the market.
This is clearly an issue of great importance for just doctoring. To explore it further, let us look in some detail at the way in which American medical care might operate in a competitive marketplace and try to trace out the problems faced by physicians who attempt to act ethically within that marketplace. This will help indicate potential problems as well as the appropriate posture for medical ethics as just doctoring in the competitive marketplace.
The Market in Medical Care: The Profits in Managed Care
Most who recommend competition in health care realize that patients may be poorly equipped to take advantage of the marketplace. Nonetheless, they believe that appropriately designed corn-
petition can help bring down health care costs even if the consumer remains somewhat poorly informed about clinical issues. In particular, they argue that insurance options can be marketed to individual consumers as well as to third-party payers. Thus competition among various insurance arrangements can lead to greater choice for consumers and potentially lower costs. Critical to the goal of lower costs is management of care by the insurer.
As mentioned in chapter 8, there are a variety of insurance arrangements in the health care industry. In traditional indemnity plans, the insurer directly reimburses the patient for medical expenses, and there is no financial relationship between the provider and the insurance company. Service benefit plans, such as those championed by Blue Cross and Blue Shield, involve a direct contract between provider and third-party payer. A patient insured by Blue Cross/Blue Shield is not indemnified; instead the insurance company pays the provider directly. Neither of these traditional programs envision much management by the insurance company of the providers practice.
New approaches to health care insurance do entail such management. In essence, the third-party payer is large enough and sophisticated enough to accumulate the expertise necessary to manage and modify clinical decision making by health care practitioners. An insurance company, for instance, can hire physicians to set up protocols for various diagnostic or therapeutic modalities. These protocols may be just as effective as more costly alternatives. Thus managed care helps create competition by exerting influence over physicians to provide cost-efficient care and by passing those savings along to the patient-consumer. The patient-consumer therefore must be informed about the various benefits associated with the insurance plan, which is probably easier than keeping him informed about the appropriateness or inappropriateness, and the efficiency or inefficiency, of medical practice. Thus, in this regard, advocates of the competitive marketplace seem to have reasonable expectations of patient care.
There are a variety of different forms of managed care.20 Preferred provider insurance requires that the enrollee choose their medical care from selected providers, all of whom have contracted with the insurer. The contract between the insurer and the preferred provider entails a set charge for visits or procedures, as well as other requirements, for example, mandatory second opinions for surgery. Another form of managed care is the individual practice health maintenance organization. The individual practice association (IPA) health maintenance or-
ganization (HMO) is similar to the preferred provider insurance plan except that the providers tend to share in the financial risks of the insurance organization, and patients enrolled in the IPA HMO usually do not receive any reimbursement if they go to a nonparticipating provider. An even greater degree of management is found in the prepaid group practice HMO. In this arrangement, a medical group is employed by the HMO and services are highly rationalized and organized. The prepaid group practice HMO exerts great control over the number of physicians employed and their clinical judgment.
The prepaid model is what is generically referred to as an HMO. HMOs have a long history in this country.21 The first HMOs were organized in the Pacific Northwest, in Tacoma, Washington. Mill owners and lumberyards contracted with physicians on a prepaid basis for medical services.22 Early HMOs engendered much opposition, especially from organized medicine, which led to antitrust litigation (in which the HMOs were generally vindicated), but by the late 1940s, the first large scale HMO was developed by Dr. Sidney Garfield, in collaboration with Henry Kaiser.23
In the 1950s and 1960s, other HMOs developed in sporadic fashion. By 1970 there were between 30 and 40 prepaid group practices in operation in the United States. In the early 1970s HMOs received a great political boost. The Nixon administration advocated the HMO concept as a potential method for constraining health care costs. The administration was convinced by arguments made by Dr. Paul Ell-wood, who had long championed HMO concepts. Indeed, it was Ell-wood who coined the term "health maintenance organizations." The administration agreed to support over 100 HMO projects. In the five years after 1970, the number of HMOs increased from 33 to 166, and they have continued to grow ever since.
Because prepaid group practice HMOs offer the greatest potential for management by the insurer of physician decision making, much of the attention of those interested in evaluating the competitive marketplace has been focused on these organizations. Many have asked whether health maintenance organizations actually increase competition and bring down costs.24 While some preliminary evidence does suggest significant decreases in the rate of hospital admissions for those who participate in an HMO, other evidence fails to reveal reductions in hospital use for the HMO enrollee.25 Moreover, there is a great concern that HMOs may produce cost savings at the expense of other sorts of insurance plans as a result of patient self-selection.
As we develop alternative insurance schemes, patient self-selection becomes an increasing problem. If sicker or older patients consistently select a certain insurance arrangement, that program will be at greater financial risk than its competitors. If HMOs are selectively marketed to healthier individuals, they will skim the healthier patients from the total patient population and leave other insurers with the sicker and more expensive patients. Thus some observers have suggested that any cost saving demonstrated by HMOs may simply be due to redistribution of sicker patients.26 Indeed, the problem of self-selection and the financial risks it creates raises questions concerning the potential for multiple insurance options as a means of constraining health care costs.27 It also raises questions concerning access to health care, as we will see.
Whatever questions remain about the potential for prepaid group practice HMOs and other managed care alternatives to help reduce health care costs, there is little doubt that these institutions are going to be an important part of the structure of medical care in this country. We now see that HMO concepts have begun to work synergistically with traditional insurance, as insurers offer more and different managed care options.28 For example, in Minneapolis, long a friendly market for HMOs, traditional Blue Cross and Blue Shield programs have begun to offer preferred provider options. Included within these options are programs that provide full coverage for preventive medical services and routine physical examinations. These kinds of developments blur the difference between fee-for-service entities and health maintenance organizations. As alternatives grow and prosper in other metropolitan areas, these combinations will undoubtedly occur widely.
Traditional medical ethics and traditional notions about medical practices do not fit easily within the managed care framework, especially the prepaid group practice concept. Physicians who work in a prepaid group practice HMO are generally employees of the HMO. They are expected to follow certain care protocols and to adjust their clinical practice to accommodate the efficiency and cost-consciousness of the HMO.29 No longer in a situation in which she is unconstrained by concerns about resources and can thus presumably "do everything for the patient," the physician practicing in an HMO is quite aware of the economic costs of diagnostic and treatment modalities. Indeed, there may be a number of financial incentives for primary care physicians within HMOs. For example, a physician may get extra pay if she is more productive, that is, if she sees more patients per hour; or
she may face financial penalties if she orders too many outpatient tests; or she and her colleagues may receive a bonus if extra money remains in a referral fund at the end of the year. All of these incentives aim to decrease referral by primary care physicians to subspecialists and to decrease testing of patients. The bottom line is that such incentives tend to save HMOs money and this money remunerates to the individual physician.30
This departure from traditional fee-for-service arrangements plays havoc with the beneficence model of medical practice. No longer is physician decision making insulated from concerns about resources. The relationship between physician practice and remuneration is quite clear, Physicians are paid more if they "do not do everything" for the patient. One might well ask whether or not "the patient comes first." Many have suggested that this conflict of interest is too great and physicians ought not be subjected to such financial temptations.31 Of course, these observers seem to overlook the fact that physicians also profited greatly from traditional medical relationships. Indeed, those who advocate a competitive marketplace believe that the absence of any economic incentives allows physicians to provide unnecessary care and elaborate unnecessary charges, thus maximizing their own income.
The truth no doubt lies somewhere in between these two poles. It is doubtful that the majority of physicians have taken gross advantage of their power in the traditional structure of medical practice. Most were generally motivated by concerns for their patients and thought they were providing correct and cost-effective care. The overwhelming increase in health care costs reveals fundamental problems, but it still seems inappropriate to refer to not-for-profit hospitals as an exploitation of patients by physicians. Yet, it is unreasonable to argue that traditional medical arrangements were the best possible. Traditional medical practice emphasized complete physician authority and therefore dismissed concerns about effectiveness and quality of health care. As we have discussed, physicians as members of the liberal state must realize that it is important to respect patients' ability to make decisions. Therefore, efforts to curb the prerogatives of physicians through marketplace concepts must be applauded from the viewpoint of medical ethics as just doctoring. Nevertheless, we must recognize that society does not want an unfettered marketplace in health care. This much is clear from recent developments in the government's role in health care regulation.
The Regulated Health Care Market in the Liberal State
The most committed marketplace advocates, as we noted, believe that the market can completely replace regulation within health care. They would, for instance, allow managed care options to evolve appropriately, with minimal governmental input. This makes sense only so long as we consider the consumer to be the large third-party payers who are trying to decide which option seems to be most cost effective. But there is also the individual patient to consider. The patient in a managed care option is, to a certain extent, at the mercy of the organization. It is the patient who will suffer if the physician, affected by economic concerns, decides not to order certain important tests or not to refer a complicated problem to a subspecialist. More bluntly, it is the individual patient who will suffer the consequences when efforts to cut costs lead to a lower standard of care.
The American government, reflecting liberal values, will not accept such trade-offs. The Reagan administration was once a strong advocate of managed care for Medicare beneficiaries, so as to reduce the cost of providing care to these patients. However, over the last few years, problems arising in government-contracted HMOs have led many to question whether or not it is a good idea to enroll elderly individuals in these HMOs.32
More important, Congress has become aware of the potential inattention paid by HMOs to quality of care, owing to their concerns about cutting costs. In particular, Congress has prohibited the splitting of fees based on physician referrals. While states have traditionally prohibited fee splitting in the practice of medicine, they have typically focused on fee splitting following the referral of a patient from one physician to another.33 The managed care industry has, inadvertently, revived the prohibition on fee splitting of a different sort.
There are two sorts of fee splitting. One creates incentives for a physician to treat a patient (referral fees); the other creates incentives not to treat (antireferral fees).34 The latter is more likely to be found in managed care situations as an incentive to decrease referrals. The Medicare fraud and abuse statutes specifically prohibit referral fees. Those found guilty of this felony face up to five years of imprisonment and $25,000 in fines.35 A more recent federal statute prohibits anti-
referral fees and allows the Department of Health and Human Services to impose fines of up to $2,000 upon those who reduce services in return for financial reward.36 Thus antireferral fees directly address the problems associated with economic incentives that seek to limit the care of enrollees in managed care programs.
This new prohibition on antireferral fees, as well as the concern about enrollment of Medicare beneficiaries in HMOs, suggests that while the administration and members of Congress may well support managed care options and general competition within the health care market, they will not forego all regulations. Most important, the government will continue to be concerned about the potential vulnerability of patients within competitive marketplaces. This means that regulations of physician practice will continue even as, or if, we move to broader use of marketplace principles in medical care.
Of course, it should not only be up to the government to provide protection for individual patients. Although just doctoring is not hostile to market values in medical care per se, medical ethics is also defined by its concern for others. "The patient comes first" attitude is the acceptance of the standards of liberalism. Indeed, just doctoring recognizes that communitarian and cooperative values must be part of the health sphere. These values are not always a part of the market, and in this regard, one would expect that just doctoring would elaborate restrictions on marketplace notions.
This certainly should be the case for incentives to make or avoid referrals. As we have seen, managed care options depend heavily on antireferral incentives in order to provide more efficient care. This is appropriate insofar as we recognize that there are a number of ways to approach any clinical problem, and that there should be incentives to choose the most cost-efficient way. However, physicians have an ethical duty to react strongly against managers who suggest substandard methods for assessing medical problems because of their cost. One of the major tenets of just doctoring, in fact, one of the major tenets of any notion of professional ethics, is that one must provide the best care possible. Physicians cannot tolerate economic incentives based on notions of efficiency that compromise care for individual patients. In this regard, Relman and others who support traditional medical ethics are correct in saying that the patient must come first. Just doctoring requires that financial incentives that could lead to substandard care should be, to the extent it is possible, curtailed. Just doctoring can operate within the marketplace, but only a marketplace that is regu-
lated by concerns for individual patients and by skepticism of financial incentives for physicians. Physicians have an ethical duty to oppose antireferral incentives that compromise care.
Antireferral incentives are not the only target of just doctoring, nor of existing government regulation of the health care market. Indeed, the role of just doctoring in the competitive medical marketplace, and its integration with and support of government regulation of the market, becomes clearer as we look at other potential abuses of patients in the marketplace. As we mentioned, Medicare fraud and abuse statutes prohibit referral fees.37 Fraud and abuse litigation have increased greatly with the introduction of marketplace notions into medical care.
The reasons for this increase are fairly straightforward. It is now more generally acceptable for physicians to invest in for-profit institutions, such as free-standing laboratory facilities.38 The potential for profit probably increases physicians' incentives to invest in such laboratories; even more so, it increases their incentives to refer patients to such testing facilities. The inspector general of the Department of Health and Human Services has found that referral of patients increases greatly when physicians own the laboratories to which the patient is referred.39 These self-referrals are at least partially constrained by Medicare fraud and abuse statutes.40 Some politicians and physicians have called for complete prohibitions on such self-referrals.
Medical ethics as just doctoring would support close regulation. While accepting that the marketplace may bring about more cost-efficient care, just doctoring will not stand for physician profit making at the expense of the patient. Even if we acknowledge that it is beneficial for physicians to determine whether laboratories provide good quality care, it does not follow that it is necessary for physicians to take an absolute investment interest in such firms. Moreover, it seems there is little to be gained from physicians' capital investment in such facilities; presumably an efficient laboratory would be able to attract capital elsewhere. Even in situations where we might accept that a physician-owned laboratory is appropriate, for instance, when the alternatives are substandard, close scrutiny and oversight are critical.
The presumption must be that there is little to be gained from such arrangements, and much to lose. Referral to labs owned by the referring physician, or to labs from which the physician receives a kickback, creates the impression that the physician is seeking to profit from the diagnostic endeavor beyond the usual fee. There is, moreover, a possibility that these arrangements will induce unneeded care. They un-
dermine the altruistic doctor-patient relationship and belittle the health care industry's status as a sphere of cooperative activity within the liberal state. Medical ethics is, to at least some extent, a matter of symbols. The abuses of physician-owned labs create great negative symbolism. They mock, rather than support, altruism.
Just doctoring requires physicians and the organized medical profession to review marketplace concepts, like self-referrals, and rigorously question whether they might exploit the patient. Medical ethics as just doctoring realizes that there are important symbolic values within the health care sphere; physician altruism must be emphasized. Insofar as the patient comes first, just doctoring must prohibit physician profit taking in the health care market, at least profits from referral to facilities in which the physician retains an interest.
Consider yet another issue arising from the institution of marketplace concepts in medical care. Since health care insurers are now at risk when hospital stays grow longer, many insurance companies, under the pressure of the competitive marketplace, have undertaken utilization review. Utilization review involves insurance company oversight of indications for admission to hospital, as well as oversight of the care provided during the hospital stay.41
These programs definitely reduce health care costs, probably by decreasing inappropriate care. However, the physician cannot hide behind the utilization review program when he has provided poor quality care. Just doctoring demands that if the physician believes that a patient's condition requires more hospital days than a utilization review committee might allow, the physician is ethically required to maintain the patient's hospitalization. Physicians cannot be paralyzed by cost-containment programs if they think that patient care might be compromised.42 The concern for others central to medical ethics as just doctoring and its inherent commitment to good quality care must provide a firm foundation for physician judgment of cost containment and the medical marketplace.
Another example of the regulatory role of just doctoring in the medical marketplace concerns the care of emergency room patients. Under the common law, any hospital which has an emergency room must be willing to provide care for those patients who arrive with an acute medical problem.43 Impoverished patients who come to emergency rooms may lack any form of health care insurance. These individuals will present problems for hospitals' financial budgets. With the move toward a competitive marketplace, there are fewer subsidies
available to help fund the care of poor patients. Hospitals thus have new incentives for getting rid of patients who lack health insurance. Hospitals may, for example, treat the patient only enough so that he may be transferred to another hospital. The phenomenon of patient dumping is in part, a by-product of the competitive health care market.
The federal government has sought to prohibit such dumping.44 The antidumping statute provides treble damages to a patient who is injured because of unfair transferrals, and hospitals that dump patients can lose all their Medicare funding. Although it is laudable that Congress has taken these steps, it is equally important that medical ethics assume a posture of strong opposition to dumping. The commitment to the patient that is part of just doctoring cannot justify activities that endanger patients, especially when the only reason for transporting the patient is that his care might be uncompensated by third-party payers.
In summary, while just doctoring accepts the marketplace in medical care, that marketplace must be modified to prevent serious disregard for a patient's well-being. The emphasis on quality that is part of medical ethics tolerates a very low threshold for profit taking. Any profit taking in medical care must be neutral with regard to patient care and should not accrue directly to the physician. Thus just doctoring generally supports only a regulated market in health care.
Of course, the appeal of the market in medical care, from the viewpoint of just doctoring, is that it restricts physicians' monopolistic control of medical practice. However, with the market must come some inequalities. Given the degree of the ethical opposition to gross limitations on access to care, a full blown market in medical care may not be appropriate. Perhaps even greater regulation than discussed above may be necessary.
Just Doctoring, Rights, and Access to Health Care
As outlined above, and in more detail in chapter 8, the institution of market-competitive concepts in medical care has had detrimental effects on access. In a competitive marketplace, health care providers, especially hospitals, must compete for patients. Moreover, third-party payers, especially insurers and the federal government, have
restricted considerably the reimbursement structure for physicians and hospitals. While this may not have cut health care costs a great deal, it has created a sense within health care administration that less and less funding will be available for financing health care. This has led to an unwillingness to subsidize care for the poor. With less available in the reimbursement provided by insurers, there are smaller surpluses with which to subsidize the care of the indigent. Accordingly, since Medicaid provides only partial coverage for indigent health care, Congress has become more and more concerned about availability of health care for poor people.45
The just doctor understands that the implementation of marketplace concepts in medical care is in many ways an effort to place the patient on an equal footing, as a consumer, with the physician, who becomes a supplier. She welcomes this aspect of the marketplace. Nonetheless, she finds the inequalities produced by the market especially inappropriate in medical care as a sphere of cooperative activity within the liberal state. Gross inequalities display a lack of equal concern and respect, affronting both the values of liberalism and the ethics of just doctoring. Lack of access is a challenge for just doctoring, for every physician must help to decide the best ways to modify the market in health care without decreasing the negative freedom of patients. The just doctor must therefore support patient rights while maintaining a concern for access to care. The just doctor recognizes the manner in which a market in medicine can decrease physician prerogatives and increase the patient's ability to choose, vet she must still be concerned about access.
Some would argue that there is no real conflict between patient rights on one hand and concerns about access on the other. They would argue that patients have a right to health care, and that this should define equal access for all. In other words, they argue that concern for patient rights demands the elimination of the market where it creates inequality. Thus a commitment to the right to health care would lead one to replace the market with a national health service.
The notion of a right to health care has a relatively long history in this country. Of course, it is not a matter that concerns only physicians per se, but rather all members of the liberal state. In essence, those who call for a right to health care believe that this particular right is an inherent feature of any political structure. The argument is that any citizen in a civilized state should have a right to health care, some
would even say a right to health. But is the modern liberal state such a civilized state? To answer this question, it is necessary to retrace issues we addressed in chapters 1 and 2 in regard to the foundations of modern liberalism.
Ill health presents a peculiar set of conceptual problems for liberalism. In the liberal state, choice is highly valued; it is one's freedom to choose that defines individuality. One actualizes oneself by budgeting one's own resources and selecting projects to be pursued. Health care is usually not conceived of as such a project. A decision to seek care is usually not a matter of free choice. Norman Daniels states, "For at least some health service needs, people cannot just choose to modify them when budgeting their fair share of social good."46 A critical illness or debilitating injury strikes suddenly in many cases. One has no choice whether to seek help or not; health care must be sought.
Thus the liberal ideal of the rational man calculating a list of social goods cannot apply. The victim of an appendicitis attack or a car accident rarely sits back and decides whether health care is more important than that new convertible or big evening out on the town. Gene Outka correctly states that "health crises are often of overriding importance when they occur. They appear therefore not satisfactorily accommodated to the context of a free market place where consumers may freely choose among alternative goods and services."47
Another consideration follows closely on this. The pure procedural justice of the market, and its utility in bringing about equal concern and respect, rests on a partly hidden premise, which is that all people have essentially the same needs and that the choices one makes are not a societal concern. Personal choice, guided by personal responsibility for one's well-being, prevails. If you enjoy caviar and champagne, you have no one to blame if you cannot purchase heating oil later. Since each person has similar needs, each decides how to fulfill the basic ones and cultivate others that are not so basic.
This description of needs and personal responsibility does not, however, obtain in health care. The need for health care is grossly unequal among people, and it often has little to do with how responsible one has been regarding one's own health. The pure procedural justice of the market place fails, to some extent, to operate in the area of health care. Thus Daniels assesses the situation accurately when he writes that "perhaps because health care needs behave in this especially unruly way, [many liberals] deliberately [leave] consideration of them out of [their] theory."48
In a modern liberal state, one could argue that health care would be on the list of primary social goods, those things to which a citizen can say she has a right. That list, as Rawls sets it forth, is made up of the following: (1) a set of basic liberties; (2) freedom of movement between various opportunities; (3) income and wealth; (4) social bases of self-respect; and (5) powers and prerogatives of office. These goods appear to be the prerequisites of personal choice. They protect and circumscribe the negative freedom of individuals.
Continuing this argument, nothing so limits freedom of choice as does the handicap of illness. Thus P. Greene states that "access to health care is not only a social primary good, in Rawls's sense of the term, but possibly one of the most important such goods.... Even more apparently than governmental interference, disease and ill health interfere with our happiness and undermine our self-confidence and self-respect.... There seems to be little question that in the priorities of rational agents health care stands near to the basic liberties themselves."49 The prevalence of health problems in a society and their great propensity to interfere with the chosen projects of the individual are strong arguments for the inclusion of health care as a primary good to be guaranteed by the society in the promotion of justice.
There are, however, serious objections to this stance. At least two major arguments have been made against health as a primary good. The first concerns the claim that health care is not a general enough good to be a primary good. As Daniels says, in defense of Rawls's wish to keep desires theoretical in the "original position," guaranteeing health care would be tantamount to opening Pandora's box:
Greene's construction proliferates too many other quality provisos. Surely, contractors might reason, adequate food is a primary social good of fundamental importance; so are clothing and shelter. Contractors would not risk having inadequate supplies of any of these goods. Therefore, they would choose principles that guarantee equal access at least to some basic level of each good. What is happening here is that the theory of primary goods is being turned into an elaborate list of fairly specific needs. But Rawls never intended the index to function as a "need satisfaction" indicator, and converting it into one does violence to Rawls' whole view of these goods. The primary goods are intended to be general, all purpose goods, which it is rational for the moral agent to want even if he does not know his specific ends or needs.50
This leads into the next argument against the inclusion of health care as a primary good: its cost would be tremendous. To accept a certain minimum of health within a society would call for a certain amount of
money. But the funds required to guarantee a level of health such that it would be possible to say that no one in the society is prevented, because of health problems, from pursuing his or her own happiness would have to be unlimited. Even Greene must admit that "the provision of the 'best possible' health care is an unreachable goal whose pursuit can absorb all the resources of even the richest society. A right to health care as a positive right, then, cannot be affirmed like negative rights or liberties. It must eventually be defined in terms of its permissible claim on other resources, particularly those handled by the economic system. Very bluntly, the question is how much should a society spend on health?"51 As Kenneth Arrow has argued,52 the needs of some people for health could reduce the rest to poverty if all health needs were to be fulfilled.
Clearly, however, this overstates the case. Arrow is correct only insofar as a right to health care means doing everything possible to restore everyone to good health. But this is not the realistic goal of any health care system. Many liberal states, Britain and Canada to name two, provide universal health care to all citizens, yet spend less of their Gross National Product (GNP) on health than does the United States. Thus, at least to the extent that a right to health care means equal access to some level of health care, it can be part of the modern liberal state. As Outka concludes, "In light of all the foregoing then—and especially the contrasts drawn between need and desert—a case can indeed be made for the goal of equal access."53
As such, the right to health care merely requires modification of the market and general taxation to support indigent care. These kinds of measures are accepted by the modem liberal as important for the goal of equal concern and respect. If health care is to be a cooperative sphere of activity, there is all the more reason to bring about equal access to a basic level of care. But the liberal does not, in so doing, create equality of access to health care. Those who can buy more than what is guaranteed will do so:
Those who claim a right to health care often gloss over another important distinction. They may intend only a system relative claim to health care: Whatever health care services are available to any within the given health care system should be equally accessible to all. Such a claim may be met by removing services accessible to only a privileged few from the system. This equality of access demand is not a demand for an independently determined level of health care, only for equality relative to whatever level of services the relevant system provides. Contrast this right claim with one that requires some specifiable
range of health care services to be made available to all.... Such a substantive demand might require specific expansion or contraction of the existing health care system, not just in terms of who is treated, but in terms of what services are offered. The two rights claims may have vastly different implications for reform.54
In a liberal state, one cannot expect that we will deny the individual who has scrimped and saved for the bone marrow transplantation she desires simply because public expenditures do not fund such transplantation. While there is much that is admirable in a state that attempts to create radical equality, it is not a liberal state. This underscores the requirement that the approach of just doctoring to health care rights must be in step with the public morality of liberalism.55
Nonetheless, it appears that there is some basis for an individual right to health care in the modern liberal state. Yet, as James Blumstein suggests,56 rights language itself does not take us very far in defining appropriate access to health care. The claim of a right to health care simply does not elicit a definitive response by the liberal state. Indeed, this was the conclusion of the President's Commission for the Study of Ethical Problems in Medicine and Biomedical and Behavioral Research.57 (One could argue that rights are the best way to protect an indigent person who is urgently ill, and cannot gain access to emergency medical care.58 )
This is not to say that the liberal state, and especially those committed to just doctoring, can afford to overlook inequity of access to health care. The liberal state is still committed to equal concern and respect for all individuals. This equal concern and respect should lead to substantive efforts by government to overcome inequality, even to the extent of modifying or eliminating the market in certain areas of the economy. Certainly, the modern liberal cannot tolerate a state in which access to medical care is strictly propositioned on the ability to pay.
Thus the law as integrity puts the onus on the liberal legislature to address concerns about equal respect for all individuals. This requires the government in the liberal state to examine those inequalities that exist in access to medical care and decide which inequalities must be eliminated so that the promise of the liberal state can be fulfilled. More importantly, medical ethics as just doctoring requires physicians to help the state determine the best arrangements for making medical access universal.
An Ethical Set of Health Care Institutions
Since health care is a sphere of cooperative activity that is especially important in demonstrating the liberal state's commitment to equal concern and respect for all its members, access to health care is of great importance. It follows that physicians should consider it part of their ethical duty to help work out the appropriate mix of market and nonmarket concepts in designing a framework for health care that provides equitable access. Physicians must consider, however, not only the concerns of patients and their access to health care, but also the availability of resources in society and the limits on care that must be tolerated. In this country, for instance, we have just witnessed the gutting of a catastrophic health program that was to provide long-term care for elderly patients as well as protection from the crushing financial consequences of their illness. The rationale for the cutbacks is concern for cost and the sense that government can no longer avoid fiscal responsibility. Therefore, it is unlikely that there will be huge new resources available for health care.
Those physicians who accept medical ethics as just doctoring must participate in an effort to define what constitutes adequate access to health care in light of limited resources. Physicians must help society decide what sorts of medical problems should be addressed for all patients. For instance, what kind of elective operations should be made available to all individuals? Certainly, resections of breast cancers are procedures which should be available to all. However, the same is probably not true of cosmetic reduction mammoplasty. Between these poles are a great number of other procedures and diagnostic modalities. The state should fund some of these in order to grant all citizens in the liberal state access to a level of adequate health.
The critical role for physicians is to define this spectrum and decide where the threshold for public financing lies. Thus physicians have a very important role to play in the problem of access to health care. Their clinical knowledge and sense of concern for the patient must be integrated into the development of lists of procedures to which the liberal state guarantees access.
Of course, American physicians and state governments have been determining adequate levels of care for some time. Consider, for in-
stance, the case of Weaver v. Reagen.59 Weaver and his coplaintiffs suffered from diseases caused by the human immunodeficiency virus. They sued the Missouri Medicaid program because the Missouri government had decided not to list the drug (AZT) under the program. In essence, this meant that the state had refused to consider AZT as a medication to which individuals should have equal access; the state was unwilling to pay for AZT for Medicaid recipients.
The plaintiffs argued that the Medicaid law requires that drugs such as AZT, which have been proven effective for a disease, should be on the Medicaid drug list. The state countered that perhaps AZT was nor indicated for individuals who, while infected with HIV, did not meet the criteria of AIDS. In response, the plaintiffs had numerous expert physicians testify that indeed AZT was indicated for all individuals infected with HIV whether or not they had AIDS. These physicians, then, were testifying that a particular medication was indicated for a particular condition and in addition, that the medication should be available to all patients under the Medicaid law. The court found in favor of the plaintiffs, granting summary judgment and allowing all who qualify for Medicaid access to this medication. Thus, in an ad hoc fashion in the courts, physicians have helped determine what constitutes adequate levels of care. What is needed, however, is a more systematic approach by the medical profession.
But, to a certain extent, efforts such as those pursued in Weaver are simple tinkering. Just doctoring's commitment to adequate access requires that physicians address the financing and delivery of health care. In addition to helping to determine the definition of adequate levels of health care, physicians should participate in the development of the institutions that will guarantee that access. Physicians cannot sit on the sidelines and allow economists and politicians alone to determine these issues. The central and most special part of being a physician is to care for those who are sick. This sense of care involves commitment that goes beyond relationships typically expected within a liberal state. It gives physicians a special ethical, and thus a special political, perspective. As a result, physicians must act as advocates for the patient in designing institutions that guarantee access to an adequate level of health care.
Just doctoring must value universal and adequate access to health care. However, as we saw in previous chapters, it opposes dominating physician control over the financing and delivery of health care. The commitment to access argues for a positive right to health care. The
opposition to physician dominance lends to a regulated, but competitive, medical marketplace. Can these, on first glance, conflicting options be accommodated by health care in a liberal state? I think the answer is yes, as a review of some other liberal states' experience can suggest.
In Great Britain, a national health service was created after the Second World War. The National Health Service removed a great deal of the inequalities to access and probably also tended to hold down health care costs. This is one model for the liberal state. The modern liberal can accept government control over certain functions of the economy, if it is necessary to bring about equal concern and respect. Of course, getting rid of the market does entail certain costs, and in Great Britain these costs are now being reexamined. The Conservative government wishes, for efficiency's sake, to reintroduce some market concepts in medical care and is committed to modifying the National Health Service.60 It is instructive for our argument that many British physicians are opposed to these changes in the National Health Service, as they feel they may lead to greater inequalities in the provision of health care.61
The Canadian model may be more pertinent to the United States, as more and more physicians are realizing.62 Since the 1950s, Canadians have moved to universal access by turning over the financing of health care to the government. Universal access has been in place since 1976.63 In essence, the provincial governments, supported in part by federal government grants, engage in global budgeting with private, not-for-profit hospitals, on a prospective basis. There is no reimbursement to individual patients. Private physician-owned laboratories, and radiology centers do exist, but provinces control them by restricting their ability to bill the provincial plan, Specific schedules for physician fees are hammered out annually by representatives of the provincial governments and physician professional associations.
This approach has led to admirable savings, keeping the percentage of the Canadian GNP devoted to health care down to 8.6 percent. America, meanwhile, spends $604 billion a year on health care or more than 11 percent of its GNP.64 If we could pare our health spending down to Canadian levels, the savings would amount to greater than $100 billion.
How docs Canada obtain universal access at lower cost? There are several explanations. First, administrative/bureaucratic expenditures are greatly reduced by naming a single payer, the provincial govern-
ment.65 Second, given the global budgeting, including capital costs, provincial governments are able to effect control over hospital costs and technology use. Finally, the negotiation with physicians over fees keeps professional costs in check. The result is that Canadians use less intense resources for hospitalized patients, with no discernible decrease in the quality of outcomes.66
What is the physician's role in this system? They still make all treatment decisions and retain many professional prerogatives. Indeed, most are quite satisfied, even though there has been some labor/industrial strife.67 Nonetheless, the government represents a counter weight to unlimited physician control over supply and demand.
From the viewpoint of just doctoring, there is much to admire in the Canadian model. It brings about lower costs and universal access. Moreover, it helps limit the moral hazards faced by physicians. This is not to say all American physicians will support it. Indeed, as acute an observer as Alain Enthoven has argued that the main obstacle to a Canadian model in the United States is the opposition of physicians.68 Canadian physicians' incomes, especially for procedure-oriented specialists, are lower than those of their American counterparts. Of course, just doctoring, and its sense of commitment to patients, requires physicians to go beyond their narrow self-interest, and ask what the most ethical approach is to health care institutions. The Canadian model of universal access and governmental oversight fulfills many of the criteria set by just doctoring for health care institutions.
The Canadian model focuses on health care financing. The delivery still occurs through nonprofit private institutions and independent physicians. Perhaps other forms of delivery might make better sense for the American liberal state. For example, Alain Enthoven and Richard Kronick have advocated a consumer's choice health plan that includes universal health insurance. Two elements are critical to this plan.69 First, the authors retain the competition among different sorts of managed care plans, so as to bring about cost efficiency and good quality care. Second, they recommend using an 8 percent payroll tax on the wages of all workers without health care insurance to fund broader coverage under Medicare and Medicaid. Certain cost-saving devices such as copayments and cost sharing would be included in this plan, thus keeping in place many of the attributes of our present system of health care, while both encouraging competition and increasing funds available to ensure that all individuals have access to some level of health care.
Perhaps the competitive elements of the Enthovan-Kronick plan could be married to the Canadian financing model, which would bring about the competition of a marketplace with assurance of universal access, both quite attractive from a just doctoring viewpoint.70 Physicians would play a public, ethical role in this health care system, helping to determine levels of adequate access, and policing competitive forces to ensure that some patients do not suffer from market efficiency.71
I cannot sketch this health plan in detail in this book; that is for another day. My point is that physician's concern for others does not only apply to the individual doctor-patient relationship. A just doctor cannot be satisfied if only her particular patients have access to health care. Her sense of what is moral or ethical must be affronted if there are patients, even patients of other physicians, who lack access to a decent minimum of health care. Concerns for individual patients should translate into concerns for the class of all patients. Therefore, physicians should not assume the general posture of other citizens in the liberal state when analyzing the policy options in regard to health care. They must respond with the same commitment they display in their relations with their own patients. In this manner, the communitarian value of medical care will be appropriately affirmed, helping to develop the most appropriate means for bringing about access to adequate health care.