In the past 20 years, the economics of our health care delivery system has evolved from overutilization to underutilization. In the 1970s, providers (physicians and hospitals) were rewarded for providing too much medical care. Because of unrestricted first dollar coverage of that era’s health insurance plans both patient and provider were encouraged to overutilize procedures, tests, and pharmaceuticals.

Today’s health care delivery system is not an honest marketplace, but has evolved into rationing of health care services by third-party payers. And it encourages physicians to be dishonest. Survival depends upon manipulating the system to receive reasonable fees and provide the patient with the health care that he needs.

Managed care is nothing more than rationing of health care services by third-party payers, and capitation is the same rationing by physicians whose financial incentives will destroy his integrity. Under capitation, the only physician who can make a living is the one who denies the patient needed health care. There is no such thing as an honest managed care system. To make money, the third-party entity (HMO insurance companies) denies the patient any health care service that improves the quality of life and only pays for medical care that affects mortality. In other words, a hysterectomy is paid for the woman who has cancer of the uterus, but this procedure is denied to the woman who has chronic fibroids, bleeding, pain, incontinence, etc. Since the latter won’t die from her disease, her operation is denied.

Under managed care, the patient pays nothing out of his pocket and because he has been shut out of the economic equation, he has lost his power to determine what health care he gets. If his physician continually fights to have indicated medical care provided, then the third-party entity will exclude him from the program and, therefore, it is impossible for the doctor to be the patient’s advocate.

Medical savings accounts (MSAs) is the obvious answer to this dilemma and would give power back to the patient to determine what kind of health care he wants and how the health care dollar will be spent. All the major players in the health care debate are now familiar with the idea of MSAs. We must emphasize, however, the fact that without tax law changes, they simply won’t work.

For over 30 years, we have had as part of our tax code one of the most nonsensical, unfair, discriminatory laws that penalize the individual and reward the rich and powerful. How can anyone defend the law that allows giant corporations to completely write-off expenditures for health care benefits, while individuals and small business are denied the same privilege? This is supposed to be the land of opportunity. How can we possibly tolerate any more a law that rewards the powerful and penalizes the weak?

If benefit costs including the initial contribution to form medical savings accounts were treated equality in the tax code, then MSAs would immediately be the desired health benefit for working Americans. This law must be changed to allow honest reform of the health care delivery system.

The second law which is also unjust, unfair, and makes no sense, is the McCarran-Ferguson Law. This law allows insurance companies to be the only industry in the United States that is exempt from anti-trust laws. Insurance companies have monopolistic power and in collusion can set doctor’s fees, insurance premium fees, hospital fees, etc. If any type of physician organization or even an informal group of physicians discuss fees, the heavy hand of the Federal Trade Commission (FTC) is immediately on their shoulders. There is absolutely no honest, valid reason that the insurance industry should continue to be exempt from anti-trust laws. McCarran-Ferguson needs to be repealed.

The third law that must be changed is the Employment Retirement Income Security Act (ERISA). Under this law, which was formed to protect employee pension funds by creating employer-administered standards, liability suits are prohibited against all health plans sponsored by private employers. In other words, if an HMO or managed care plan refuses to pay indicated medical care and the patient suffers permanent injury or death, the plan is exempt from any liability and the victim or victims are denied the right to sue the plan for malpractice.

Because of the above laws, we are slowly seeing the quality of our health care deteriorate. Because of these laws, the managed care company can slash doctor fees, deny medical care to the patient, and put the profits in their pockets. They tell the employer that they have stopped the increase in their premiums, but the employer doesn’t know the big profits are kept by the managed care company. CEOs of these companies now make millions and the profits are so large they don’t know where to invest them.

I think it is time we focused on these laws because unless they are changed, valid economic ideas such as MSAs won’t have a chance and the honesty and integrity of the patient-doctor relationship will continue to deteriorate.

Dr. Boyles is an ENT surgeon in Dayton, Ohio, and a member of the Board of Directors of AAPS. His address is 7076 Corporate Way, Dayton, OH 45459.

Originally published in the Medical Sentinel 1996;1(1):27. Copyright©1996 Association of American Physicians and Surgeons (AAPS)