As APA President Steven Sharfstein, M.D., wrote in his July 1 column,"
Where Does the Money Come From and Where Does It Go?":"
[P]rivate insurance has cut back dramatically on paying for the
treatment of our patients as the carveout behavioral health care companies
have been successful in reducing costs (emphasis mine). More and more
patients have become uninsured and/or qualified for care under public
programs, especially Medicaid."
Health care coverage is not analogous to manufacturing. In manufacturing,
there are only two ways to lower what are considered "costs":
increase production per unit time, while holding quality and expenses
relatively constant (productivity, throughput) or controlling prices favorably
by driving competitors out of (narrowing) the field, as with antitrust
What Dr. Sharfstein does not explain is that being in a purely cash-flow
business, these companies have not reduced "costs" at all but
successfully increased premium profits. Insurance manufactures nothing and,
with the managed-care additive, stabilizes or increases premiums. His
admission that "people with mental illness are at more risk than
ever" concedes that there's no free lunch in medical economics.
Since my good friend Dr. Sharfstein only indirectly answers the questions
he raises, I will make an attempt. My answer to his first question,"
Where Does the Money Come From," is that it still comes from
private insurance premiums, Social Security's FICA taxes for Medicare, and
general revenue (federal and state) income taxes earmarked for Medicaid. My
answer to his second question, "Where Does It Go?" lies in the
reduction of the amount of care each "managed" patient now gets,
passing those savings (not costs) from health care services to stockholders,
improving nothing, while churning increasingly subacute patients through the