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Letters to the Editor
Here's One Answer
Psychiatric News
Volume 40 Number 16 page 22-22

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 violations.

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 system.

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