Monitoring Managed Care: Revisited

When I was asked to write this piece as part of Psychiatric Times 40th anniversary celebration, I immediately anticipated nostalgia from decades past when I had written a regular column describing the problems, challenges, and dangers of managed care for mental health care in the United States. Only a few days later, however, Luigi Mangione allegedly stepped from between parked cars by the Hilton Hotel in Manhattan and shot the CEO of the country’s largest managed health care company, which had a telescopic effect.

The heartrending frustration that we were experiencing 35 years ago with the perverse financial incentives of the new managed health care industry became eerily present in a horrible new context: A leader of managed health care in America was assassinated in broad daylight on the streets of New York.

Even more shocking for many was that millions of Americans seemingly expressed a collective cathartic relief that an architect of managed care had been “taken down.” Predictably, the outrageous insurance behavior we in mental health witnessed decades ago is now baked into most aspects of the health care system in America. For many of its victims, the only way they or their families felt able to express their rage was to support a cold-blooded killing of another human being. Social media provided the outlet.

Industry Response

The rage, to me, was more understandable when just a few days after the shooting, a senior spokesperson for the victim’s employer issued a company statement. Even in these tragic circumstances, it was vintage managed care duplicity. It began artfully designed to appear an acknowledgment of the obvious—that some responsibility for the outrage was on the managed care industry itself. The managed care executive said there were some problems within the industry that the industry has to fix. OK, sounds good.

But, the statement continued, the problem was not really with the managed care industry itself. The spokesperson explained the problem was that his company, and the managed care industry in general, had simply failed to educate the public on the nature of case management within the industry. He was humbly “taking responsibility” for our ignorance. If he and his colleagues had just done a better job of explaining things to uninformed us, we would not have misperceptions.

Motives and Money

Managed care was born in such devious deception, and it owes its continued existence to the perpetuation of such. Stripped to its naked essentials, the operative feature of America’s shift to managed health care in the last quarter of the 20th century was to manage funding of care. Before that, a doctor and their patient went into a room and decided how much of a third party’s money they wanted to spend on the patient’s health care. The answer was often “a lot,” and, at least arguably, “too much.” (Expenditures for private psychiatric inpatient care were particularly noteworthy in this regard. When combined with traditional discriminatory attitudes about mental health care, it made mental health coverage one of the earliest targets of the managed care industry.)

To correct the perceived excesses of this third-party reimbursement system, we Americans brought in a fourth party to oversee the doctor-patient expenditures: the managed health care industry, which soon became almost one and the same with the American health insurance industry. This new fourth party promised it would ensure that decisions were made rationally and that patients would receive care deemed medically necessary and would prevent “excessive” and sometimes even dangerous care.

Of course, there was a fly in the ointment that one would have thought would have been immediately apparent to policymakers and corporate executives. If the incentives of the old system favored overuse, the incentives of the new system favored underuse. As individuals’ treatments became more expensive, they became a bigger burden to the profit margins of the newly reformed health insurance industry. This new fourth party, the insurance company, could decide how much money they wanted to spend on doctor and patient and how much they wanted to realize as corporate profits. The real payer was the employer providing insurance for their employees/patients and their families. If a fourth party could take over the authorization process and spend less on health care, there would be a lot of money to be made and divided between the corporation and the insurance company. Patients were for the most part helpless. (The parent company of the assassinated executive is the fifth largest corporation in America.)

Government’s Role

Why did the federal government repeatedly support the development of managed health care in government programs? It was not because they were ignorant of the dangers. In the late 1980s, I attended a meeting of the Congressional House Ways and Means Health Subcommittee, in which the Republican staff director, Chip Kahn, was asked how he and his committee intended to address the inevitable quality-of-care issues that would ensue from managed health care. He replied, “We are going to wait until people scream.” The Mangione case seems to document that people are now screaming—and perhaps delighted that someone went as far as murder to express their outrage.

There have been other political attempts to provide more protection for the public from managed health care, most notably in the Clinton Health Plan initiative. Here, too, deception reigned. After its intense lobbying of the Clinton administration, the insurance industry decided the plan was not to its liking and set out to kill the bill. In a stunning overnight move, the Health Insurance Association of America hired Representative Willis “Bill” Gradison, the ranking Republican chairman of the most important committee in Congress for health care reform purposes. They also hired his staff director, the aforementioned Chip Kahn, as a lobbyist to help him. Those of us in the DC health community who were lobbying woke up to find the person we had been lobbying to shape the new health delivery system working for the other side.

That was not all. The insurance industry then rolled out its national TV campaign to sound the death knell for health care reform. Duplicity again was at the core of it. The Clinton plan wanted to give individual and group consumers leverage to bargain with the giant insurance companies that were designing benefit plans with very little accountability from their ultimate consumers, patients. The plan allowed the consumers to form large purchasing groups to represent them with leverage because of their size. These were to be called health alliances. Of course, the health insurance industry did not like this.

To address the problem, the health insurers started a national ad campaign featuring “Harry and Louise,” who explained to the public that these consumer coops were really a huge governmental bureaucracy that were at the heart of a plan that had been kept from the general public by the Clinton administration. (Eventually Hillary Clinton was sued for allegedly not being public enough about the plan, even though it was the most publicly open legislative initiative in my lifetime.) The unsuspecting public was appalled at the idea of “another federal bureaucracy,” and the Clinton plan went down to defeat. Managed health care became the dominant force in health insurance. Health care was too important to be left to government bureaucrats.

And here we are.

History of Heartbreaks

But in between now and then, there has been a lot of heartbreak. I am an attorney as well as a psychologist. During the 1990s when I was writing the managed care column for Psychiatric Times was the only time in my career when I actually practiced law suing managed health care companies on behalf of patients with mental health issues (eg, individuals with suicidal ideation who were denied care) and their families.

There was very little care provided under the managed care system. Patients realized that they were going to sit in the hospital until they “contracted for safety” not to kill themselves. Invariably they were discharged a few days later and died by suicide shortly thereafter, leaving a family to experience the horrible effects. Some of the more tragic cases involved adolescents and young mothers.

Most readers of the column know full well how suicide impacts a family. Often there is no recovery. Divorce, depression, substance abuse, and delinquency follow the survivors. It is deadly pain in all directions.

There was another kicker with which the family had to contend. In reviewing the cases in the postmortem, what was most chilling was the devious and outrageous criteria and techniques the managed care companies used to deny care. Each case was different, but the duplicity was consistent. In one case I wrote about, a 14-year-old boy from the East Coast was actively suicidal 4 hours before his discharge from a treatment facility. A few days later, he climbed onto his parents’ roof and shot himself in the head. He was an only child and the pride and joy of his parents’ lives.

His story and lawsuit represent one from more than 2 dozen I filed during that era. I believe they brought some solace to the family and some relief from financial pressure at a time when the survivors were in such pain. However, lawsuits did not undo what had happened, and they certainly did not lead to systemic reform of our health care system that has built-in conflict of interest between the insurance company and the people it serves.

Nor have Americans outgrown their adolescent resentment of government, which is the only entity that can be an alternative to the doctor/patient overuse or the draconian current system in which the insurance companies make their profits from denying care. Arguments against the single-payer system pale in comparison to the system we have now.

This brings us full square back to Luigi Mangione and the managed care executive he allegedly shot dead on the street in New York. Sometimes we must say the obvious. Violence and assassinations are never justified. But they do have reasons, and it behooves us to be aware of them. We do not know fully who Mangione was and why he did what he did. Nor do we know for sure what role his victim played in the managed health care mess that now is our national health care system. The most salient clinical piece of information I have is that Mangione was and had been in severe pain for a long time. That can certainly cause people to do things they would not otherwise do, rightly or wrongly. All I can say at this point is that regardless of what was going on with Mangione, our ongoing refusal to confront the obscene way in which insurance companies set our health priorities on a case-by-case basis with the incentives under which they are operating is also causing massive pain and exacting a tremendous price from our national well-being. This, I believe, is what the outpouring of sympathy for Mangione has been all about. I am grateful to John Schwartz, MD, and Psychiatric Times for giving me the forum to discuss these concerns more than 3 decades ago. Sadly, we hardly have turned the tide on managed health care. But we were right.

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Dr Welch is a clinical psychologist practicing in San Francisco, CA. From 1997 to 2001 he authored the well-received column “Managing Managed Care” for Psychiatric Times. He is the author of State of Confusion: Psychological Manipulation and the Assault on the American Mind. He can be reached at welchfirm@aol.com.