THEORETICAL REFLECTIONS
2. CHANGING VIEWS ON BUSINESS AND PROFITS
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Against this background, it is reasonable to consider whether the concept of genuine responsibility could contribute to a constructive debate about health care reform or whether it should be dismissed as a social reformist ideal too far distanced from the socioeconomic reality of everyday life in the United States. Is it possible for the notion of genuine responsibility to assist us in reaching a tipping point for health care reform and, thus, to contribute to a model of health care that is just and affordable, as well as of high quality?
Although the likelihood of a successful implementation of a health care model based on the concept of genuine responsibility seems farfetched, the necessity for establishing strategies to meet the health care needs of all members of society with fairness under reasonable resource constraints has become more evident over time.
Appropriate management of health care at all levels of the distribution process has become more than an economic necessity; just as importantly, it is also a moral imperativeif any significance can be placed on the claim that we are collectively striving to achieve the goal of a just society.
Another alternative is an already existing free-market model based on societal consensus, a long-term mentality, a participatory role by the social partners, and an active role for government (Albert 1991). That the notion of a social or community market is not necessarily counterproductive to the long-term goals of business organizations is exemplified by an analysis of the longevity of the Royal Dutch/Shell Group by Arie de Geus. In his book, The Living Company, de Geus (1997) concluded that profits are not a predictor or determinant of corporate health, although they are necessary for short-term cash flow and for focusing the company.
That the discussion on the role of business, particularly in health care, is very much alive can be illustrated by the questioning of some state legislators in Arizona about whether the profits were excessive for a state-contracted mental health services provider. In 2004, the Arizona Republic reported that state legislators had debated whether the 6.5-percent profit margin of the Virginia-based company ValueOptions should be considered out of line, particularly in light of additional well-documented operational concerns (Snyder and Steckner 2004). They argued that the contract for mental health care services should therefore be awarded to one of the other companies that had put in competing bids for the state contract. Quite commonly, such concerns about excessive profits are associated with uneasiness about the accessibility and quality of services and, at times, about the compensation of top executives, particularly at NPOs (Gose 2004).
At a minimum, the observation that the status of business organizations in society is increasingly under public scrutiny appears to be fairly accurate. In the health care debate, considerations to establish a different set of corporate responsibilities that include both individual and societal interests are becoming an integral part of these discussions. However, such discussions cannot take place without adequate and widely accepted criteria by which to assess the potential excessiveness of corporate profits. Those criteria, as might be expected, are a topic of contention. In their discussion of profits in the pharmaceutical industry, Daniels and Sabin (2002) suggested that it is intuitive
that profits are excessive if they are not necessary to produce an appropriate level of investment in drug development. (p. 107)
Their definition clarified that one function of business is to improve the goods or services produced for society, but it did little for the fiscal reality that investors have a legitimate expectation of good returns on their investments.
Within the revised context that generating returns on investments is not the exclusive goal of business, determining what is a reasonable return on investments can take place only as part of a broader cost-benefit discussion to assess the impact of the return paid out on other relevant business components that sustain the organization’s social and economic viability. For example, adjusting premiums is one of the most obvious and common corporate strategies by which MCOs commonly respond when profits are diminishing or expenses are increasing. These adjustments, however, have a direct impact on the affordability of health care and therefore on the accessibility to health care. When health care premiums increase as they have in recent decades, employers typically look for less expensive health plans
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that are often consequently more restrictive, which implicitly affects the quality and extent of health care service coverage for employees.
The most recent trend in health care insurance is for employers to even write the plan themselves. They become self-insured and contract with a third entity for administration of the plan. The coverage provided by the plan depends on the premium that the employer is willing or able to pay. Plans with more extensive coverage are being offered to employees for a higher premium that must be paid for by the plan enrollee. The less comprehensive plans are less expensive for employers, who subsequently save money on employee benefits. Self-insurance holds some additional benefits for employers. Implementing administrative strategies to reduce utilization of the plan results in a premium reduction for the employer. Lower medical loss ratios also create opportunities for plan administrators to increase profits.
Under such conditions, everyone except plan enrollees appears to benefit from strict access management strategies. On the one hand, it could be argued that employees at least continue to have access to affordable health care insurance.
However, on the other hand, that accessibility does not hold true for all employees.
Some small companies have discontinued the provision of any health care benefits for employees. They opt out for reasons of affordability, and labor laws do not require companies with fewer than 50 employees to offer health care insurance as an
Services, nationwide more than 40 million people younger than 65 years of age lacked health insurance in 2002 (National Center for Health Statistics 2004). Of those 40 million, more than 35 million were 18 to 64 years old, so many of them would presumably have been in their working years. The geographic region most populated by these uninsured persons was the South with 20.2 million persons under age 65 uninsured.
In a labor market that has purposely limited federally mandated employee benefits, as is the case in the United States, the impact of increasing health care premiums (often for less coverage) can be substantial. Within a social or community market model, consideration about the negative impact of increasing premiums would, at minimum, be part of a decision-making process characterized by rational public deliberations. Higher premiums affect not only the competitiveness of the MCO, with subsequent effects on the organization’s economic viability, but also its long-term social viability. Simply put, without plan enrollees who can afford the plan or find its benefits meaningful, an MCO has little reason to exist.
Change is inevitable, and at least the beginning of a public discussion is emerging on the function of profit motivation in business, particularly in health care.
Thus, there is the potential for change in managed care. The idea of a marketplace driven by broader individual and social values may not be as inconceivable as many might think. There is, however, one caveat. What Jonas (2003) described as a social community market can be successfully introduced only in the presence of a basic shared understanding of the fundamental elements that constitute the notion of responsibility.
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employee benefit. If they do so, it is on a voluntary basis.
According to a 2004 report from the U.S. Department of Health and Human
As outlined previously, the origin of responsibility is difficult to trace.
Nonetheless, its basic element can reasonably be defined as the intrinsic human capacity to make moral choices in the distribution of social goods by which we all establish ourselves as moral agents and for which decisions we can all be willing to be held accountable. As such, the concept of genuine responsibility functions as a precondition to further define individual, social, and corporate responsibility through a process of moral discourse.
There is, however, at least one other component that must be considered in trying to (re)define the extent of the notion of corporate responsibility. Business organizations traditionally supply their markets on the basis of consumer demands.
In other words, the supply of health care products and services is a function of demand on the part of consumers. Through their product and service expectations, these consumers (i.e., patients and plan enrollees) have a direct impact on the supply side and thus on the costs of health care. But MCOs have little authority (nor should they) to define unilaterally what, in general, can be expected or demanded from the health care system. Instead, individuals and society as a whole determine, at least in theory, the scope of health care entitlements. But in all practicality, not all members of society have been able to lay claim to their health care rights, and society as a whole has failed to demand a participatory role in the entitlement debate.