An early draft of this paper was read at the Sixth Annual International Conference Promoting Business Ethics, Fall, 1999, Niagara Falls, New York, and included in the Proceedings of that Conference: Moses L. Pava and Patrick Primeaux, eds., Symposium on Health Care Ethics, vol. II of Research in Ethical Issues in Organizations (Stamford, Conn.: JAI Press, 2000), 97–128.

¹ For empirical evidence of that “widespread feeling,” I can cite only the ongoing outrage of the popular press, which in this case I do not think is manufactured. Recent lawsuits by medical associations against the HMOs (see The New York Times Sunday, March 4, 2001, Connecticut section) appeal to this sense that whatever it is the insurance companies conceive of themselves as doing with regard to medical care, it is seriously wrong.

² The classic discussion of “legitimacy” in government, among Hobbes, Locke, Rousseau, and Kant, revived by Rawls, has been considerably enlivened by Jurgen Habermas’s introduction of the notion of “discourse ethics” to ground a conception of justice. See Dominique Leydet, “Habermas’s Decentered View of Society and the Problem of Democratic Legitimacy,” Symposium 1(1), 1997: 35–48; David Beetham, The Legitimation of Power (Atlantic Highlands: Humanities Press, 1991); Douglas Rasmussen, “Political Legitimacy and Discourse Ethics,” International Philosophical Quarterly 32(1), (1992): 17–34.

³ Fairbanks, Jo and William H. Wiese, The Public Health Primer (Thousand Oaks, Calif.: Sage Publications, 1998), 23–25.

⁴ “Medicare Choice,” as it is called, was intended to bring the efficiencies of the free market to the provision of extended coverage (including pharmaceuticals) to the elderly. In Connecticut alone, almost 115,000 subscribed to Medicare Choice through one of seven HMOs, as of June 2000. Connecticut Post, Friday, June 30, 2000, C2.

⁵ This bitterness is not reflected in random polls asking “are you happy with your health care plan?” Anyone who is not sick, and has not had to make claims on his plan, is perfectly content with a plan that does nothing, for that is all he wants it to do at the moment. Most of us are healthy most of the time.

⁶ With blinding speed, HMOs are retreating from Medicare. In Connecticut again, Aetna, U.S. Healthcare, Anthem Blue Cross Blue Shield, Physicians Health Services, CIGNA, and Oxford Health Plans are either withdrawing from Medicare plans or limiting provision of Medicare coverage as of January 1, 2001. Dana Ambrosini, “Aetna slashing Medicare” Connecticut Post, Friday, June 30, 2000, C1.

⁷ The trend continues. See Jo Thomas, “H.M.O.’s to Drop Many Elderly and Disabled People: Health Experts Predice Most Severe Consequence Will Be Loss of Prescription Drug Benefits,” The New York Times, National Report, Sunday, December 31, 2000, p. 14.

⁸ It is true that the health insurance industry has spawned practices of its own that the insured consumer may find oppressive. There is widespread belief, for instance, based on a good deal of anecdotal evidence, that some insurance companies reject health care claims at least once or twice, reason or not, in order to wear out those who don’t really need the money. It costs less to have low ranking administrative staff write rejection letters than it does to pay the claims. Ex-employees of insurance companies tend to tell of practices of “losing” claims, primarily to delay payments to keep more cash for shortterm investment. When the physicians work directly for the HMO, the compensation policies are notorious for the creation of patient-threatening conflicts of interest. Where the physicians are paid on the basis of capitation, as above, it is in their interest to treat each patient as rarely as possible and for as short a time as possible (according to one survey, patient visits to primary care physicians now take about 14 minutes, leaving the patient confused as to what she has been told and what she is supposed to do about it). Bodenheimer, Thomas, “Physicians and the Changing Medical Marketplace,” The New England Journal of Medicine (February 18, 1999), 340(7): 584–588.

⁹ And attempts to make them illegal are, as we write, unconstitutional; see Pegram v. Herdrich, 120 S. Ct. 2143, 2000 U.S. LEXIS 3964, 147 L.Ed. 2nd 164, Decided June 12, 2000.

¹⁰ The point is commonplace, and obvious. Any lawyer who accepted a client, without revealing that he had a financial interest in representing that client less than zealously, would be disbarred. That a similar fate awaits physicians is widely conjectured.

¹¹ This further worry is anecdotally confirmed: in a recent conversation, a psychiatrist of my acquaintance excoriated a local internist for failing to refer a patient for psychiatry, attributing his failure to greed. The patient was insured under the scheme called “capitation” (a fixed annual fee per patient) and any referrals would hurt the internist’s income. So he had prescribed a tranquilizer, completely inappropriate to the patient’s illness, which had made the patient sicker! I happened to know the internist, and knew his referral and prescription habits a little, and strongly suspected that he had thought the medication appropriate. I asked, had the patient returned to the internist, to complain that the medication made him sick? No. The psychiatrist had discouraged the patient from going back to ask for a change of medication, because she assumed that the internist, acting out of greed, would only try more stalling to keep the patient from appropriate treatment.

¹² Robert Pear, “Federal Inspections of Hospitals Are Badly Flawed, Harsh New Report Says,” The New York Times, July 21, 1999, p. A18.

¹³ Compliance Hotline, July 20, 1999.

¹⁴ Robert Pear, “U.S. Is Asking for Patients’ Help in Fight against Medicare Fraud,” The New York Times, Sunday, February 21, 1999, p. A1, 35.

¹⁵ Id., at p. 35.

¹⁶ Id., at p. 35.

¹⁷ Casalino, op.cit.

¹⁸ Haavi Morreim, Balancing Act (Washington D.C.: Georgetown UP, 1995), 74–85.

¹⁹ Robert H. Frank, “Not Insured, snd Not Worried,” The New York Times, October 6, 1999. Op-Ed.

²⁰ Robert Pear, “Hospitals Told Not to Delay Emergency Room Treatment: Insurance Questions Must Come After Care, Administration Says,” The New York Times, Tuesday, December 1, 1998, A20.

²¹ For a quick review of that disaster, see Lisa H. Newton and David P. Schmidt, Wake – Up Calls: Classic Cases in Business Ethics (Belmont, Calif.: Wadsworth Publishing, 1996), 103–116.

²² “Doctors’ Group Sues Connecticut H.M.O.,” The New York Times, October 6, 1999, p. B11.

²³ Robert Pear, “House Passes Bill to Expand Rights on Medical Care: Suits Allowed in Insurance Denials—G.O.P. Leadership Defied,” The New York Times, October 8, 1999, p. A1.

²⁴ Pegram v. Herdrich, above.

²⁵ As one reviewer of this article put it, “Of all the systems in the U.S. that we might emulate, I would not want to emulate the public school system!” The reviewer went on to wonder if the author went to public schools. The answer is no.

²⁶ Jo Fairbanks and William H. Wiese, op.cit. supra., 73–83.

²⁷ John Kenneth Galbraith, The Affluent Society (New York: Houghton Mifflin, reprinted 1998 [orig. published 1957]).