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An Ethical Framework for Cost-Effective Medicine: Confronting the Risks in Managed Care


  • Walter M. Cadette

    (The Jerome Levy Economics Institute)


This paper examines the features of HMOs and their associated ethical problems. And it points to a framework of needed consumer protection. The problems seem to flow from the very design of HMO medicine. One is prepayment. Every revenue dollar is also potentially a profit dollar when not spent on direct patient care-a temptation, if not also an incentive, not only to economize on care but to skimp on it. Another problem is the oversight of physician practice by nonphysicians. That may yield significant savings, but it also threatens physician autonomy and, more important, physician capacity to act as patient advocate. The public policy concern is with low HMO medicine addresses the trade- offs between quality and cost and with the ethical issues those trade- offs raise. In particular, it is about the change in the role of physician from agent of the patient to agent of the health plan as well- under compensation arrangements, moreover, that commonly reward physicians for doing less for patients and penalize them for doing more. To what extent do those financial arrangements undermine the fiduciary role of physicians? How are physicians to act in their patients' best interests without compromising their own? Behind these questions lie broader ones of who should decide what care is not worth the cost, and what criteria should be uses for those decision (Hall 1997).

Suggested Citation

  • Walter M. Cadette, 1998. "An Ethical Framework for Cost-Effective Medicine: Confronting the Risks in Managed Care," Macroeconomics 9808003, EconWPA.
  • Handle: RePEc:wpa:wuwpma:9808003
    Note: Type of Document - Acrobat PDF; prepared on IBM PC - PC; to print on PostScript; pages: 33; figures: included

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    • E - Macroeconomics and Monetary Economics

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