The Bright Coast

Progressive Thoughts from San Diego Alums on Law, Politics, and Culture

Conflict of Interest between shareholders and patients?

Posted by progressivethink on August 30, 2009

This is a great video showing in a simple-to-understand way why a public option is needed in the healthcare reform. It also brings up the legal question of whether the duty publicly traded health insurance companies have to their shareholders inherently conflicts with the duty of care required towards patients.

As the video points out, it is clear that public traded health insurers have a duty to their investors to maximize corporate profits. How do insurance companies realize a profit? By taking in more in insurance premiums while simultaneously lowering payouts to plan participants for medical care. It logically follows that health insurers are required to deny as much coverage as possible in order to satisfy their fiduciary duty to their investors. On the other hand, by denying medical coverage to post huge profits, does this violate the duty of care towards the patient?

It’s an interesting thought, which is why I believe that either a government option should be provided (a provider that doesn’t need to use money that could be funding coverage to issue profit for shareholders) OR all health insurers should be required to be non profit corporations. Either of these options would prevent the inherent conflict between the duties to patients and the fiduciary duties to shareholders.

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One Response to “Conflict of Interest between shareholders and patients?”

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