|9 February 2004
It seems to me that there's no simple 'good guys vs. bad guys'
scenario concerning the American Psychiatric Association's
fabricated 'disorders of childhood' and the complicated mess
that has evolved from their popularisation.
The central characters do indeed seem to be psychiatrists with
feelings of inadequacy who have been attempting to increase the
credibility of their profession - and by consequence boost their
own egos - in less than honest ways.
But, there are other parties involved in the mass delusion, each
contributing something to its development and maintenance.
The most obvious party, of course, is the pharmaceutical industry,
in business to make as much profit as possible. Then, I've
discovered, there are biological scientists who've allowed their
imagination to gallop off ahead of the facts; there are social
scientists who don't seem to know much about social behaviour or
science; educators who are panicking as the system that provides
them with their livelihood disintegrates around them; parents
who've realized that they have a job which requires skills they
don't have and don't know how to get and are glad of whatever
relief comes their way; media parrots who write what they're told
Over the past week, however, I've been looking at another player
in the 'mental illness' game that, it appears to me, is coming in
for as much criticism for its part as even psychiatry and the
drug companies - the health insurance industry. Specifically,
the American health insurance industry (the Americans started all
this, after all).
What follows is an assortment of comments and commentaries on the
American health care system and health insurance industry - not
in any particularly meaningful order - that offer us clues to how
the American health insurance industry is indeed playing a major
role in maintaining psychiatry's bogus 'mental disorders'.
From 'Health Care Delivery in the United States: the
Transformation of an Industry', by Deborah Gordon of Chicago
franchise attorneys Rudnick & Wolfe.
"To begin to understand the mechanism by which health care is
delivered in the United States, it is imperative to understand
how health care services are paid for in the United States.
Traditional health care insurance coverage emanated from
indemnity health care insurance whereby insurance companies would
charge a health care insurance premium, invest that premium
dollar and pay out health care claims. As health care costs were
relatively low, insurance companies were earning money on the
invested premium dollar, advances in healthcare technology were
relatively slow and malpractice awards were relatively small,
this indemnity-based insurance model provided a relatively stable
mechanism for the health care industry.
However, health care costs began to rise and malpractice awards
rose dramatically. Suddenly, traditional indemnity insurance
companies could no longer continue to operate under this model.
As premium rates began to rise, the concept of managed care began
to appear more attractive to those entities responsible for the
payment of health care services, i.e. employers, the government,
These payors began to develop mechanisms to control the costs of
the provision of healthcare services. This paved the way for
alternative health insurance products such as HMOs [Health
Maintenance Organizations] and PPOs [Preferred Provider
Organizations]. HMOs are similar to indemnity insurance companies
in that HMOs are financially responsible for the cost of
providing health care services to insureds. HMOs charge a flat
premium and are responsible for the delivery of health care
services to enrollees on a prepaid basis, rather than an
indemnity basis. In offering a new health care insurance option,
HMOs could offer affordable health care services due to HMOs'
employment of managed care mechanisms. A PPO, on the other hand,
also employs managed care concepts, but is not an actual
insurance product. Instead, it is an arrangement designed to
supply health care services at negotiated discounted rates and
by providing incentives for enrollees to use certain designated
health care providers. Even self-insured companies have begun
engaging third party administrators utilizing managed care
concepts to administer their self-insured plans.
As such, managed care concepts arose which whereby insurers would
only cover "medically necessary" services."
"With physicians, and especially primary care physicians, HMOs
would often pay the physicians based upon a capitation
methodology, i.e., a per-patient, per-month concept. For example,
primary care physicians are paid $100 per patient per month. The
primary care physician is then assigned a certain number of the
HMO's patients. In any given month, if all of the HMO's patients
are healthy, the primary care physician takes home the money,
without having to provide any services. However, even if a flu
epidemic breaks out, or if even a few of those patients become
very ill, the physician is still paid only that flat amount, and
is required to provide all medically necessary services to those
"With hospitals, HMOs may employ either per diem reimbursement
(a hospital is paid a flat amount for each day an HMO's patient
is hospitalized, regardless of the reason such patient is
hospitalized) or on a diagnostic related methodology (the
hospital is paid a flat amount based upon the reason the patient
is hospitalized). So, if a patient has viral pneumonia, the
hospital is paid a certain flat amount that the HMO has set for
that illness. If that patient takes a longer-than-average time to
recover, the hospital is not paid any additional amount. These
cost-sharing reimbursement methods have the potential effect of
producing incentives for hospitals to utilize less expensive
services and products. Physicians and hospitals are also provided
with additional incentives to utilize the most cost-effective
services through incentive funds. For example, an HMO may
withhold a certain percentage of a health care provider's
reimbursement. Then at the end of the year, the HMO assesses the
health care provider's use of certain services, e.g.,
prescription drugs, admissions to the hospital, home health
services. If the health care provider utilized those services in
a cost-effective manner, that health care provider would get a
bonus at the end of the year. If not, the health care provider
would lose the amount withheld. In order to align incentives,
some HMOs also began to employ physicians and actually own and
operate health care facilities, blurring the distinction between
insurance payors and health care providers. Similarly, hospitals
and health systems have begun to own and operate their own
insurance companies or directly contract with employers or other
health care payors, thereby cutting out the HMO. Obviously, these
types of reimbursement methodologies become subject to abuse and
From 'The Risks of Managed Care: A Position Statement' by
Granville Angell, EdS, LPC, NCC
"At the present time, our society is undergoing rapid and
unstable change with regard to the economics of the healthcare
industry. Financial policies, such as fees for services, are less
and less established by the actual care-givers as the corporate
mentality of "big business" continues to enter the picture. Major
changes continue to occur as managed care (including HMO's, PPO's,
etc.) and health insurance companies dominate both the provision
of services and payment for services."
"Historically, compared to medical care, mental/behavioral
healthcare of any nature has not received the same respect in our
society. Coverage by health insurance and managed care companies
has been inadequate and has required a DSM-IV psychiatric
diagnosis, denoting "mental illness," in order to receive
treatment. As a result, in a society which historically
stigmatizes persons with a history of mental illness, the trade-
off for any reimbursement received amounts to a psychiatric
diagnosis which becomes a permanent part of the client's
Considering that counseling services for many situations can be
provided without such a diagnosis, persons who are given enough
information to truly make an informed choice often opt to pay
out-of-pocket. This is especially the case when counselors offer
better alternatives, like fairly negotiated fees, sliding scale
fees based on income, and the brief therapy approaches pioneered
by the counseling profession."
"The majority of health insurance companies and managed care
conglomerates are self-serving business concerns, first. They
make more income the less service they have to pay for, manage,
or provide. Operating under the guise of ensuring appropriate and
competent professional care, they use record review and telephone
supervision to manage and limit the professional care of clients
and patients with whom they have no first-hand, personal
knowledge or experience. The result often is a sort of tug-of-
war; between therapists using records to justify treatment, and
company reviewers using records as a basis for limiting or
denying treatment. Indeed, the provider signs a contract with the
managed care company which considers the company's needs over the
By contract, the client's records (once the private domain of
therapist and client) are now the property of the managed care
company. And when the managed care company decides to terminate
treatment, the counselor's contract typically stipulates that the
counselor shall not continue to see the client...not even for
"In summary, in their economic self-interests, the managed care
and health insurance conglomerates have developed a system which
especially compromises mental/behavioral healthcare services. All
covered services require a psychiatric diagnosis and many
services (for example, marriage counseling and family therapy)
often are not covered at all. (Some therapists get around this by
a psychiatric diagnosis of at least one person in the couple or
From 'Eleven Unethical Managed Care Practices Every Patient
Should Know About (With emphasis on mental health care) by Ivan
Miller, Ph.D., of The National Coalition of Mental Health
Professionals and Consumers, Inc.
"Managed care, particularly in states that have so-called parity
laws, often claims that mental health benefits are unlimited,
when in reality, hidden policies and rules make even ordinary
Managed care often claims to provide all mental health services
at times when it offers only ultra brief therapy -- a short-term
and frequently ineffective treatment."
"Because managed care limits referrals to specialists, it forces
many professionals to treat special problems for which they do
not have the training or experience."
"Managed care ... seeks out and develops conflicts of interest in
which professionals profit the most when the patient receives the
The conflict is most serious with case rates and capitation in
which the professional is paid a set fee regardless of how much
treatment the patient is given. Competitive mental health case
rates may be as low as $200 per patient, regardless of whether
the patient is seen once or fifty times. If patients are seen for
as few as an average of eight one-hour sessions, simple
arithmetic shows that a $200 case rate yields $25 per session.
After subtracting a modest overhead cost estimate of $20 per
session, only $5 is left. That is too little to pay the therapist
for each session and paperwork. When case rates are this low,
professionals have a terrible conflict of interest because they
cannot stay in business unless the patient is given much less
treatment than is really needed.
... professionals may avoid dealing with important long-term
issues or cut therapy short because managed care prefers to refer
new patients to therapists with a record of short-term treatment.
The therapist has a conflict here between treating current
patients for the necessary length of time, or cutting treatment
short to assure future referrals.
Many managed mental health care companies will stop referrals to
therapists who provide more than ultra brief therapy, but
patients usually are not told their treatment is restricted by
this hidden managed care policy."
"Some companies have contractual "gag clauses" which forbid
professionals from giving patients any information that would
make the patient unhappy with their managed care company. Due to
intense public pressure, most companies have dropped these gag
clauses, but many still use what they call "managed care
unfriendly" behavior ratings which perform the same function as
gag clauses. These ratings are used to control therapists in the
following way. If a therapist commits an "unfriendly behavior,"
it shows up as a low rating. Professionals are regularly notified
of the ratings, and low ratings serve as a warning that
unfriendly behavior may result in terminating the contract. The
forbidden "unfriendly behavior" includes even telling patients
when they may benefit from a treatment not paid by the managed
care company. Patients are not told that their therapist's
professional freedom is constrained by these rating systems."
"Managed care ... often fails to inform patients of any treatment
alternatives outside of the plan. This failure to inform serves
the purposes of the managed care company because patients who do
not know other treatment is possible are more likely to report
satisfaction with the managed care treatment. Unfortunately, this
failure to inform also undermines the patients' control, because
the patient loses the choice to self-pay for the preferred
Medication is frequently presented as if it is complete
treatment. In truth, psychotherapy for many problems, either in
place of medication or along with medication, is better treatment
than medications alone, and psychotherapy is a treatment that
many patients will pay for out-of-pocket if they believe it will
Patients who are sent to psychotherapy are usually told that
ultra brief therapy is the treatment of choice, and if they don't
improve, they are told that there are no realistic alternatives.
The reality is that longer-term psychotherapy is a more effective
treatment, and many patients find it so helpful that they will
self-pay for longer psychotherapy.
Patients, particularly children, are rushed through treatment,
either therapy or medication, without being informed of the
benefits of psychological and educational testing to evaluate and
diagnose problems. Again, some patients or parents choose to
self-pay for this testing when they know it is available."
"In managed care ... the family doctor is often the gatekeeper
and may be paid a financial bonus for avoiding referrals to
"Health care ethics require that professionals publicly report
potential harm from a treatment, attempt to evaluate possible
harm, and consider possible risks along with potential benefits
when making treatment decisions. Managed care, on the other hand,
usually reports only those statistics that show the benefits of
managed care and does not adequately examine the potential harm
"When managed care considers cost effectiveness, it often does so
only on the basis of cost to insurance, not the costs to the
patients or their families. For example, when ultra brief therapy
is used for the treatment of depression, fewer patients will
recover. The many patients who don't recover will suffer damages
through missing work, losing a job, a divorce, inadequate
parenting of their children, or suicide. Their families also may
need to take time from work and be less productive. Both the
patient and their family will suffer emotionally. However, when
reports about managed care cost-effectiveness decisions are
revealed, these reports do not consider these important costs to
the patients and their families."
"... Human life and quality of life are simply not entered into
the managed care formulas for measuring the treatment cost-
effectiveness. The cost-effectiveness calculations show only
A collection of quotes:
"Dr. Sacks is described as having led, in the 1970's, the
"successful battle to mandate group health coverage for
outpatient psychiatric treatment..." However, Dr. Sacks now
describes managed care as "...totally undesirable in terms of
people getting adequate care... Managed care operations of course
would like...extraordinary profit for insurance companies... The
greed is daunting... As an example of greed, the C.E.O. of US
Healthcare will get in excess of $900 million plus... Where does
the money come from? It comes from the denial and interruption of
... patient care."
Herbert S. Sacks, M.D. (President-elect of the American
Psychiatric Association), The New York Times, Sunday, October 27,
"Make no mistake, we are under attack by a rapacious, dishonest,
destructive, greed-driven insurance/managed-care/big business
combine that is in the process of decimating all health care in
America, particularly ... [psychotherapy and psychiatric care]
"The market is controlled by a few large corporations and the
health insurance industry, stifling competition and excluding the
choices of the people who need care and those who provide it. The
health market is an imprisoned market, controlled by
corporations, which operate identically to totalitarian states,
with gag rules, discharge-without-cause clauses, and so-called
appeals processes deriving directly from Machiavelli.... Society
needs to know that managed care is a false promise based on a
false idol". Dr. Eist continues by emphasizing the need for his
profession to fight the threats to ethics and confidentiality
posed by managed care."
Harold I. Eist, M.D. (President of the American Psychiatric
Association), American Journal of Psychiatry (153:9), September
1996, pp. 1123-1125.
"We must state emphatically that managed care is inherently
flawed. We simply cannot let private entrepreneurs decide whether
they want to spend money on behalf of patients or keep the money
in corporate profits."
Dr. Nathan Stockhamer, President of The American Psychological
Association, Division of Psychoanalysis.
"Mental health care benefits have been cut by more than 50% in
the last ten years. In particular, managed care plans along with
employers have been reluctant to pay the cost of ongoing
psychotherapy. Even patients with serious disorders that stem
from such things as childhood sexual abuse are being limited to
just a few visits. That's if they are seen by a therapist at
The only area of mental health coverage that employers and HMO's
seem interested in funding is drug therapy. They'd rather just
throw Prozac, or better yet, some generic substitute costing
pennies a pill, at mental health problems".
Timothy B. McCall, M.D., Physician commentator, author of
'Examining Your Doctor', on National Public Radio, May 20, 1998.
"For psychiatrists, medical insurance companies, and especially
the pharmaceutical industry the benefit derived from promoting
drug treatment and chemical theories of mental disorders is
primarily economic. Of course, the argument is never framed in
Psychotherapeutic drugs, like the other physical therapies before
it, have served the interests of the psychiatric profession. Of
course, psychiatrists are not all of one mind, but in various
ways the profession as a whole tends to promote drugs by
exaggerating what is known about the chemical basis of mental
disorders and the effectiveness of drugs, and often by
discrediting alternative treatment modalities...
By adjusting payment schedules, medical insurers are playing a
major role in shifting treatment toward drugs and away from
Dr. Elliot Valenstein, Professor Emeritus of Psychology,
University of Michigan, author of 'Blaming the Brain: The Truth
About Drugs and Mental Health'.
"The managed care assault on all but the most brief
psychotherapies, not just psychoanalysis, include excessive
review, destruction of the doctor-patient relationship and
environment for treatment, invasion of privacy, excessive demands
for record-keeping and supposed standards of treatment that have
as their goal a reduction in the availability of care....
The future of psychiatry is in doubt. [Psychiatric] Residencies
in America cannot be filled with graduates from U.S. medical
schools. Medical students know that psychiatrists are being
coerced by managed care not to provide needed and often expensive
...services. In many training programs, residents are not even
exposed to psychotherapy. [Psychiatric] Residents are being
trained with little understanding of how to listen to patients,
and how to understand their thoughts, motivations, fears and
feelings. There exists a very real threat of a mindless
psychiatry, in which only chemical treatment will be understood
Reviews of the necessity for the treatment being provided are
undertaken by clinicians who profit financially, directly or
indirectly, in proportion to the reduction in health care they
produce. Often, these reviews are executed by inexperienced
Psychotherapy instruction for medical students and [psychiatric]
residents is in short supply. The result is residents trained
primarily in medication management and severely limited in their
ability...to talk meaningfully with their patients."
Dr. Lawrence Sack, President, American Association of Private
Practice Psychiatrists, 'What Will Managed Care Do to the
Profession of Psychiatry?', August, 1996.
From 'Problems with Managed Care Psychotherapy', Volunteers in
"Managed Care destroys Privacy in Psychotherapy.
Managed care has drastically damaged psychotherapy. Therapists
must send reports about your personal therapy discussions to
insurance companies when they demand. Many reasonable people are
justifiably concerned about divulging personal information in
therapy that will become part of their permanent medical,
insurance or employment records.
Managed Care companies control psychotherapy, not clients and
Insurers decide how long therapy will continue. They increase
corporate profits by strictly rationing therapy.
Health insurers view personal problems as if they were illnesses.
However, no pathology of the body has been scientifically
verified. Insurance companies can increase their profits by
declaring psychotherapy of reasonable length "not medically
necessary". They increasingly rely on pills.
Psychotherapy is costly.
Many people who want to preserve their privacy and control, pay
out of pocket for psychotherapy, if they can afford it.
Human understanding and solutions for people's personal problems
If your therapist works with your insurance or managed care
company, they may bend to pressures to see you for only a short
number of sessions. Therapists may be pressured to provide pills,
and not therapy.
Your therapist will be less likely to really get to know how you
think and feel. They may be less likely to learn of important
personal experiences you have had which powerfully affected you,
or to learn what is important to you in your life."
From 'Why Managed Care Hurts You' by John M. Grohol, Psy.D.
"What's the big deal about this? Try getting psychotherapy
services from your HMO or insurance company and you'll soon
realize what the "big deal" is. There are two major and a whole
lot of minor problems with regards to how managed care hurts your
ability to access timely and effective treatment. The first
problem is that insurance companies, looking out for the bottom
line, will seek to limit either the time or type of
psychotherapeutic services offered you. The second problem is
that these same companies seek to limit your choices in who you
This hurts you because it is the people in little cubicles in
the insurance companies and HMOs in the world who dictate to us,
the doctors and therapists who have had years of experience and
training, what is and is not appropriate treatment for you. It
wouldn't be so bad except that many (if not most) of those people
in those little cubicles have no greater experience, education or
specialized training than a college degree. Oversight at the
companies is at best, minimal. This is not a doomsday or
negativistic opinion -- these are facts you can check with your
own HMO or insurance company."
From 'Myths of Managed Mental Health Care', California Coalition
for Ethical Mental Health Care
MYTH 8: THE MANAGED MENTAL HEALTH CARE INDUSTRY UTILISES THE
MOST EFFECTIVE TREATMENT APPROACHES
Managed care companies promote the treatments that cost the
least, not necessarily those that are most effective. They tend
to discourage the use of any psychotherapy longer than a few
visits, and to require medication instead of psychotherapy. They
may deny inpatient treatment because of the cost. Some MC
organizations even require doctors to prescribe less expensive,
older medications, instead of the newer drugs that usually give
patients better results with fewer side effects.
MYTH 9: MANAGED MENTAL HEALTH CARE COMPANIES REFER CLIENTS TO THE
MOST QUALIFIED THERAPISTS
MC companies often limit coverage for psychotherapy while paying
psychiatrists for medication visits only. (The Wall Street
Journal, 12/1/95). Yet much of the research shows that depressed
clients treated with medication alone relapse at a greater rate
than those receiving only psychotherapy, or therapy combined with
medication. For some patients, medication is simply not
effective, or must be discontinued because of intolerable side
And, finally, from 'Patient Care and the Future of Psychiatry in
the Age of Managed Care', Group for the Advancement of Psychiatry
- Committee on Planning and Communication, April 1997
"Managed care has become the dominant force shaping the future of
psychiatry. While managed care was conceived as a means of
providing high quality service in a cost effective manner, in
practice this has often meant an overriding emphasis on reduction
of cost of care. In the process, patients with mental illness
have suffered. This focus on cost has led to reduction in length
of inpatient stays, cuts in day treatment, and limitation of
outpatient services. We believe that these cuts often have been
excessive and have damaged the quality of patient care. In some
managed care settings, psychotherapy has been taken away as a
reimbursable treatment performed by psychiatrists. In others,
reduced reimbursement for psychotherapy and increased demand for
paperwork has created powerful disincentives for psychiatrists to
provide psychotherapy services. To the extent that psychotherapy
is recognized as medically necessary by managed care, it has been
drastically reduced in length and depth. An additional problem
created by this managed care climate is that psychiatric
residents are finding it increasingly difficult to receive
adequate training in psychotherapy. This has long range
implications for the quality of psychotherapy treatment and
supervision of other mental health care providers by
psychiatrists. If these trends continue, psychiatric practice
can become primarily triage, consultation, medication management,
and team management. Individual and group therapy will no longer
be within the psychiatrist's job description or expertise."
The last document above, incidentally, contains this very
"The bio-psycho-social approach must guide our work.
The purely biological approach that ignores the psychological and
social complexities of our patients lives is inadequate and
detrimental to quality care."
It's worth noting that this statement was made in 1997 in an
official paper published by a group of psychiatrists whose
declared purpose is to advance the standing of their profession.