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Dr. Steigerwalt's Letter to New York Times

Letters to the Editor
The New York Times
229 W. 43rd St.
New York, NY 10036

The editorial "When Big is Good" (Editorial, April 3) is dead wrong about the merger between U.S. Healthcare and Aetna. The market rewards companies that deliver health care the least efficiently -- companies that spend less on health care and more on overhead.

U.S. Healthcare typifies this profitable inefficiency. In 1994, U.S. Healthcare took 25% out of every premium dollar for its executive salaries, profits, and bureaucracy. CEO Leonard Abramson made $20 million in cash and stock options in a single year. Furthermore, every time U.S. Healthcare's overhead has bumped up, so has its stock price.

U.S. Healthcare pays doctors huge bonuses for denying patients referrals to hospitals, specialists, and emergency care, according to a recent article in the New England Journal of Medicine. Meanwhile, until a public scandal recently forced U.S. Healthcare to change their policy, they forbade any criticism of their plans by physicians (the so-called "gag clauses").

Aetna found this ability to scrimp on care and splurge on shareholders so appealing that it paid nearly 25 percent more for U.S. Healthcare than its stock market valuation.

Wall Street defines efficiency as maximizing the profit squeezed from each premium dollar. Patients and physicians, however, want to maximize the resources that actually provide needed health care. The best option for providing efficient, humane, and patient oriented care for all of our citizens is a not-for-profit single payer health care system.