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Smoke? Don't smoke? It apparently doesn't matter to some
large health maintenance organizations (HMOs) whether you do or
you don't; they profit either way.
According to information compiled by Disclosure Information Services of Bethesda, Md., Prudential, the largest supplier of health insurance and biggest operator of for-profit HMOs, also owns significant shares of five of the six largest tobacco companies. totalling almost a quarter billion dollars. Prudential's investment portfolio includes $100 million each in Philip Morris and in Lowes, maker of Kent and Newport, over $36 million in American Brands (Lucky Strike and Carlton), and $12 in RJR Nabisco stock.
And, Prudential isn't the only big HMO with interests in both the coffin nail and health businesses. Travelers Insurance holds $51 million in American Brand stocks and $37 million in RJR Nabisco,while Cigna, another major insurer, has $57 million in Philip Morris and $18 million in American Brands.
Dr. Susan Steigerwalt, president of Physicians for a National Health Program (PNHP), calls these investments "outrageous." Steigerwalt, who is director of the hypertension clinic at Detroit's Henry Ford Hospital, sees the results of smoking every day. She says, "It is completely inconsistent for a so-called health provider to even be remotely involved in profitting from tobacco products."
Steigerwalt points to statistics showing health costs totalling billions of dollars as a direct result of smoking which leads to ailments such as heart disease, cancer and high blood pressure. She says, "Stopping smoking is the single most important risk factor modification anyone can make to reduce all of the major diseases Americans are plagued with." The heart of the contradiction, according to PNHP, a 7,000-member doctors' group advocating universal, publicly financed health care, is that the HMOs have enormous excess profits, and even with a spate of recent bad press, the tobacco companies remain good investments.
A more cynical view is put forth in The Lancet, the British medical journal, which calls such investments "a briliant win-win financial ploy, much like a combination veterinarian/taxidermist who promises that `either way you get your dog back.'" That is, the insurance companies collect premiums from non-smokers to whom they pay few claims, then demand higher premiums from smokers, while they reap huge profits from tobacco investments. This viability is in large part determined by the fact that the number of tobacco market customers remains constant though 1,000 of them in the U.S. die daily from their addiction. However, an equal number of replacements are recruited from children and from a staggering increase in Third World countries where often 80% of men smoke. Steigerwalt cites the average age in the U.S. for first time smokers as 13.
"These investments point out the problems with the growth of for-profit HMOs," she says. All other industrial countries have government-financed health plans, but if current trends continue, the U.S. may be the first to have corporate-run health care.
Steigerwalt says, "This will mean a system with no concern for the patient or the provider; just how much money the corporation can make."-Peter Werbe
Physicians for A National Health Program can be reached at 332 S. Michigan, Suite 500, Chicgo IL 60604; 312-554-0382.
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Last modified: October 21, 1997