It can be argued that the problem of health care costs has been oversold [2], but it is clear that the recent rate of growth of these costs cannot continue indefinitely. It is also clear that the long-dominant fee-for-service payment system has provided less incentive for cognitive effort and the management of patients' overall health than it has for procedural interventions; it has thereby rewarded the provision of unnecessary and even disadvantageous treatments. Unfortunately, many persons now believe in or promulgate the fallacy of "black or white": If the existing system, which gives incentives for excessive treatment, is bad, then its opposite, a system that provides incentives for giving less treatment by putting the provider at financial risk for the costs of care, must be good. However, a health payment system in which incentives are based solely on this premise is only "managed cost," not "managed care." The RAND Health Insurance Experiment's finding that health maintenance organization insurance equally reduced both inappropriate and appropriate treatments [2] illustrates that primary pressure on costs reduces costs without regard to clinical appropriateness. It is easy to understand that benefit-paying employers and insurance companies (whether or not they also provide care) would want to adopt such managed cost systems; to do so is clearly in their financial self-interest. What is harder to understand is the adoption by physicians of this fallacy of black or white, given that the traditional role of physicians is to defer to patients' welfare in the face of their own financial interests.

Do physicians accept the moral hazard of capitated care because they are confident that their own moral fiber will enable them to resist financial incentives (reinforced by the immense trust accorded them by their patients), because money is such an effective lure, because they fear being left out of the evolving health care system, or for all of these reasons? Some physicians ignore this issue, saying, "Well, something must be done about health care costs," and then justifying such incentives to withhold care in terms of the fallacy of black or white. Others assert that such incentives really do not work and, thus, that there is really no need for concern. This is clearly specious. If such incentives did not work, they would not be used by those who are trying to manipulate physicians' behavior. The fact that such incentives are used, and more and more widely, is clear evidence that they do work: Physicians are restricting their patients' access to medical services in exchange for financial rewards [3-5]. Some argue that such incentives really do not operate for any specific patient but rather that they work on average, allowing care to be given to more persons, which is good and responsible. However, the only way such an incentive can work on the overall group is if it works to a greater or lesser extent on every single person; otherwise, total costs would not be reduced [6].

It may be true that a limited pool of money is available for health care, but there is no direct, logical link between this fact and the need to accept payment for restricting care. For example, as an alternative, physicians could make more cost-effective decisions but return any money saved to their patients. Then the rewards of restricting care would flow to the persons who are paying for medical care (albeit sometimes indirectly, but then payment is made directly by those with a fiduciary responsibility to the patient [7]) and taking any health risks related to constrained care. We physicians could thus help to contain costs while avoiding a conflict between our interests and those of our patients. Why doesn't the system work this way now? Are physicians trusted to make better tradeoffs between patients' health and money than are the patients themselves, once properly advised? Or do employers and insurers, who stand to benefit most from such incentives, trust physicians more than patients to make the tradeoffs that will save them money?

Indeed, trust in the role of the personal physician is central to this issue. We physicians are, even today, greatly trusted by the public and especially by our own patients. Even so, one wonders if this trust would survive a local newspaper headline such as "Physicians Accept Money To Deny Their Patients Medical Care" (or something more colorful). And how would we feel about our own roles as physicians when asked about his headline by our own patients?

After a recent discussion at lunch about capitated care among primary care physicians, I decided to ask my patients that afternoon how they felt about such an incentive system. I also wanted to see how I felt asking such a question. Certainly, the principle of full disclosure of potential conflicts of interest requires that I disclose any such conflict to my patients [8]. As luck would have it, my first patient (a long-time member of my practice) was the chief executive officer of a statewide health insurance and managed care company. He admitted to some concern but thought such incentives were reasonable. However, the responses of my next four patients ranged from distinctly negative to far worse. One patient bluntly laid out the effect of such incentives on trust. The situation reminded her, she said, of a police officer receiving bonuses for giving out more traffic tickets, thereby having "a financial incentive to screw me." She no longer trusts the police, and this is one reason why. Whatever rationalization payers and providers may prefer, my patients provided a clear picture of the effect of capitation on the role of the physician: Capitation will undermine patients' trust in physicians.

Should this be taken to suggest that we physicians should not participate in improving the coordination and cost-effectiveness of health care? Clearly not. We have stayed out of this arena for too long. Indeed, financial incentives did influence us to stay with fee-for-service systems and their perverse incentives. As those who provide leadership in the direct provision of care, and as those in whom our patients put their trust, we are uniquely able to improve the organization, coordination, and delivery of health care. In that role, we must be sure that financial incentives are not, as they have been, contrary to such improvements. However, we must be equally sure that incentives are not contrary to the interests of our patients. Moreover, if our participation is to accept incentives for reducing services, we will undermine the most precious commodity in the patient—physician relationship: trust.

We must resist the assumption that we, the health care system, and governmental structures lack the creativity, conviction, and resistance to financial incentives that are needed to improve health care delivery without putting our interests in conflict with those of our patients. While waiting for and working toward fundamental changes in health insurance, interim solutions will be incremental but no less important. Some improvements will arise from the increasing awareness—by all members of the health care system—of the implications of the organization of care on conflicts of interest [7-10]. However, as a near-term action item, Swartz and Brennan [1] argue convincingly that regulatory protections are needed now to protect patients from overzealous and actuarially unsound capitation plans. Moreover, including the public as well as the medical community in the oversight of managed care organizations' mechanisms for constraining care, as Swartz and Brennan suggest, would help to increase the general level of awareness and discussion of these critical issues. Shapiro and Wenger [11] have suggested similar oversight of managed care utilization review functions, which are often the cutting edge of limits to care. Other types of change must also be considered. For example, necessity-adjusted copayments and other features of health insurance that increase cost-sensitivity by patients might mitigate health care costs without the moral hazard of capitation [12], although such devices raise important concerns about socioeconomic equity. All such ideas, and the many more that will be proposed as the use of capitation grows, require our consideration and active input. It is time for physicians to take on public leadership and responsibility for answering this call.