Miss Marple Tackles Health Care

Harvard Business School Professor Regina Herzlinger has written a must-read book, "Who Killed Health Care?". It is written in the style of a murder mystery. The puzzle to be solved: Who killed Jack Morgan, (a patient who dies while awaiting a kidney transplant)? Like Murder on the Orient Express, there is not one killer here but many: health insurance companies, hospitals, employers, the federal government and even academics.

Jack Morgan is a composite figure, based on the experience of 112 people who needlessly died while waiting for a kidney transplant. They were all insured by California-based Kaiser Permante. Of those who died while waiting, 25 had a perfect match.

So the mystery begins, appropriately enough, by asking; what's wrong with Kaiser? "The original idea behind Kaiser was not all bad," writes Herzlinger. The company was formed by caring doctors who wanted to practice high quality medicine. Things went wrong when managed care became commercialized and insurers started telling doctors what to do so they could save a buck.

Herzlinger is not against managed care in principle, but she argues health insurers are the last people who should be doing it. Geico may be a great auto insurance company, but who would go to Geico for auto repairs? The same principle applies to health care.

Hospitals come next on the list of suspects and the bill of indictment is lengthy. These are stodgy, bureaucratic institutions that provide fragmented care rather than integrated team care and do so with highly uneven quality. Patients almost never learn what the cost is going to be prior to their surgery, and at the time of their release uninsured patients are charged the highest prices of all!

It doesn't have to be that way, she says. In India you can get a package price in advance for all major forms of surgery. That price, by the way, will be as little as one-fifth of what you would be billed in this country; and the surgery is performed by US-board certified physicians with comparable standards of care. In a real market, patients would find it easy to get price and quality data – just like they can for automobiles. To help that along, Herzlinger calls for an SEC-type body that would ensure patients get accurate data.

Employers come next. Good as they are at many things, they are lousy at choosing health care plans. So why should they – rather than the employees themselves – make these choices? It's all due to an accidental quirk in the tax law, says Herzlinger. To remedy the problems, individuals should be given the same tax break when they buy their own insurance, with higher subsidies for lower-income families.

Then there is government. Virtually everything wrong with our health care system stems from bad government policies. Herzlinger goes to great length to show how the federal government has botched kidney care, but I wish she had done more. Indeed, if there is a fault in this book it is the failure to more fully explore all the many ways in which government has undermined normal market forces in health care.

Finally there are Herzlinger's colleagues – in the academic and think tank world. She pulls no punches – and that's unusual. (Academics tend to be kind to one another; after all, we're all in the same game, so to speak.) Their sins? Over the years they have apologized for and defended managed care, bureaucratic care, perversely regulated care – indeed almost any kind of care other than the low-cost, high-quality care you would expect free markets to produce.

Herzlinger calls her ideal approach "consumer-driven health care." But the real issue is much deeper than putting patients in the driver's seat. We are suffering today because we systematically suppressed the market in every aspect of medical care for more than 100 years. The solution is long overdue: bring the market back to life.

Link to (the Manhattan Institute book) "Who Killed Health Care" McGraw-Hill, 2007.


Comments (7)

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  1. Sean says:

    Sounds like Herzlinger is right on the money and pulls no punches. Its a shame her critique doesn’t recieve nearly the attention that the Michael Moore’s of the world do. Thanks for bringing this to our attention.

  2. E.Nelson says:

    Herzlinger's book proves to be just another example of common media bias. Had she been a left-wing critic, her book would be receiving ample amounts of media coverage. However, since it stems from the right, it has had little attention, when the issues she has addressed call for so much more. Maybe if she had made a really bad documentary and used untrue and inconsistent facts she would be getting more attention?!

  3. Bill Waters says:

    I was privileged to see the prepublication manuscript. She’s fabulous.

  4. Brian T. Schwartz says:

    I've read about this book before, and while her diagnosis of how government interfers with the market looks valuable, I was disappointed in at least one of her policy recommendations, listed at the Manhattan Institute's page for the book: (here I focus on the last one, mandatory insurance) http://www.manhattan-institute.org/healthcare "Herzlinger describes in precise detail how her innovative program will provide. * Smaller, disease-focused medical facilities that provide complete care to patients * A national system of medical records that provides privacy to provides and allows for confidential access to approved practitioners * Mandatory performance evaluations of all hospitals and all other medical organizations * Mandatory health insurance with subsidies for those who cannot afford it." How can one call this "consumer-driven," when the government makes it a crime not to purchase health insurance? Surely the government, not the consumer, will determine what qualifies as acceptable health insurance, and what does not. And this recommendation comes not from the Left, but from the Manhattan Institute, which claims to "foster greater economic choice and individual responsibility." It's too bad this version of a free-market approach advocates putting people in prison for not buying health insurance. (The punishment may start as a fine disguised as a removed tax credit, but if you do not comply with the extra tax, eventually you'll find yourself in prison.) For a good critique of mandatory health insurance, see David Hogberg's article here: (Google "Rx for Coercion", with quotes) http://dhogberg.com/wordpress/2007/07/rx-for-coercion The Council for Affordable Health Insurance has also critiqued it: (Google "The Pitfalls of Mandating Health Insurance Coverage", with quotes) http://www.cahi.org/cahi_contents/resources/pdf/n135mandatorycoverage.pdf

  5. Josh says:

    I enjoy reading your stuff

  6. Janette Tweten says:

    amazing stuff thanx 🙂

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