Who Killed Health Care?: America’s $2 Trillion
Medical Problem — and the Consumer-Driven Cure
by Regina Herzlinger
(McGraw-Hill, 240 pages, $24.95)
Try to imagine health care as a police lineup, with the patient
behind the one-way mirror, trying to pick out the suspect. The
lineup includes big hospitals, employers, big insurance companies,
health care academics and government. When asked which of the
suspects killed health care, the patient points to all of them.
That is a good metaphor for what Regina Herzlinger does in her
new book, Who Killed Health Care? The Harvard Business
School Professor who is often described as the godmother of
consumer-driven health care takes no prisoners in this
tour-de-force of how our health care system became an unadulterated
mess. In the end, Herzlinger will probably have few allies left
among those who have a vested interest in the current system. Yet,
should her vision become the one that guides health care reform,
everyone who is a health care consumer will owe her a debt of
gratitude.
Herzlinger was an early critic of “managed care,” the theory
that gave us insurance companies like health maintenance
organizations (HMOs), which act as gatekeepers for patients’ use of
medical care. While many people think that HMOs are the result of
private sector insurance, Who Killed Health Care? points
out that they actually came to prominence due to the HMO Act of
1973. With an economy facing rising health care costs in the early
1970s, President Richard Nixon turned to HMOs to hold costs down.
His HMO Act required employers who offered insurance to offer at
least one managed care product. It also offered subsidies to
companies that opened HMOs.
Employers liked managed care because, initially, HMOs seemed to
control health insurance costs. They liked managed care so much
that they narrowed the insurance choices of employees to the point
that by 2005 almost all employers were offering only one type of
insurance plan. Big insurers liked managed care because it meant
that they would make money by not paying for medical care.
Academics (most notably, systems analyst Alain Enthoven) loved
managed care too. They touted the example of Kaiser Permanente as
how health care should be managed. But what was best about managed
care from their perspective was that it put academics at the
forefront of evaluating medical treatment. Academics became
dedicated to techniques such as disease management that put them in
the powerful position of telling doctors how to treat patients.
Indeed, the only ones to not make out on managed care were
patients and doctors. Patients loathed the restrictive nature of
HMOs, to the point that eventually HMOs were replaced by managed
care organizations like Preferred Provider Organizations that put
fewer restrictions on patient access and choice. Under managed
care, doctors are pressured to conform to managed care
organizations’ disease management advice. Academics frequently
complain of doctors’ low compliance with such advice. However, it
may be that the doctors, and not the academics, know what they are
doing. As Herzlinger notes, “There is no accepted evidence of the
cost effectiveness of disease management.” In the end, we are left
us with a system of paying for Medical Care that offers few
insurance choices for consumers and tries to second-guess decisions
best left to patients and doctors.
The suspects are still at it. For example, big hospitals are
trying to regulate specialty hospitals out of business. “The
hospital industry,” notes Herzlinger, “sensing correctly that this
is an innovation that could really do it in, has gone to all-out
war against the specialty sector.” The hospital industry convinced
Congress to include an 18-month ban on the opening of new specialty
hospitals as part of the 2003 Medicare prescription drug bill. The
true loser in this fight is the health-care consumer, as specialty
hospitals often give better treatment for lower cost than
traditional hospitals. Also well worth mentioning is Herzlinger’s
case study of how badly government has, through Medicare,
mismanaged the treatment of kidney disease. It is a frightening
glimpse at what a single-payer system would look like in the
U.S.
Herzlinger concludes her book by outlining a compelling plan so
that we can achieve the health care system that we deserve. First,
we should put the tax treatment of health insurance on an equal
footing so that those who do not receive their insurance through an
employer also get a tax break. Second, we need to deregulate so
that entrepreneurialism can flourish in the health care sector —
laws that hinder physician ownership of medical facilities are one
such example. Government’s role should be very limited, only
helping to pay for the insurance of people who cannot afford it,
and regulating health care information, much like the Securities
and Exchange Commission does with financial markets. The only one
of Herzlinger’s suggestion that would likely prove
counterproductive is her call for an individual mandate to require
everyone to purchase health insurance. This is already proving
problematic in Massachusetts, leading to even more government
involvement in health care.
Otherwise, Who Killed Health Care? is a book that all
of those who favor more freedom in our health care system should
pick up. As Herzlinger notes, the importance of transforming our
health care system into one run by free markets can’t be
overstated:
“A system controlled by the insurance companies or hospitals or
government will kill us financially and medically — it will ruin
our economy, deny us the health care services we need, and
undermine the importance of genomic research that can fundamentally
improve the practice of medicine and control its costs.”
David Hogberg is a Washington writer and host of the
website Health Hog.
