Regina Herzlinger from the Harvard Business School presented at DHMC last Tuesday as part of the Harry and Carolyn Bird Lecture Series in Health Care and Policy. In the lecture titled “Who Killed Health Care?” Herzlinger focused on why and how the United States should reform health care. She outlined some of the current options for health care reform and argued for a consumer-driven plan based on innovation from medical scientists, doctors, and nurses.
According to Herzlinger, the American health care system is not a good value for the money being spent. The current system hinders the country’s ability to be globally competitive and lacks solutions for shrinking hospital endowments and for the 50 million uninsured or underinsured Americans.
To improve the current expensive and inefficient structure, Herzlinger contrasted single payer or consumer-driven systems as possible solutions.
Under single payer plans, a government organization would collect the health care fees and pay the health care costs. Herzlinger warned that these plans do not leave room for the entrepreneurship that has both defined American innovation and has lead to better and cheaper products in other realms. She frequently compared health care in America to other industries, where knowledgeable members like Steve Jobs or Bill Gates have been able to respond to demands.
In contrast, consumer-driven plans allow for these innovators. They also improve personalized health care services and technology, which are two priorities in the minds of the American public. One example of this consumer-driven system in practice is Switzerland, where is mandatory that all citizens buy their own health care, and therefore all are insured. Herzlinger argued that this could become reality in America.
The Swiss system is characterized by mobility, high quality care at low costs, and excellent consumer access to information. Herzlinger praised the system for its universal coverage and lack of intermediaries. Moreover, health care costs comprise only 11% of the Switzerland GDP compared to 17% in the United States.
Herzlinger also vied for integrated care systems for diseases like diabetes, whose patients must visit a series of individual doctors that lack an efficient means of communication. While the diabetic demand for a team is currently not being met, Herzlinger proposed that in a consumer-driven system these patients could have a choice of teams at a flat rate. This would cut costs while also holding the teams accountable. Interestingly, Herzlinger also noted that Lasik eye surgery is the only component of the health care system where prices are decreasing as quality increases. Lasik is consumer-driven.
If the government can adopt a consumer-driven system that mandates individual health care purchases and increases transparency, while acting mainly as a prosecutor against abuse of the system, Herzlinger believes that characteristic American innovation will answer the demand.
Though the Swiss system is a commendable working model, the problem with a purely consumer based system is that many aspects of health care don’t fit a consumer market. Consumers in a typical market can choose when and if to purchase the goods or services. Unfortunately, when it comes to health, the choice to delay entry into the market or stay out of the market is rarely there. Health issues usually need to be addressed right away.
As well, the costs are not at all easily predictable so there is inevitably the risks of buying too little insurance or paying too much for security. Unlike buying house or car insurance and knowing the repair and replacement values to target a premium, such knowledge is not available in advance for the health insurance purchaser. They have the unpredictable task of balancing long term health versus ongoing costs.