Thursday, February 28, 2008

Hope for the Health Care Mess

Yesterday, Regina Herzlinger spoke at The King's College in conjunction with an outfit Bret Schundler is developing here called The Policy Center. Dr. Herzlinger is a professor at the Harvard Business School and she is the reigning expert on consumer-driven health care. It seems that she has figured out what's wrong with health care system, with it's oppressive bureaucracy (for doctors and for consumers) and skyrocketing costs (for employers and for consumers). The way we pay for health care stifles innovation, drives up costs and de-couples consumser demand and quality of service.

Consider this:

1. Nearly 300,000 people are killed by hospital errors every three years. It is the 8th leading cause of death in the US.

2. Employer based coverage makes us less competitive. The cost of employee health insurance adds about $1300 to the price of a GM car vs the $300 it adds to a Toyota (all things considered).

We can fix the system largely by fixing the tax code. Employers should give the money they now spend on your health insurance to you as tax-sheltered cash income. You can then buy whatever package you think is right for you, and health insurance companies will and health care providers will start tailoring their services for your consumer demands instead of for your employer's HMO. You can choose the job you want, even the career you want instead of the one that gives the best medical coverage because everyone will have the same tax advantage. Employers will simply pay salaries.

This situation is approaching the tipping point. It threatens to kill the US economy. Herzlinger sees the Swiss system as a model. They spend 11% on health care as opposed to our 17%. But unlike the statist systems of Canada and Britain which also spend just 11%, the Switzerland leads the world in health care consumer satisfaction. In the US, studies show that people are as about as satisfied with our health care system as we are with the post office. Ouch!

Consider also that the plans offered by the Obama and Clinton campaigns speak endlessly about choice, but they would quickly move us toward a single payer, government run system which is simple but oppressive, bankrupting, unresponsive to patients needs and innovation killing. The McCain plan is consumer-driven and will set us on the path to recovery, prosperity, satisfaction I have the audacity to say it?...hope.

Herzlinger's 1999 book (Perseus Books) is Market-Driven Healthcare: Who Wins, Who Loses in the Transformation of America's Largest Service Industry. B&N says this: "In Market-Driven Health Care, Regina Herzlinger translates the most urgent lessons of American business for the health care industry today. She explains how consumer demand for information and convenience, along with technology and new organizational structures, are creating health care delivery systems that offer high quality and low costs; she shows us what the "focused factory" concept that helped renew our automobile industry can mean for health care. Along the way, she analyzes the successes and failures of a variety of health care ventures."

Her 2004 volume, Consumer-Driven Health Care: Implications for Providers, Payers, and Policy-Makers (Wiley, John & Sons), an anthology of essays by various experts, is a more expensive and more technical treatment of the subject.

Herzlinger's most recent and most popular book is Who Killed HealthCare?: America's $2 Trillion Medical Problem - and the Consumer-Driven Cure (McGraw-Hill, 2007). B&N says: "Consumers are in charge of every transaction in their lives-except for health care. Insurance companies have either partial or total control over which doctors, treatments, and medications they can use. Doctors, on the other hand, are often powerless to assign the tests and treatments their patients need. Regina Herzlinger...offers a potent solution: Through a consumer-driven system, insurance money would be put in the hands of the patient, remove the middle man in patients' relationships with their doctors, and give employers cost relief. Newt Gingrich says: “No one has done more than Regina Herzlinger to rethink health care and transform it from a bureaucratic mess into an entrepreneurial, market-oriented success. Her new book continues that historic mission.”

Some helpful articles I have on hand regarding the candidates' proposals are these:

"HillaryCare--The Preview" by Sally C. Pipes, President of the Pacific Research Institute (WSJ, Oct. 12, 2007). It's Hillary, not Obama, but the plans are the same in principle. They both bring us eventually to a single payer (government) system.

"The Truth About Mandatory Health Insurance" by Betsy McCaughey, adjunct senior fellow of Hudson Institute and former Lt. Governor of New York (WSJ, Jan. 4, 2008).

"McCain's Medicine," a Wall Street Journal editorial from October 12, 2007.

"The GOP's Prescription for Health Care" by Grace-Marie Turner, president of the Galen Institute (WSJ, Jan. 29, 2008).

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