Who Killed Health Care? Regina Herzlinger (Professor, Harvard Business School), McGraw-Hill (2007).


Per the jacket flap, Professor Herzlinger (Harvard Business School) “has sat on the boards of directors of dozens of nonprofit and business health care organizations and has been a keynote lecturer at hundreds of meetings on health care.”  She is also plugged in politically, as attested to by the visits to the U.S. Congress and the White House mentioned in the introduction.    So when the author talks about how the healthcare system works in this country, she can do so with some authority.


As Herzlinger sees it, there is a war going on and “the wrong side” is winning.  She ascribes blame to health insurers, general hospitals, employers (who provide insurance for their employees), Congress, and academics, in other words just about everyone involved with the healthcare industry except consumers and doctors.  And in the acknowledgments section, she predicts that “because the status quo fights dirty and fights hard to protect its interests, this book will likely be smeared.” (This prediction does not seem to be borne out by the reviews posted on Amazon, which are predominantly four and five stars.)


There are indeed many pointed comments about firms, institutions, and people, which were probably not appreciated by those on the receiving end.  Corners cut, actions taken based on self interest versus the welfare of consumers, over the top compensation packages, and the like.  Herzlinger does not even spare her fellow academics, who are said to “favor schemes that give them considerable power over your money.”  In my view, this part of the analysis is well worth reading no matter what approach to healthcare reform one is inclined to favor.


It is stated repeatedly that the healthcare system could benefit from more choices and competition, which leads to the conclusion that a government-run healthcare system (or “single payer”) is not the solution and sets up the author’s proposal for a “consumer-driven healthcare” system.   


But Herzlinger is no dyed-in-the wool conservative, for she also espouses universal healthcare and subscribes to the idea that individuals (not companies) should be required to maintain at least catastrophic healthcare insurance coverage (to be subsidized by the government as required).


I am not sure the consumer choice and universal healthcare thrusts are compatible, although it would be nice if they were.  That would be something for readers to ponder while following the argument.


The issue is far from theoretical, for the healthcare legislation currently (10/21/09) under consideration would embrace greater government control as a means of reducing the number of Americans without healthcare insurance – an approach Professor Herzlinger seemingly warns against.  On the other had, she praises the Massachusetts universal healthcare plan that was enacted in 2006 – which according to other sources has led to soaring healthcare costs, etc. – so it’s not entirely clear how she would come out on the national legislation now under review.


As for the author’s own plan, there seem to be a few holes.  For instance, I’m not convinced that establishing a new federal agency to function as “a health care SEC” would greatly improve the quality of information available on the performance of healthcare providers.  Ask yourself why the SEC missed the Madoff scandal until it blew up in their face.


Also, I don’t see why the government should necessarily provide a tax subsidy for healthcare expenditures.  Perhaps it would suffice to eliminate the current inequity in the tax law by taxing employees on the value of employer-provided healthcare coverage.


In summary, this is an excellent analysis, but the solutions offered are no panacea.

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