April 19, 2001
Keynote Address by Professor Regina Herzlinger, Harvard Business School
“A Force for Innovation, Consumers Taking Charge of Their Health Care”
“Harvard University Professor Regina Herzlinger, the author of ‘Consumer-Driven Health Care’ and other books on America’s health care marketplace, predicts consumers exercising personal choice – not employers or managed care companies – will create dramatic change in the health care marketplace of the future.”
Audience Question:
“With a consumer driven model, a lot of people are concerned that folks who are healthy will elect into the lower cost options leaving the cost of care to the folks with the most chronic conditions and sometimes to the people who can afford it the least.”
Professor Regina Herzlinger:
“…. What happens in the individual market in a risk adjusted… the community rating systems end up in a death spiral. It there’s a community rated system there’s a great incentive for anybody whose costs are lower than the community average to get the hell out of that system. So ultimately it becomes a very expensive system because the people who are left in it are only the very sick. Doesn’t it make more sense to price the sick accurately and to price the well accurately right from the start and to provide more subsidies for the sick and fewer subsidies for the well and to get the incentives lined up the right way?”
Comment: The Buyers Health Care Action Group (BHCAG) has become the glamour boy of advocates that support utilizing “empowered consumers” in the marketplace to control costs and improve quality in health care. Although we share their goals of cost containment and quality improvement, their methods can only be disastrous for those with the greatest health care needs. Individuals active in the health care reform movement should be aware of this organization, and be prepared to respond to their defective proposals (www.bhcag.com). (Also, some of their concepts on quality improvement and improving efficiency may have some merit, although they are flawed in assuming that solutions should be limited to control by market forces.)
The extent to which marketplace advocates manipulate policy theory for the purpose of preserving our very sick system of pseudo-free market medicine is astonishing, considering that we could solve most of the problems of access, coverage, quality, and cost containment, by adopting the moral imperative, a publicly-administered risk pool with everybody in and nobody out.