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strategy and business
 / Spring 2007 / Issue 46(originally published by Booz & Company)


Does Health Care Have a Future?

5. Shaped by Market Forces. The experiences of the past 30 years make it clear that the market has the sustained systemic power to bring consumers more for less. We’ve already seen this phenomenon in other industries, as well as in the portions of health care that compete directly for the consumer dollar. (See number 2.)

6. Practical. Politically, economically, and systemically, the solution must arise from present realities. We cannot take seriously any proposal that wipes out the existing health plans, for example, for the simple reason that health plans alone represent 5 percent of the U.S. economy.

7. Progressive. The solution must recognize that dramatic change cannot happen all at once. It has to be possible for any sector of health care, or even individual organizations, to move toward the new way of operating and be rewarded for it.

8. Self-Reinforcing. As any one part of the system moves toward the new reality, that movement must allow and encourage other parts of the system to move forward as well.

Taken together, these make for a very tall order. But if a proposed solution does not satisfy all of these criteria, it is either incomplete or impossible. The experience of reading through the reform literature, however, is an exercise in frustration. Author after author describes a piece of the problem and solution perfectly, each feeling a different part of the proverbial elephant, but no one author has addressed the whole problem.

Achieving Universal Care
Few books do a better job of describing the ills afflicting the U.S. health-care system than Donald L. Barlett and James B. Steele’s Critical Condition: How Health Care in America Became Big Business and Bad Medicine. This book is both true and infuriating. It shows vividly why almost everyone is deeply outraged about health care, and how a complex, dysfunctional system can look like a conspiracy to outsiders.

Most importantly, this book focuses on the problem of universal care. The Pulitzer Prize–winning investigative team documents the plight of the tens of millions of uninsured or underinsured Americans who can’t easily get access to treatment, and the horrors of a system that forces doctors and nurses to cut corners with patients in order to save money while companies notch ever-higher profits.

If you wish to put shape and detail to your outrage, read the work of Barlett and Steele. But their prescription for reform, a single-payer system, suffers from the problems common to all such arguments: Eliminating the entire health insurance industry with a stroke of a legislative pen is politically and economically impractical. And although such schemes eliminate the huge cost of private insurance, they do nothing to drive down the root costs of medical care or to improve its quality.

Alternatively, to compare a variety of proposed payment mechanisms that would cover all Americans in the name of universal care, you could look into a number of recent titles, including Uninsured in America: Life and Death in the Land of Opportunity, by Susan Starr Sered and Rushika Fernandopulle; the Institute of Medicine’s Insuring America’s Health: Principles and Recommendations; Charles R. Morris’s Apart at the Seams: The Collapse of Private Pension and Health Care Protections; and Jill S. Quadagno’s One Nation, Uninsured: Why the U.S. Has No National Health Insurance. Each of these books argues compellingly for its own set of schemes, including among them total government control and direct payment, mandated employer insurance, government-subsidized insurance for the near-poor, vouchers, and tax credits. Some propose funding such an expansion by ending the tax deductibility of health insurance.

Unfortunately, none of the books engages the full scope of the problem. Although any number of these schemes might effectively give all Americans access to the existing health-care system, none addresses the fundamental systemic drivers that have caused health-care costs to increase while those of other industries have moderated or dropped. And none addresses the demonstrated unevenness of current medical care. If health care continues to eat up more and more of the national economy, no scheme to cover every American can work. However you slice and dice the economy, there simply will never be enough resources to pay for a perpetually expanding health-care system. Anyone who wants to argue a social agenda for insuring all citizens must show how we can change the current system to make health care less expensive and more effective, so that we can afford universal coverage.

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Health-Care Resources
Works mentioned in this review.

  1. Donald L. Barlett and James B. Steele, Critical Condition: How Health Care in America Became Big Business and Bad Medicine (2004; Broadway, 2005), 286 pages, $14.95
  2. Susan Starr Sered and Rushika Fernandopulle, Uninsured in America: Life and Death in the Land of Opportunity (University of California Press, 2005), 272 pages, $15.95
  3. The Institute of Medicine, Insuring America’s Health: Principles and Recommendations (National Academies Press, 2004), 222 pages, $26.10, or download PDF for $22.50 at Click here.
  4. Charles R. Morris, Apart at the Seams: The Collapse of Private Pension and Health Care Protections (Century Foundation Press, 2006), 86 pages, $14.95
  5. Jill S. Quadagno, One Nation, Uninsured: Why the U.S. Has No National Health Insurance (Oxford University Press, 2005), 286 pages, $28
  6. Arnold S. Kling, Crisis of Abundance: Rethinking How We Pay for Health Care (Cato Institute, 2006), 120 pages, $16.95
  7. Regina E. Herzlinger, editor, Consumer-Driven Healthcare: Implications for Providers, Payers, and Policymakers (Jossey-Bass, 2004), 926 pages, $55
  8. Michael E. Porter and Elizabeth Olmsted Teisberg, Redefining Health Care: Creating Value-Based Competition on Results (Harvard Business School Press, 2006), 524 pages, $35
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