Sean Khozin, MD, MPH

Acknowledging the “daunting challenges” facing our heatlhcare system today, a new McKinsey Quarterly report highlights the need for strong leadership that “must come substantially from doctors and other clinicians.” The growing concerns about many administrators being out of touch with the realities that govern taking care of patients is placing clinicians in a great position to become the pragmatic agents of transformative change.

BusinessWeek on Regina Herzlinger’s vision of a consumer-driven healthcare system:

• Consumers tailor their own health-care coverage, navigating in a national insurance market.
• Everyone must buy insurance, and the federal government maintains strict oversight to ensure price and coverage fairness.
• Small, disease-specific hospitals care for patients who don’t need all the services offered by medical centers.
• A national database contains the prices and outcomes for procedures at every hospital and clinic, so consumers can make informed choices.
• Individuals get generous tax breaks to buy their own insurance, with subsidies for those with low incomes.

Greg Scandlen, is the President and CEO of Consumers for Health Care Choices (CHCC), “a not-for-profit grass roots organization that represents the views of the health care consumer to policy makers and industry leadership.” Below is an excerpt from a talk he gave back in 1999 at a meeting of the AMA House of Delegates in California where he presented highlights of his program for reforming the American healthcare system as then director of health policy at the Cato Institute. His insights are as timely and accurate now as they were when he delivered the talk almost a decade ago:

• Individual Choice and Ownership of Health Plan. Workers get to select their own plan and keep it with them as they change jobs. If they don’t like the plan they’re in, they can “vote with their feet” and leave it behind.

• Vouchers or Defined Contributions from the Government and Employers. Employers have a legitimate interest in helping their workforce obtain coverage. It keeps productivity up if workers can get treatment when they fall ill. So employers can continue to fund the plan, they just don’t have to choose or manage it.

• Tax Reform. The states and federal government currently spend $140 billion a year on subsidizing employer-sponsored health care, but it does so in a regressive way. It needs to be made at least neutral so that all Americans get the same subsidy.

• Expand Medical Savings Accounts. MSAs rationalize spending on routine services. They are the best tool currently available for affecting the demand side of the equation. They should be made available to everybody.

• Reform the Insurance Market. There are far too many nit-picky rules in the individual market, including mandated benefits and restrictions on non-employment groups. We need innovation and a period of creativity in this market.

• Transition Issues. Making the change to an individually-owned system will take a while and there are a number of safeguards that need to be built in. These include state high-risk pools, for instance, and continuation of Medicare for those already on the program.

Stressing the possible collapse of the healthcare system in response to unwise policy decisions, Mr. Scandlen pointed out the following facts:

• Employers have had it up to here with paying all this money and getting nothing but grief for it. They may spend $4,000 – $6,000 per worker on health coverage, and all they hear are complaints that Viagra isn’t covered.

• Employees are fed up with being forced into a plan the boss selected. For most workers, the employer is the last party they would turn to for help with medical issues. If their daughter has an abortion or if they want more benefits for mental health care, the boss is about the last person they would talk to.

• Physicians are sick of health plans second-guessing their medical judgment. The reality is that medicine is still as much art as science. Doctors have to take a lot of subtle factors into consideration, including the look of fear in the patient’s eyes or the love of a family member.

• Politicians are weary of the unending growth of the uninsured and the complaints they hear from all the other groups.They know that something must be done — but they have no idea what.

It’s now more important than ever to heed the enduring insights of Mr. Scandlen and other like-minded visionaries in order to rescue our healthcare system from its current dreadful trajectory.

More info: The Cato Institute

Regina E. Herzlinger is the Nancy R. McPherson Professor of Business Administration Chair at the Harvard Business School. She is widely recognized for her research on consumer-driven healthcare and has been dubbed by Money as the “Godmother” of the movement. A consumer-driven healthcare model enables patients to control more of their healthcare dollars. This requires accurate information on the cost of services charged by providers. Once patients are given this information, they can “shop around” for providers that deliver high-quality services at reasonable prices.

Made by the Manhattan Institute, the following is a video in support of Herzlinger’s latest book “Who Killed Health Care?” This book has already become a classic among many physicians and advocates of a market-driven healthcare system.