Market-Driven Health Care

To the Editors:

A consumer-controlled health care system will not increase costs and reduce access as Andrew Hacker contends in his review of my book, Market-Driven Health Care [NYR, June 12]. To the contrary, it will inspire the entrepreneurs who can best create new ways to provide accessible, affordable, quality medical care. Americans will benefit in several ways: they will be freed from the stranglehold of those managed care technocrats who reduce costs by denying access to health care, and more Americans will receive the care they need at a price they can afford.

To observe what happens when consumers control the market, just examine your personal computer. The 1959 PDP-1 with 4 kilobytes had limited applications, and, because of its $120,000 price tag, was available only to a few. In contrast, the recent wholesale cost of 8 megabytes was $100 and PCs were widely owned. Better quality, lower cost, far greater accessibility. How did it happen? Ferociously competitive, entrepreneurial firms gave the US public plenty of choices, and Americans picked the best quality/cost combinations. Disappointed competitors then innovated even better quality/cost characteristics, so that more and more people could afford to buy these increasingly user-friendly, lower-cost machines.

How will the poor and uninsured fare in a consumer-controlled health care system? Just fine, under my proposal that they, like everyone else, be given the funds needed to purchase health care. (Hacker’s review incorrectly states that I oppose direct purchases by the poor.) Although the American public does not share my willingness to underwrite the costs of this insurance, a market-driven health care system will still help the poor and uninsured, as well as other Americans, by making their health care more affordable.

Market-driven health care will also help the vast sea of hard-working middle-class Americans whose needs for greater convenience Hacker ignores and whose desire to control their own bodies he mocks, despite the substantial evidence in my book of the negative impact on health, costs, and productivity of the inconvenience and lack of support that characterize all too many health care providers. A new consumer-controlled health care system will finally give Americans the integrated, convenient, supportive systems they need to ease their aching backs and sore feet, as well as their debilitating, chronic diseases.

As in other sectors of the economy, in a market-driven system, entrepreneurs will provide what consumers want. It is difficult to imagine such results in the limited-choice, technocratically controlled health care system that Hacker advocates.

Regina E. Herzlinger
Nancy R. McPherson Professor of
Business Administration
Graduate School of Business Administration
Harvard University
Cambridge, Massachusetts

Andrew Hacker replies:

In her concluding chapter, Professor Herzlinger says that with her proposal for public funding, “an average family may receive around $6,000, the payment their employers once spent for their health insurance.” But there are millions of households that have no working members, and whose jobs do not provide health coverage. It is not clear if she would give these families the full $6,000 to purchase policies, since she notes they may have to settle for a “lower-cost version.” She also speaks of continuing to use “Medicaid money for the poor,” which suggests perpetuating that program, with its legacy of second-class care.
In rereading my review, I cannot find any place where I call for a “technocratically controlled health care system.”