NCPA - National Center for Policy Analysis

Consumer-Driven Health Care

June 13, 2003

Politicians and health policy "experts" who wield unprecedented power over our health care system don't like consumer-driven health care one bit. They question our ability to purchase health care and doctors' and hospitals' ethics and competence. We would be lost without them, they aver, says Regina Herzlinger (Manhattan Institute).

But somehow, consumers and providers of other complex items -- cars, computers -- succeed without their help. Their costs plummeted while quality shot up.

We can achieve the same in the field of health care with a consumer-driven health care system that rewards productivity by empowering providers and consumers, explains Herzlinger.

  • Providers could price and design services, absent insurer and government micromanagement.
  • Consumers could choose from a wide choice of insurance plans, offered by their employers along with excellent information to support their decision-making.
  • The resulting market-driven competition is much more likely to create the efficiencies that can broaden access to health care.

Government micromanagement isn't needed in consumer-driven health care, according to Herzlinger.

  • We don't stop lawyers from owning legal practices because in a consumer-driven system, clients can easily resist blandishments for additional services.
  • Consumer-driven governments prosecute fraudulent, incompetent insurers and providers and help the needy.
  • In Switzerland, citizens must buy insurance, while governments subsidize those who can't afford it, which results in universal coverage and excellent health care at much lower costs than ours.

Our health care system demonstrates the effects of suppressing markets in the name of ideology. What we want is a system that enables entrepreneurs to create medical innovations at a fair price and us to buy it, says Herzlinger.

Source: Regina Herzlinger, "Prix-Fixe Rip-Off," Wall Street Journal, June 13, 2003.

For text (WSJ subscription required),,SB105546075890080200,00.html


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