Aetna 2001 Annual Report Download - page 29

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Consumer-Driven Health Care
 . , ...
Nancy R. McPherson Professor of Business Administration Chair, Harvard Business School
We live in a democratic, consumer-driven country whose
prosperity and freedom serve as models for others.
Such a consumer-driven society is not easy to attain; but prior “Great Generations” and today’s brave
soldiers, including my son, currently an infantry officer, fight the good fight to secure the life we want.
Since we got rid of Britain’s micromanagement, we have been able to vote for candidates and
buy products that best meet our needs. Cars, computers, chickens, automobile insurance, mutual funds
— you can get what you need at a fair price. Producers continually innovate to gain our custom.
Car manufacturers, for example, successfully respond to seemingly impossible consumer demands
for more choice; lower costs; and improved safety, reliability, and environmental characteristics.
Readily available, excellent quality ratings help ordinary people, like you and me, to buy complex
products, like cars, intelligently.
Health care is the one exception to these happy circumstances. Most insurance policies are plain
vanilla — virtually the same benefits, co-pays and deductibles, and access to essentially the same
providers. And despite the excellence of providers and technology, quality problems abound. Costs are
so high that, to our shame, more than  million Americans lack health insurance. As for the quality
ratings of providers that consumers want and need, they are the “Emperor’s New Clothes.”
No wonder Americans give health insurers bottom ratings.
Why is health care such an exception?
Some blame the incompetence, greed and frivolous product differentiation of health insurers.
They want government to take over. With a single bureaucracy firmly imposing standardized
benefits, supplanting competitive health insurers, they claim costs will be reduced. But most
Americans and those who have experienced government-controlled health care systems elsewhere
are hardly euphoric about this prospect.
Instead, many who support a consumer-driven economy believe that health care problems
are caused by a shortage of consumers,not government. After all, a third party usually purchases
health insurance. How can Harvard University, or any third party, know what benefits I want at what
price? So buyers simplify by limiting product differentiation. Small wonder that competition
through consumer-driven innovations is notably absent in health care.
As I predicted in my  Harvard Business School Conference on Consumer-Driven Health
Care,  spawned the movement with the widespread introduction of lower-cost catastrophic
insurance products. Under the corporate umbrella, employers will follow defined-contribution
pension models, creating a supermarket stocked with a vastly enlarged menu of new, highly
differentiated health insurance products and quality ratings to help employees choose wisely.
They will also give their employees money to help buy insurance. The resulting competition will
create the better, cheaper health care system we all want.
The transition will not be easy. Single-payer advocates and the insurance firms that fear compe-
tition will promulgate many scare stories to stop its dissemination. Providers will kick and scream
about being evaluated.
But in the end, the American people will prevail, as they always have, and finally include health
care in our hard-won consumer-driven society.