The Big Idea: How to Solve the Cost Crisis in Health Care

The biggest problem with health care isn’t with insurance or politics. It’s that we’re measuring the wrong things the wrong way.

by

Robert S. Kaplan

and

Michael E. Porter

by

Robert S. Kaplan

and

Michael E. Porter

From the Magazine (September 2011)

U.S. health care costs currently exceed 17% of GDP and continue to rise. Other countries spend less of their GDP on health care but have the same increasing trend. Explanations are not hard to find. The aging of populations and the development of new treatments are behind some of the increase. Perverse incentives also contribute: Third-party payors (insurance companies and governments) reimburse for procedures performed rather than outcomes achieved, and patients bear little responsibility for the cost of the health care services they demand.

A version of this article appeared in the September 2011 issue of Harvard Business Review.

Robert S. Kaplan is a senior fellow and the Marvin Bower Professor of Leadership Development emeritus at Harvard Business School. He coauthored the McKinsey Award–winning HBR article “Accounting for Climate Change” (November–December 2021).
Michael E. Porter is the Bishop William Lawrence University Professor at Harvard Business School. He has served as an adviser to governments and campaigns around the world on the advancement of social policy and economic policy, including Mitt Romney’s presidential campaign. His latest paper is The Role of Business in Society. He is an academic adviser to the Leadership Now Project.

The Big Idea: How to Solve the Cost Crisis in Health Care

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