Why It Matters
A Harvard public health professor’s forthcoming book argues that the United States’ expensive and underperforming health system stems not from happenstance but from deliberate policy choices beginning in the early 1980s. Understanding how ideological shifts shaped health care markets has implications for how policymakers might address persistent cost and quality problems today.
What Happened
John McDonough, Professor of the Practice of Public Health, Health Policy and Management at Harvard T.H. Chan School of Public Health, contends in his new book that America’s health care troubles trace to a fundamental ideological reorientation toward neoliberalism during the early 1980s. McDonough discussed his research on the podcast “Health or Consequences” with interviewer Paul Hattis.
The neoliberal philosophy, shaped by thinkers like Milton Friedman, emphasized deregulation and encouraged market actors to maximize profits and shareholder value through competition. This worldview prioritized efficient markets and consumer choice while minimizing government oversight—and it extended to health care, a sector traditionally viewed as operating under different rules than other industries.
McDonough describes this transformation not as a single dramatic legislative overhaul but as an accumulation of smaller decisions: legislative choices, agency deregulation, and the gradual erosion of the assumption that health care markets function differently from conventional markets. The shift opened the door to decades of industry consolidation and financialization.
“America’s uniquely expensive, uniquely underperforming health system didn’t just result as an accident of history—but was the predictable result of a specific ideological turn taken in the early 1980s,” McDonough said.
By the Numbers
Early 1980s — the period when neoliberal ideology began reshaping American health care policy
1990s — when health care industry consolidation accelerated in earnest
40 years — the span during which government has largely avoided using antitrust enforcement to halt health care consolidations
Industry Consolidation and Private Equity
Health care consolidation that gained momentum in the 1990s folded independent, mission-driven institutions into larger systems. Research shows that as consolidation increased, prices and spending rose without corresponding improvements in quality—and in some cases quality measures worsened slightly.
Private equity involvement represents the latest and most aggressive chapter. McDonough characterizes private equity as “the purest and most aggressive expression of the financialization” of health care. Unlike earlier consolidation waves, private equity firms operate on shorter time horizons and focus explicitly on extracting financial returns rather than building long-term institutional capacity.
Zoom Out
The debate over whether health care should operate as a market commodity or a public good continues across the United States. Some economists and policymakers argue that market competition drives efficiency; others contend that health care’s unique characteristics—information asymmetry, life-or-death stakes, and the inability of consumers to shop easily for emergency care—make traditional market models ill-suited to the sector. McDonough’s book adds historical and ideological perspective to this ongoing dispute, tracing current system failures to specific policy choices rather than inevitable outcomes.
What’s Next
McDonough’s book, “America’s Wrong Turn: US Health Care in the Neoliberal Era,” is scheduled for publication on August 11. The work may inform ongoing debates among Massachusetts policymakers and nationally about antitrust enforcement, consolidation limits, and the role of government in regulating health care markets.