Tackling costs of health care requires some huge changes

June 13, 2007

In The Des Moines Register, CHT Founder Newt Gingrich and Project Director David Merritt discuss how to extend coverage to 45 million uninsured Americans. By Newt Gingrich and David Merritt
(Originally published in The Des Moines Register)

From presidential candidates and trade associations to governors and industry coalitions, it seems that everyone has a plan on how to extend health insurance to the 45 million Americans without coverage. While they have their hearts in the right place, they fail to grasp the magnitude of the problem.

We can get to 100% insurance coverage, but it will take bold, transformational solutions. What the current proposals give us is just more of the same tired financing proposed in the past. They try to cover the uninsured within the current system, which is akin to building a house on quicksand. They have nary a word on how to make healthcare more affordable – and that is why they will all fail.

The uninsured crisis is a symptom of the larger structural problem of rising healthcare costs. As in medicine, we must cure the disease, not just alleviate its symptoms. By driving down costs and making healthcare more affordable for every American, we can achieve 100% coverage. But to get there, we must implement four transformational changes.

First, individuals must take an active role in becoming healthier. The Centers for Disease Control and Prevention report that 64 percent of adults are either overweight or obese, and that diabetes kills more than 200,000 Americans every year. These two conditions alone cost our system hundreds of billions of dollars every year. But they are, for the most part, a consequence of poor individual choices. Individuals must be incentivized to make responsible decisions through closer relationships with their physicians and through wellness programs that reward healthy living. For example, Blue Cross Blue Shield of Michigan introduced Healthy Blue Living, where individuals can save 10% or more on their premiums, co-payments, and deductibles if they work with their physician, exercise, eat right, control chronic conditions, and don’t smoke.

Personal responsibility extends to the purchase of health insurance as well. Citizens should not be able to cheat their neighbors by not buying insurance, particularly when they can afford it, and expect others to pay for their care when they need it. However, an individual mandate must take one’s income into account, and more importantly, it is an acceptable option only when the larger healthcare system has been fundamentally changed. It is unjust to require an individual to buy into a broken and dysfunctional system.

Second, we must create a culture of health that leads to responsible choices. We can do this by redesigning how public and private institutions influence individual behavior, and nowhere is this needed more than in public education. The CDC reports that nearly 80% of students—40 million of them—do not eat the recommended five servings of fruits and vegetables a day, and only one in three high school students participate in daily physical education. As a result, the number of obese children has tripled since 1980. We can correct this course with smart policies.

For instance, physical education five days a week should be required for every student in grades K through 12. Students should be weighed and their body mass index calculated, with the results and relevant educational material sent home to parents. School lunches, breakfasts, and vending machines should promote healthy foods, so that unhealthy alternatives are penalized or prohibited. For example, the University of Virginia Health System has an innovative program that color codes snacks in vending machines and their cafeteria according to how healthy they are. Future generations that are vibrant and healthy will ensure that America is as well.

Outside of public education, grocery stores in poor neighborhoods should receive tax incentives to provide a wide selection of fresh fruits and vegetables. The federal government should redesign the food stamp and WIC programs to incentivize the purchase of healthier foods. State and local governments should dramatically invest in bike paths, sidewalks, public parks, and active recreation programs to encourage physical activity. And consumers need tools to be better educated on their choices, as Safeway has done by creating an online portal where consumers can view their own specific food purchases and receive recommendations on healthier alternatives.

Third, we must dramatically improve and modernize the way we deliver care. This must start with rooting out waste and inefficiencies. We should eliminate any financial incentive to do any test, treatment, or therapy that does not directly benefit the patient or add value to the care process. Payments or reimbursements to doctors and hospitals must change from a transaction-based to an outcome-based model. Paying for outcomes will entail the creation of and adherence to clinical guidelines across the care spectrum that are based on evidence—not opinion. Payment for outcomes will also encourage the use of tools and technology, like electronic health records, that will lead to higher quality, more efficient care.

Lastly, we must radically change the way we finance health insurance and healthcare. Between individuals and their doctors are mountains of burdensome regulations, hoards of middlemen, and red tape as far as the eye can see. In no other sector of society do we accept such a convoluted approach to buying a product or service. Putting consumers squarely in control is essential.

Consumers should have the right to purchase a health insurance policy from anywhere in the country, which would create a truly competitive, national market. In effect small businesses and the self employed would have the same national market advantages which big businesses enjoy today under ERISA. Health Savings Accounts should be available to everyone, regardless of how or whether they obtain insurance, and HSAs should be opened and funded for low-income individuals and families. Information on provider performance and price, as well as that of insurance companies, should be available to consumers—before they receive care. We should empower the individual to root out waste by creating incentives for consumers to pursue better care at lower cost so the citizen becomes the primary driver of cost reduction in healthcare. Consumers should have the right to purchase insurance policies that are tailored to their specific needs. And individuals who purchase their own insurance should receive the same tax benefits as employers who provide coverage.

The healthcare system as currently designed is incapable of insuring every American. It will always result in rising costs, poor quality, and an unhealthy population. Any plan to cover the uninsured that builds upon such a dysfunctional system simply throws good money after bad. We can do better. With real change we will lower costs and make healthcare affordable for every American, and that will lead to 100% coverage. Our country and our citizens deserve nothing less.

Former House Speaker Newt Gingrich is founder of the Center for Health Transformation. David Merritt leads the “Insure All Americans” project at the Center (www.healthtransformtion.net).