Newt Gingrich: Health Care Visionary
(Today’s Health Alert was written by Greg Scandlen.)
Politics has a way of turning everything ugly. Some people will say anything to get their guy elected. Others see elections as an opportunity to settle old scores. In either case, what is lost is honesty and sober analysis.
Seventeen years ago, shortly after being installed as Speaker, Newt Gingrich gave a short talk (video; full transcript) at a reception of the Council for Affordable Health Insurance. His presentation included his vision for a reformed health care system and how we could get from where we were at the time to where he saw it going.
It is interesting to look back today and see how his predictions panned out — where he was right, where he wasn’t, and why.
We can never know about the days to come
But we think about them anyway
Perhaps even more interesting is that he had a vision at all. Thinking about the other Speakers of our era — Tom Foley, Denny Hastert, Nancy Pelosi, John Boehner — how many have had a vision beyond retaining a majority? Or at least, one they would share with the public? Not only did Gingrich have a vision, he could articulate it in detail without using any notes.
Let’s take his points one by one and see how they have turned out.
His overall vision was that we are “likely to see a crash in the cost of health care in the next 20 years of at least 20%.” Obviously that has not happened, but it is not an outlandish dream. Indeed, it could be argued that it has happened — for the conditions that were being treated in 1995. There have been substantial improvements in the care of heart disease and certain kinds of cancers. But there are also a host of new challenges to the health care system that could not have been anticipated in 1995. These include the obesity epidemic and resulting rise in diabetes, the increase in asthma cases, and the growing diagnosis and medicalization of autism.
Gingrich laid out a series of broad trends he thought would take us to this goal. The first involves molecular-level medicine. He said:
First of all, we are entering the age of molecular medicine. We are about to know dramatically more about how bodies operate and the whole DNA human genome approach that is literally going to eliminate classes of problems.
The Human Genome project hasn’t worked out quite the way people expected in 1995. It turns out that, rather than identifying a single gene that “causes” a particular malady, we are discovering a very subtle and nuanced interaction of genes and proteins that combine to create conditions that trigger certain responses. The people with hands-on knowledge of this work are astounded and humbled by how vastly more complex all this is than they had imagined.
But the expectation of a fundamentally different approach to medicine just around the corner continues. In 2006, Andy Kessler wrote a fascinating book, The End of Medicine, which anticipated a world in which nanotechnology, molecular medicine, and informatics combine to create customized treatments that will be managed by the patient. [Kessler, by the way, sees very little value in electronic health records and other means of digitalizing the crude and clumsy system that exists today.] Kessler also sees entrenched special interests as the primary obstacle to innovation — a viewpoint he shares with Gingrich.
Gingrich’s next point involves something similar to Kessler’s thought. He said:
Second, we are entering an information age in which our real time capacity to check research all over the planet is going to not only allow new ideas to move around faster, but also mean that patients…are going to be able to learn dramatically more very fast and that doctors are going to rapidly discover…that patients know as much or more than they do about the particular problems they are dealing with because the patients have far higher vested interest in learning the state of the art than do most doctors.
This is in fact happening today, though only over the objections and resistance of the health care elite that is invested in keeping patients ignorant. People with a particular condition are searching out research and treatment options on a global basis. Much of this is still crude and physicians sometimes complain that patients arrive in their offices with reams of print-outs from the Internet. But Gingrich’s vision is being vindicated.
The third contributing factor, according to Gingrich, was moving to a “genuinely free market” in which patients shop around for the best price and best quality service for their condition. He envisioned insurance companies partnering with patients to get services at the lowest cost facilities with the best outcomes, even if they are out of the area, and sharing the savings with the patient.
This, too, is happening today, though with minimal assistance from the insurance companies. Rather, people who are uninsured or who have high deductible health coverage are using “medical tourism,” both domestically and globally, to receive very high quality care at costs that are a fraction of what they would have paid locally. The efforts of India, Thailand and Korea to attract such patients are well known. People often go to Mexico for dental care or Brazil for cosmetic surgery. Less publicized are the patients who travel, say, from California to Oklahoma City to get care at half the cost back home.
Which raises one of Gingrich’s major misapprehensions. He said:
This will also mean that health care and health systems will be the largest earner of foreign exchange in the 21st century. Americans will make more money in the world market and health will be seen as an opportunity, not a problem, financially.
Alas, other than some wealthy sheiks and disgruntled Canadians, there are not many foreigners coming to the United States for health care services. Why? Because the hospital industry was fearful of competition. They propped up Certificate of Need (CON) to prevent new, more efficient facilities from being built. CON is based on the delusion that each hospital serves a well-defined “catchment area” which needs only so many hospital beds. Any beds beyond that number are not “needed,” so will not be allowed to be built. More recently, the American Hospital Association worked with Senator Charles Grassley (R-IA) to virtually outlaw physician-owned specialty hospitals — the very kind that would attract patients from abroad.
Instead of being an economic bonanza for the United States, medical travel has worked in the opposite direction. Americans are taking many millions of dollars overseas to obtain better quality at a lower price than is available stateside.
Gingrich then goes on to discuss his legislative agenda. He said he wanted to move several ideas as building blocks of reform.
The first is portability. This, of course, was enacted as HIPAA. Despite its name, HIPAA (The Health Insurance Portability and Accountability Act) did very little to ensure real portability, such as allowing workers to own their own coverage and keep it as they changed jobs. It was sold as a portability law, but like many such efforts, it ended up being loaded down with a host of other provisions that made it nearly unworkable.
He wanted to enact Medical Savings Accounts. These were built into the HIPAA law, though opposition from Ted Kennedy resulted in a feeble, whittled down program that applied solely to small groups and individuals and had severe limits on the length of the program and the numbers who could be enrolled. Senator Kennedy spent an entire week on the Senate floor shouting that, “MSAs will destroy the insurance market!”
Gingrich wanted to equalize the taxation of individual and employer-based coverage. He said:
We would like to move the tax transparency, where whether you are buying your own insurance or your insurance is being bought by your employer, why should there be a difference in tax consequences?
Tragically, this never happened.
He also wanted to allow for non-employer groups. He said:
We would also like to make it possible for virtually anyone to become a group. So if your church, your synagogue, your bass fishing group, whoever wants to form a group, why should we be tapped into a handful of groups? It’s a much more flexible dynamic environment and assumes the capacity of people to be consumers and not just to be taken care of.
This, too, never came to pass. Both of these provisions were blocked by a combination of liberal Democrats who thought people are too stupid to make decisions and an insurer/employer alliance that was comfortable with the current system and didn’t care to face changes.
Then Gingrich talked about Medicare, and the crisis in funding it was facing then (and now). He said:
Our system will essentially be offering the current base Medicare plan followed by offering five or six options. MSAs will be an option. Opting out of the system and getting a voucher from the government and buying your own insurance will be an option — paying whatever you want and buying whatever plan you want and going wherever you want to. Managed care will be an option.
This was largely enacted as part of the Balanced Budget Act of 1997. The BBA created “Part C” of Medicare, which has since been expanded to Medicare Advantage and is currently enrolling one-fourth of all Medicare beneficiaries.
He said Medicare would include MSAs, and it did (and continues to), but again in a very tentative way.
He also wanted to set up a way for seniors to benefit from auditing their own medical bills. He said when they found something amiss Medicare should share one-quarter of the savings with them. Another great idea that never happened.
Gingrich was not blind to the challenge and the resistance these ideas would spawn. He said:
But I want to give you one number to take home with you because you are going to see a big lie program from the liberals that will make the school lunch demagoguery look like nothing.
Medicare spending under the current Republican proposal in the House goes from $4,700 per year to $6,300 per year per senior citizen. Now, in almost all of America going from $4,700 a year to $6,300 a year would be considered an increase. That is, we will spend more, in fact we will be spending $1,600 more. In most of America, the idea that we are prepared to spend $6,300 per person on an insurance program would strike most people as a fairly serious commitment. But I can assure you that over the next three to four weeks you are going to see the Washington interest groups and the liberals join together in a deliberate effort to frighten senior citizens by lying to them about the program.
And it is, I think, a remarkably despicable thing that some people want to keep their elected jobs so badly that they don’t mind scaring 70- and 80- and 90-year-old people by telling them something that is fundamentally false.
Gingrich nailed it. This is exactly what happened, and continues to happen today. Remember the commercials last year that featured Paul Ryan literally throwing Granny off a cliff?
It is worse than that, though. A couple of years after this speech Congress created the Medicare Reform Commission, co-chaired by Sen. John Breaux (D-LA) and Rep. Bill Thomas (R-CA). It included representatives of the House, Senate and White House. After months of hard work, the commission came up with a bipartisan consensus that had majority support. The Commission called for a “premium support” approach to Medicare coverage, but Bill Clinton’s appointees refused to support it, so it died for lack of a supermajority.
This was perhaps the greatest tragedy of the 1990s. The opportunity to fix our largest entitlement program was lost. But Newt Gingrich saw this coming back in 1995. He said:
Now the question is very simple — Is it possible to develop a program that provides adequate health care for $6,300 per year per person? Now let me give you my answer as an historian. If we aren’t smart enough and creative enough to improve the system for $6,300 per year than we had better just tell our kids that the America we’ve known is gone.
It turns out that we may be smart enough and we may be creative enough, but we are paralyzed by political arrogance and blind ambition. Combine that with an ideology that views the American people with contempt — like children incapable of managing their own affairs — and you get government policies that empower a bureaucratic elite whose job it is to make decisions on your behalf.
Newt Gingrich failed to achieve all of the goals he set in 1995, but given how lofty those goals were and how broken the Washington environment, he accomplished a great deal. And we are still building on those achievements today.
Regarding his prediction for the crash in the cost of healthcare, clearly that hasn’t happened overall, but I would think that the obesity epidemic could have been anticipated and probably was anticipated by some in the medical community.
A few years back, Newt Gingrich used Travelocity as an anecdote about how an electronic exchange for bidding and price comparison could do for medicine what it had done for travel. In years past, travel was booked by travel agents, who earned a significant commission from the airlines, cruise ship industry, hotel industry for booking your travel. You used a travel agent because they had access to the reservation sustem and had the time to familiarize themselves with travel deals. The assumption was: the agent found you a good deal and the commission was paid for by someone else. But economists will tell you that the travel agent was (to a significant degree) beholding to the entity that paid them (read: the travel industry) and the commission ultimately came out of the travelers wallet.
Now, travelers rarely use the services of a travel agent (except for corporate travel). The travel industry doesn’t pay huge commissions on Internet sales. People decide whether to take the time to investigate the best prices or the best locations and book their own travel.
Back to the topic: Gingrich had a great idea; he saw Travelocity as a model for what could happen in the health care industry. The only problem that stood in the way of Gingrich’s vision is that consumers need to control more of their own money in order to be persuaded to do this. If patients controlled more of their own money, they’d dig through medical websites looking for bargains in a heartbeat.
#1 Issue – People like the former Speaker want to design coverage – instead of taking input from those of us who have decades of experience in the market.
#2 Issue – “Molecular medicine”, often called “personalized medicine” had a promising start but it was another Republican, President Bush, who allowed the Congress to pass GINA, which was supposed to free-up Americans to pursue personalized medicine, but, regulations essentially chilled most of what would have been employer-sponsored efforts (consider that your employer’s wellness program can no longer ask about your medical history).
#3 Issue – Most Americans don’t want a “free market” in health care services. In the run up to health reform, I heard many say: “I want the best health care YOUR money will buy.” Nothing much has changed – too many people I know are waiting for a $2,500 per family check in the mail.
#4 Issue – Health Savings Accounts can/will work, so long as we recognize their limits. We need people to have “skin in the game” so that they will adjust health behaviors. But, we are kidding ourselves if we think that it will affect PATIENT behavior. That is, once you or your child is ill, all of us fall back into the mode where we will worry about cost later.
#5 Issue – Domestic medical tourism is in its’ infancy, however, we still don’t have the robust level of information – cost and quality – that would allow for effective utilization. Too many people are still focused on privacy and other issues – which, if I remember, came to us as part of Speaker Gingrich’s HIPAA 1996 act. You know that is the case when you see articles on the topic in the Atlantic, but not in the annual enrollment materials or employer coverage web sites. And, you know it will continue to be the case when there is no mention of such items in the mandated disclosures like the recently finalized regulations on coverage summaries under the Patient Protection and Affordable Care Act of 2010.
#6 Issue – Prediction of Medicare Trust Fund (Part A) goes broke pushed off until later this decade by increased Part A taxes – taking off the earnings cap, effective January 1, 1994. Great solution. Didn’t see Speaker Gingrich rail against that when he was in the minority in 1993. Didn’t see him try to roll back that one, either. Perhaps, as President, he will allow a similar change to Social Security. The Democrats complain about “regressive” taxes. Let me confirm that the only thing more regressive than the taxes are the benefits they fund.
#7 Issue – The cost of Medicare per beneficiary is now over $14,000. And, it was another Republican, President Bush again, with the majorities in the house and senate, who pushed through Part D in 2003 (along with Health Savings Accounts) and added perhaps another $10T in unfunded liability. The problem with these estimates is that they don’t account for the historical, massive cost shift from how Medicare (and Medicaid) are priced (that is, maybe 10% – 20% or more of Medicare is simply shifted over to other users who do not have government price-setting and out of pocket protections. Nor do these numbers incorporate the massive future cost shift from the intensified cost shift from changing demographics of baby boomers, nor the added cost shift from SGR (another Gingrich/Clinton initiative) nor from the PPACA’s cost shift by limiting Medicare cost increases to fund other health mandates.
From my point of view this essay has one glaring problem. Patients can learn a great deal about their specific disease. What patients cannot obtain without years of training and experience is judgment. Every patient is an individual and has unique health needs tailored to their overall and different health conditions. This takes judgment and thought, unfortunately Medicare and other insurances has reimbursed this activity very poorly and it has dwindled. The idea that patients themselves will become in effect their own doctor is in my opinion completely unrealistic.
Great post by Mr. Scandlen. As a physician, my heart aches at the paternalistic, protectionist, autocratic nonsense that is healthcare policy in America. The biotech revolution is being strangled in it’s crib by such as the FDA, Obamacare, etc., etc. And physician organizations are all but luddite, as are academic medical centers, hospitals, etc, as described here. On an historical note: The “Certificates of Need” for hospitals arose out or physician and hospital exploitation of Medicare in the 1970’s, when there were no controls on Medicare and whatever bill was submitted was paid by Medicare. This created a “golden financial age” of medicine that saw new medical schools popping up everywhere, people builing hospitals as fast and as far as the eye could see, because the deep pockets of the Federal government through Medicare was making all of these endeavors artificially highly profitable. Medicare created a bubble in healthcare facilities. Medical inflation was rising at rates as high as 30% a year. It was an impossible situation, created by exploitation of Johnson’s most popular “Great Society” program. Like all of Johnson’s programs, it contained the seeds of its own putrification. Before Medicare, Federal government spending on heatlh care was 6% of all spending on healthcare and healthcare spending in total comprised 6% of GDP. Thus the federal government spent 0.36% of GDP on healthcare. Now federal spending on heatlhcare is 55% of total heatlhcare spending, and healthcare spending is 18% of GDP, hence federal spending on heatlhcare alone is 10% of GDP. That’s a factor of about 30 times since the creation of Medicare. It is unsustainable. And it is the fact that Medicare not only uses 55% of all dollars spent on heatlhcare, but dictates the coding and pricing of all healthcare services paid for by the private sector. All reimbursement is tied to Medicare rates. This is a command and control system, directed from Washington. The AMA has been totally co-opted in the endeavor by being allowed to write the code books by which all medical services are re-imbursed (and is allowed to copyright those code books, profitting, some reports suggest, by as much as 300 million dollars a year from these federal contracts. The medical establishment has colluded completely in the federal takeover of heatlhcare (endorsing Obamacare, or course–James Rohack was AMA president when that happened). The federal government, meanwhile, holds both physicians and Medicare beneficiaries hostage to the SGR and cuts in Medicare spending, year after year after year. And now, under Obamacare, the elderly are being targetted for draconian cuts, (Berwick was the author of this virtual euthanasia with a smiley face). The AMA and the physicians it ostensibly (though not acutally) represents, are faring about as well, and performing an historical role, not unlike that of the Jewish Special Commandantes in the Hitler death camps.
Newt has always been a visionary. Often he has been very prescient.
Gingrich is the only Republican candidate who has made an effort to develop a serious alternative to Obama Care. All the others are for “repeal.” But they don’t have any serious ideas for “replace.”
If we look at his platform for 2012 (http://www.newt.org/solutions/healthcare), it is still largely in line with this previous vision – especially the first and second points in the platform, which would give individuals the choice of their own health plan, whether they were privately employed or on Medicare.
However, we must recognize that the dynamic in Washington, DC is at least as difficult today as it was then. Indeed, large interests in the health sector greased the skids for Obamacare, instead of resisting it.
So, if Mr. Gingrich could not get individual ownership of health insurance into HIPAA back then, how will he do it now? Furthermore, HIPAA itself put us on the slippery slope of federal legislation governing health insurance – which it has not done for other lines of insurance.
“Instead of being an economic bonanza for the United States, medical travel has worked in the opposite direction. Americans are taking many millions of dollars overseas to obtain better quality at a lower price than is available stateside.”
I would argue the latter statement referring to better quality at a lower price, especially after reading this article I came across which clearly states that you get exactly what you pay for.
http://www.msnbc.msn.com/id/14719452/ns/health-health_care/t/death-exposes-illegal-cosmetic-surgery-network/
Interesting post.
Excellent point, Dr. Fisher.
RE: blind faith in market-based health care, prudent patient/consumer judgment and the myth of government paternalism – it just amazes me that people actually believe that purchasing healthcare services is fundamentally no different than buying a new car or a flat-screen TV. Just amazing.
Nice and timely review, Greg.
To J Towarnicky: Medical tourism does not come to us in large part because hospital charges are too high. The hospitals, corporations run for profit, often with coverups for mistakes and attacks on whistleblowers, are not the domain of doctors. We have many centers of excellent specialty care, but only the rich come here (exception: coming across the border from Canada when the Canadian socialistic system has failed to provide timely care). The medical tourism is almost exclusively to abroad, not for superior care, but for comparable care at a much reduced cost.
To Dr. Fisher: Agree. Medicine is a black box to “consumers” here, much less to those who live abroad. Even many family medicine docs and internists don’t know who the best specialty surgeon in their own region is. Plus the intellectual diagnostic mechanism you reference.
To Dr. Lyon: Agree; perceptive post. The AMA will not even stand up for doctors who blow the whistle on hospitals. Their cowardly accord with Obamacare/Abysmalcare is noted. They should have stood tall, esp when Obama came to the annual AMA meeting in June, 2009, and refused to make tort reform a part of any medical legislation. (The pittance set aside to study medical risks in the current bill is a joke)…besides, the studies have been done. Tort reform has worked in Indiana, Louisiana, California, Colorado, and now Texas.
Only 15% of practicing physicians belong to the AMA.
Medicare keeps costs down (soon to be overwhelmed by the number of individuals on the plan) by ratcheting down payments to physicians…often reimbursement is below overhead; and the paperwork for Medicare and Medicaid is the most burdensome of all insurors.
To D Osuna: I hope that is a rare occurrence, and believe it is…so doesn’t really apply to this article.
If his plan truly carried water, then someone certainly would have brought it forward. I was very interested in his health care policy reform, but for some reason it never gained any traction.
Dr Bob Kramer
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