This Article Abstract Submit a response to this article Services E-mail this article to a friend Alert me to new issues of the journal

I N T E R V I E W : 
G I N G R I C H  &  G O L D S M I T H
W E B  E X C L U S I V E   

29 October 2003  
  


Politics, Technology, And Transformation: 
A Conversation With Newt Gingrich

How can we reform Medicare without political consensus
about what needs to be reformed?

by Jeff Goldsmith


ABSTRACT

In this interview conducted by Jeff Goldsmith, former congressman and Speaker of the House Newt Gingrich (R-GA) provides an iconoclastic view of the problem of reforming a Medicare system in the absence of a political consensus about what needs reforming. Topics include Medicare prescription drug legislation, the role of technology in transforming the health care system, the need to communicate clearly and honestly with people (especially senior citizens) about proposed changes to their health benefits, the role of the private sector, and incentives for change.


Wrestling With A Medicare Drug Benefit

Jeff Goldsmith: Your Republican colleagues in Congress are wrestling with adding a prescription drug benefit to Medicare, and they seem profoundly uncomfortable, particularly in the House, about how to do this without destroying the federal budget. What comfort would you give them?

Newt Gingrich: None. This is the most important domestic policy decision since 1965, and they should approach it that way. If they create a transformational Medicare bill, they will create a better future for the entire health system. That requires thinking of the bills from the House and Senate as building blocks, not as boundaries. If they allow themselves to see the House and Senate bills as boundaries and negotiate a compromise between those two bills, they will have created a mess.

Goldsmith: Isn’t that what’s going on?

Gingrich: No. I think that the president and the senior leadership of the House and Senate are absolutely undecided about what they’re doing in the next couple of months.

Goldsmith: But what’s the engine of transformation? It seems like they’re leaving the basic acute care structure of the program and its payment incentives largely intact.

Gingrich: Right. And that’s a mistake. If the bill that comes out is bounded by the two bills that went in, it will be a failure. It will be a failure for the senior citizens currently on Medicare, because it won’t offer them a very good program. It will be a failure for the health of the senior citizens on Medicare, because it won’t incorporate new techniques. It will be a failure for the federal budget, because it will be impossible to balance it again in our lifetime. And it will be a failure for the baby boomers, because it will fail to prepare the system for them to retire.

So let me be very clear. I was for both bills, because those were the bills that could get to conference. But now the conference has to make a real decision. Senator [Bill] Frist [R-TN], who is a world-class doctor; Speaker [Dennis] Hastert [R-IL], who is an extraordinary student of health care and has presided over all of the major task forces; and President Bush have to decide: Will they bring into that conference a range of ideas that will dramatically transform the health system, not just Medicare?

Let me give you an example. Both bills take major steps towards electronic prescribing. The House bill mandates it; the Senate bill encourages it. Compare that with the legislation in June in Florida, which required doctors to print legibly.

Goldsmith: I guess the docs get sent back a grade for bad penmanship?

Gingrich: I clipped a Naples, Florida, newspaper article that actually discussed what would happen if doctors refused to print well. Isn’t that just perfect? It tells you everything about the current system. So the deal is, if you take the pieces of the two bills that are the most forward looking and build on them, you can design a politically popular bill that will pass both chambers by a large margin. That will have something like a Federal Employees Health Benefits Program [FEHBP] model for the baby boomers, but it will protect the current generation of seniors if they want to stay in the old system, apply comorbidity management for chronic disease and patient safety requirements, and actually have taken huge steps toward transforming the health system.


Fiscal Constraints

Goldsmith: Where are the fiscal constraints that your House colleagues worry about?

Gingrich: I was a student of Edwards Deming. There’s a book, Quality Is Free, by a student of Deming’s, Philip B. Crosby, who argues that if you do the right thing right the first time, it is cheaper, not more expensive. This is a very important concept. That’s the number-one fiscal issue. Because if we can get the right thing right the first time in health, we can take out two million hospital-induced illnesses; a million and a half nursing home–induced illnesses; 44,000–98,000 people a year killed by medical error in hospitals; and so on. It has to be less expensive, not more expensive.

The Agency for Healthcare Research and Quality [AHRQ] came out with a report in June 2003 with a list of patient safety modifications that could be worth $100 billion a year. The federal government’s share of that is about $47 billion; Medicare’s share is about $25 billion. The CBO [Congressional Budget Office] will never score it that high. Say they only score half, $12.5 billion. That’s a substantial part of what’s needed to pay for the whole Medicare drug bill, just by itself.


Paying For Medical Error

Goldsmith: What percentage of the outlier payments in our current Medicare program do you think go to pay for the results of medical errors? There’s actually an entitlement to be paid for cleaning up mistakes under the current system.

Gingrich: In Rhode Island in the early 1990s, one-fourth of all senior citizen emergency room visits were the result of medication errors. Every one of those emergency room visits was paid for by Medicare. So if through electronic prescribing you take out four of every five emergency room visits for medication errors, that has to be a savings.

Goldsmith: Who holds providers accountable for achieving these changes? It seems to me that if people aren’t held accountable, you don’t get the savings.

Gingrich: I believe that CMS [Centers for Medicare and Medicaid Services] should pay 0.4 percent more per case or visit if a provider goes to electronic medical records and agrees to report quality outcomes. I’m told that is a substantial amount of money for a hospital or a doctor’s office, spread across all of their Medicare encounters in a year. I also believe that in some areas, like electronic prescribing, we should say flatly that by 1 January 2005 there will be no written prescriptions except in an emergency room. There’s no reason for any health care provider in America to use written prescriptions.

Continental Airlines went from 85 percent electronic ticketing in June 2002 to 97 percent in June 2003 and is now charging $50 for a paper ticket over and above the airline fare. By next June they will have eliminated all paper tickets, no matter what you pay. Take a look at that, and at the number of air travelers who now queue up voluntarily to get an e-ticket, and then say, tell me again about doctors printing legibly?

We [at the Gingrich Group] have been working with NDCHealth in Atlanta, which processes 70 percent of the pharmacy prescriptions in the United States. They have zero doubt that we could have a Travelocity-model [online travel reservation system] drug benefit in operation, with electronic prescriptions, in five months. Some people say you cannot do that. That’s what you hear about electronic health records, for example, and then you realize that the VA [Department of Veterans Affairs] already has an electronic health record for every veteran in the country.


Conflicts In Congress

Goldsmith: Back to Congress for a minute, haven’t the Democrats set your Republican colleagues up, continuing the perception of entitlement to services by the elderly, where countervailing influences to containing expenses aren’t really present? And when the costs inevitably blow up, they get price controls on pharmaceuticals as well as on hospitals and doctors.

Gingrich: First of all, there is a long-standing, and correct, need to reintegrate pharmaceuticals into health care. Someone made a comment on the 1964 Blue Cross plan (which Lyndon Johnson codified into Medicare) that medicine changed during the following thirty-nine years, but Medicare didn’t. Having a freestanding pharmaceutical benefit is actually an irrationality. Now, how do you kludge the benefits together? The first political ground rule is the simplest—the one that I keep preaching to my former colleagues in the House and Senate: Don’t scare the current generation of seniors.

Goldsmith: That’s pretty hard to obey with the scare-oriented political tactics out there.

Gingrich: Congressional Republicans won the debate over Medicare in 1996, while reforming Medicare. And, despite 123,000 ads, we ran seven points ahead of [Sen. Bob] Dole among senior citizens. Republicans would not have kept the House for the first time since 1928 if we had not succeeded in Medicare. It took a yearlong campaign. Every one of our members had been trained. We all knew the right language; we all had the right answers.

Goldsmith: And what was the message?

Gingrich: The message was, “We guarantee you will get to keep Medicare, but you should have the right to choose.” No bureaucrat or politician should limit your right to choose.

Goldsmith: Choose what?

Gingrich: That was the message.

Goldsmith: Oh, OK.

Gingrich: It was a two-part message. A: You’re guaranteed security. B: You’re guaranteed the right to choose. Because we worked with [AARP executive director] Horace Deets very closely, AARP never flinched. When all the vicious, mean ads came out, the average senior citizen read his AARP bulletin, didn’t see anything like what he saw in the ads, saw [Rep. Dick] Gephardt and me both being interviewed with neutrality, and said, “Well, that scare stuff can’t be true, because AARP would be raising hell if it was true.”

Last year the House Republicans passed a bill that AARP had endorsed to get to conference. Senate Democrats couldn’t pass a bill. The Republicans carried seniors by eleven points in the exit interviews. So the Democrats could have set us up, or they could have set themselves up, if we had the nerve in conference to write a free-market bill built on top of the guarantee of choice. You can’t scare AARP or seniors and be politically sustainable.

So you first stipulate to the elderly: If you want to stay in an obsolescent, forty-year-old system, the federal government will not force you to change. But AARP agrees: If the federal government can invent a new, better system and it’s less expensive, the elderly can choose it and get a bonus.


Prospects For Private-Sector Plans

Goldsmith: I’m having trouble reconciling House Republicans’ optimism about private health plans and competition with the existing Medicare program, on the one hand, with your profound skepticism about health plans in your book, Saving Lives and Saving Money, on the other. You seem a good deal less enthusiastic about the private health insurance system as a vehicle for change than the House Republicans appear to be.

Gingrich: Everybody in Washington focuses on finances, as though that were what health care is all about. Private-sector insurance is about finances. Private-sector insurance companies don’t have the moral authority to change the practice of medicine. That’s the great lesson of HMOs. Everybody intuitively believes that all the private-sector insurance company cares about is money.

Look at the title of the book: Saving Lives and Saving Money. First, you have to do the morally correct thing, which is to save lives. Then you do the practically correct thing, which is to save money. Unless it’s believed, with integrity, to come in that order, people won’t tolerate it. There’s only one institution in America that has the authority to make choices that affect the practice of medicine: the government. So in the Theodore Roosevelt tradition, which led to the creation of the Food and Drug Administration in 1903, my argument is that we should apply the same federal government standards to health care that we apply to aviation. In aviation you have private manufacturers of airplanes and engines. Private companies run airlines. You have privately owned aircraft and private pilots. This all happens in a system whose quality standards are federal. This is a Theodore Roosevelt model, not a German socialist model.

What we want to do is raise the standard within which people behave. So you start out with electronic prescriptions, as the simplest example. According to one estimate, electronic prescribing saves two hours per day per doctor on average. Now, 40 percent of all prescriptions require a call back for clarification.

Goldsmith: But congressional Republicans are still relying as the engine of “reform” on a private health insurance system that you just characterized as lacking in moral authority. How is that going to work?

Gingrich: I am for a federal guarantee that everybody has access to health insurance. I am deeply opposed to the federal government as the delivery system or as the single payer. That guarantees you end up with Canada or worse. As another example, we have electricity codes without having federal building contractors. So you have to build your house to code, often set by your county, that fits within a larger sense of what standards the code has to include, for safety.

I’d start with the idea that you want to transform the health care system by creating much greater incentives for individuals to be directly involved. This is why we talked about medical savings accounts—because you can’t manage things like diabetes through doctors and nurses; the patient has to be involved. Furthermore, in this age of the Internet, for some specialized health problems, the odds are fairly high that you know more than your doctor about what is wrong with you. This is one of the secrets of the modern world: The explosion of medical knowledge means that a generalist almost certainly won’t know as much as a patient can learn in a narrow niche, if it’s a truly rare disease or pharmaceutical agent.

Second, you want patients to have choice, and that means they have to have knowledge. We just got a study back from a little firm called Health Share, which takes Medicare data and simply analyzes those data against an expert system. We asked them to look at clinical outcomes for Phoenix, Arizona. In the hospital with the best outcome rate—they risk-adjust it for severity—a person was only one-fifth as likely to die as in the hospital with the worst outcome rate. The hospital with the best outcome rate was also 20 percent less expensive than the hospital with the worst rate. It’s the opposite of buying a Ferrari. In the health system, if you go to the very best, it can be less expensive. But you don’t know which the very best is. So part of what we need to do—and this is part of what has to be in the Medicare bill—is to set up a system that gives providers an incentive to adopt IT [information technology]. Initially, outcome reporting should be incentivized, but within five years there ought to be mandatory reporting of a set of indicators. It takes about four to five years to sort out the details. Then patients should be able to access that data.

Goldsmith: Shouldn’t the beneficiary get some of the savings from choosing a safer provider?

Gingrich: Yes. That’s why I said that the right way to draw people into an FEHBP-type system is to reward them in, rather than to punish them out of the old order.


Backlash From The Elderly?

Goldsmith: Isn’t this legislation really going to anger the elderly when they realize they’re not going to get free drugs from the government?

Gingrich: I think it depends on which elderly you’re talking about. I think if they get some help, they will, in fact, not be angry.

Goldsmith: Some help in three years?

Gingrich: Whatever the speed of setting it up.

Goldsmith: There was a fierce backlash against the 1988 Medicare catastrophic insurance bill, which included a prescription drug benefit but steeper beneficiary cost sharing. Why isn’t there going to be a backlash against this bill, with all the hedging that’s going on?

Gingrich: If it comes out of Congress so complicated it can’t be explained, there will be a backlash.

Goldsmith: Well, of course it’s going to be a thousand-page bill. How do you explain that?

Gingrich: You don’t try to explain it. The question is, What do you need to know as a senior citizen?

Goldsmith: OK. What do you need to know?

Gingrich: Right now it’s stunningly complicated. And I think unless that’s fixed in Congress, it will be a huge problem.

Goldsmith: Isn’t it going to be another ten thousand pages of Medicare regulations to implement a thousand-page bill? How can you make that simple?

Gingrich: I think with these two bills, it’s going to be very hard to simplify. But you can write a simpler bill off of these two bills. If you think of them as the building blocks from which you write the bill, not as the boundaries within which you negotiate it, you can create a much simpler bill. I also think that if you give a “smart card” to every senior within six months of the bill’s passing, you can begin to move toward a whole range of things almost overnight. And if you have electronic prescribing, that further helps things almost overnight. If you do it right, you can actually do six or seven things that work. There’s a reason we were successful in 1994, 1996, and 1998. Part of it was that we started with what the citizen hears and worked back to public policy. If we couldn’t explain it, we didn’t do it. There needs to be a set of clear principles coming out of this bill that explain what senior citizens get, and what they give up. Then Congress has to have the nerve to go back home and talk about it.


The Task For Congressional Committees

Goldsmith: Committees have trouble simplifying things, particularly when they are surrounded twenty-deep by lobbyists.

Gingrich: Right. Committees live in an age of too much expertise with word processors. Word processors allow you to write stunningly complicated material. But the assignment ought to be for every committee staff member to go out sometime this fall and spend one day talking with senior citizens.

Goldsmith: How many of them will return safely? That’s like sending them into Basra, isn’t it?

Gingrich: But see, I’m an idealist. I don’t think they ought to go out and try to defend the current bills. They ought to go out and listen. I keep telling my former colleagues and the guys down in the White House: We did this for four years. There is a way you can create a stunningly popular bill. Look at welfare reform. We met with 60 percent reduction of welfare, with people almost universally saying it’s a better system than the one it replaced. That wasn’t easy.


Realizing The Savings

Goldsmith: Yeah. But you had a lot of help from the economy. Now you’ve got the opposite situation. You’ve got a health system that is sucking up 9 percent more revenue per year and a huge budget deficit besides.

Gingrich: But you’ve also now got AHRQ showing you $100 billion a year in savings. We showed our model to Elias Zerhouni over at NIH [National Institutes of Health] and to Bill Stead, the associate vice-chancellor at Vanderbilt University. For different reasons (because it operates off of an early awareness/early detection/preventive care/self-maintenance model, which postpones the onset of serious illness), they both believe that we can save 40 percent of the current system’s spending. That’s more than 5 percent of GDP.

Goldsmith: But of course, those savings are income to somebody, right? They’re income to physicians that are redoing things, to hospitals…

Gingrich: And Travelocity has made life harder for the unionized big old airlines.

Goldsmith: Don’t we have a terrible time taking anything away from anybody in our political system?

Gingrich: Look. This is going to be one of the great arguments for the next couple of years, and people need to understand it up front. If the old airlines and the old unions and the old banks could get together, they could eliminate Travelocity and they could eliminate choice. On their own, the new upstarts could never have matched the lobbying power of the old order. But what changed it was—to their credit, ironically—when Teddy Kennedy and Jimmy Carter colluded to pass deregulation. Kennedy, I’m sure, never realized that it made life dramatically harder for the airlines’ unions, because it created an environment in which they had to be agile, efficient, and customer-oriented to survive.

Look at the world we live in now. I have a good friend who just went to Chicago to stay at the Drake or the Palmer House—five-star hotels—for $99 a night because he went on hotels.com [a discount travel site on the Internet]. With almost every audience, I bring up ATM machines for cash, including overseas; self-service gas station with credit cards for which you no longer check receipts; Travelocity; and e-tickets. And I say to seniors, now that we’ve discussed the world you normally live in, let’s talk about paper prescriptions. This is the core issue. People need to get this straight. If this country is prepared to sacrifice 100,000 or more people each year, we shouldn’t change the health system, because it’s going to disturb someone in the current system. But if you think saving 100,000 people a year, and maybe as much as 5 percent of GDP ($640 billion a year), is worth doing, then let’s get busy. That’s how we did welfare reform. That’s how we balanced the budget in 1997. That’s how Reagan defeated the Soviet empire. We had to go in and roll up our sleeves and tell the truth and have a fight.


Bringing About Change In Large Systems

Goldsmith: In your book you talk a great deal about the transforming power of technology and of empowering consumers. But the health system itself has congealed in the past ten years into very large, complex, bureaucratic enterprises. How do you change them?

Gingrich: You don’t try to change them. You create conditions for them to meet. They have to change themselves. You can never reach into these systems and change them. Let me go back to my analogy. Nobody in Washington could reach into United, American, TWA, Delta, Northwest, or Pan Am and change them.

Goldsmith: Eastern, Piedmont, Braniff—

Gingrich: Look. I used to represent Southern, which became Republic, which became Northwest. Washington couldn’t reach in and “fix” those companies. What Washington could do is set the market conditions in which customers could say, in effect, “Change or die.”

Goldsmith: So what you’re saying is that we need a government that is wise enough to stand back and allow some of these large entities to fall apart.

Gingrich: That’s how America changes. I mean, you know, look back to Studebaker and Kaiser as automotive companies, or AT&T.

Goldsmith: Well, now, that’s an interesting example, because it was the judicial system, not the elective system, that went in and broke up AT&T. Are you advocating that people do that with health care enterprises?

Gingrich: No. What I advocate there is that you get competitive association health plans, like those that exist in an ERISA [Employee Retirement Income Security Act] model, and they will compete with the Blue Cross system overnight—the Southwest Airlines model. Now, if you find collusion in a hospital chain, or collusion with a dominant insurance company, then I would say, sure, break it up. That’s why you have a Federal Trade Commission.

So the question is, What is in the best interest of the citizen/individual/patient—which is all the same person—who we’re designing this system around? Are we propping up obsolescent systems that have earned lots of people a living, and avoiding change? Now, absolutely, the current political structure is heavily biased toward preserving the existing order. You will never win an inside fight. You’ll never win a fight where you take on the Blues, or the teaching hospitals, in a closed room. But you will win fights where you are busy defining patient safety, patient choice, patient knowledge, patient responsibility. Looking again at the welfare reform model, in which we expect the poorest Americans to get a job, so also we can expect every American to know something about their own health and have some responsibility for their own health care. And yes, that’s a real fight. It means that we have to say to people who are grossly overweight and drink a bottle of gin a day and are risking being diabetic, “You know, you have a problem. Your doctor doesn’t have a problem. You have a problem.”

Goldsmith: So do they pay more for their health insurance?

Gingrich: In some cases they pay more, or they get rewarded for being more careful with their bodies. General Electric has just launched a project that gives an annual Christmas bonus to diabetic patients if they are compliant with their care, because GE figured out that it actually saves them money. I believe in incentives more than punishments, anyway. In a free society, punishments are a very tricky business.


Encouraging Technology

Goldsmith: You talk about the transformative potential of technology. How do we get systemic technologies to take off? It seems that the technologies that enable physicians or hospitals to make money quickly by offering a new service just explode out of the gate, but systemic innovations like the ones you were talking about—electronic prescribing, electronic medical records—seem to take forever.

Gingrich: That’s because of the failure of the government to lead properly on reform.

Goldsmith: Well, how do you do that?

Gingrich: You do three things. First, you incentivize the transition. That is, you pay more for people to do the right things. Second, you set general systems architecture at the federal level. So you say, “We’re going to have an electronic medical record. You can use any vendor you want, you can use any software you want, but by the way, this is the compatibility standard.” This is exactly how ATMs and bar codes at grocery stores came about. Third, you have to say, “After a certain date, the federal government as a payer won’t deal with you unless you do this.”

Goldsmith: Some colleagues and I were debating this earlier this year, and one of my liberal colleagues thought that it was politically infeasible to mandate $100 billion in spending by providers and payers to move to a completely electronic patient care and payment system.

Gingrich: But that is less than 20 percent of a single year of federal health care spending. If you believe the AHRQ estimates we mentioned earlier, you would presumably get the entire $100 billion back by the end of the first year.

Goldsmith: It would take at least five years to put them in.

Gingrich: But I’m just saying, their estimate is that we’d save $100 billion a year.

Goldsmith: Right.

Gingrich: OK. So now you’re talking about a trillion-dollar savings over the ten-year score by CBO.

Goldsmith: Does that justify some form of federal subsidy for the providers that can’t afford to do it?

Gingrich: Yeah. But notice the difference here. My argument is, you actually get a return on the investment.

Goldsmith: Right.

Gingrich: Your colleague’s argument is that it’s an additional expense.

Goldsmith: Exactly. You have a $400 billion budget deficit—plus or minus—right now.

Gingrich: Right.


Health And The Federal Budget

Goldsmith: The moment that the recovery is finally under way, people are going to say, “What do we need this huge fiscal stimulus for?” and cut it back. Health spending is the balancing item in the federal budget.

Gingrich: The federal budget is not going to be balanced again in my lifetime, unless we transform the health care system. So every fiscal conservative had better be prepared to make an investment in transforming the health care system, if they ever want to get back to a balanced budget.

Goldsmith: But name a policymaker who really believes that it’s an “investment with a payback.” So how do you convince them of that? That’s what everyone says who wants the government to subsidize something in the health system. Every time we’ve added a service or created an incentive to do something, the cost to the government has gone up.

Gingrich: That’s right, and that’s because we continue to try to reform a program that sub-optimizes profits at the expense of the whole as opposed to transforming it.

Goldsmith: Well, you could argue that we’re actually getting what we’re paying for with Medicare and Medicaid funding. Right now, we’re paying for admissions. We’re paying for visits. We’re paying for procedures. Policymakers aren’t even talking about changing that. The core set of 1970s incentives in the system remains in place, for private health insurance and for the federal government. You’re working around the edges. You say, “Give people incentives at the margin to digitize their operation. Give them incentives at the margin for doing a better job of taking care of patients. Give beneficiaries better information and reward them for making better choices.” But what are we actually paying the health system to do? The system writes them a check for every hospital admission. It’s a DRG [diagnosis-related group]. It writes them a check every time a lens implant is performed. Is that how we get to a transformed system?

Gingrich: No.

Goldsmith: So how do we pay them?

Gingrich: You reshape the whole payment structure. You pay them for managing comorbidities. You pay for health management. I don’t like the term “disease management.” It’s what Kaiser did in Florida. It’s what Currahee, which is one of our members, does in Georgia. Currahee is estimated by PriceWaterhouseCoopers to get a return of three and a half to one. You pay to have specialized systems; anybody who has kidney dialysis, for example, ought to be in a specialized system.

Goldsmith: All right. So you take people with chronic illnesses, and you pay for them differently than you were paying before.

Gingrich: Sure. And the amazing thing is, AARP totally agrees. When people talk about preserving traditional Medicare, they are doing it to frighten seniors. They don’t necessarily mean improving medical care. AARP is totally in favor of improving care, even within what we call traditional Medicare. Now, that would be a revolution.

If you had a comorbidity system; a health management system for chronic diseases; and a specialized system for truly unusual, high-cost diseases, those three steps alone would change the world we’re in and would cut costs. In the model bill that we are recommending for the House–Senate conference, we have all three of those endorsed by AARP.


Dealing With Deficits

Goldsmith: What are you going to do about the fiscal problem here? I hate to be dragging us back to the deficit.

Gingrich: Assume we’re only half right. Assume we get 20 percent out of the system.

Goldsmith: Well, when does that start, though?

Gingrich: That starts within a year. I mean, the minute we switch to electronic prescribing we start changing behavior. So assuming we get 20 percent out of the system instead of 40 percent, that’s a reduction of about 3 percent of GDP. Half of the current federal deficit is represented by money we don’t need to be spending on health care.

Goldsmith: I thought the boldest thing in your book was that you saw the potential for actually reducing aggregate health spending, not merely deflecting the growth rate.

Gingrich: Sure. How could you not see that potential? It’s a huge, cumbersome, bureaucratic system with personal irresponsibility, professions that don’t see a need to modernize, and archaic paper procedures. Every other experience I know of in history where we have gone in and transformed, we’ve saved money.

Let me give you an example that came out of the Iraq war. We’ve achieved a 700 percent increase in the effectiveness of bombs and a 1,600 percent increase in the effectiveness of aircraft in the twelve-year period since the first Gulf War.

Goldsmith: Well, the war also went really quickly.

Gingrich: Right.

Goldsmith: They need to figure up how to clean up the resulting mess sixteen times as fast.

Gingrich: Well, we solved the first half of the problem. Now we have to work on learning the second half.

Goldsmith: But the second half is the hard part. And it’s the hard part of the health system too, isn’t it?

Gingrich: No, but the first half used to be the hard part. We used to think wars were really hard. We’re getting better and better at high-tech surgery, but everything around it is a mess. So maybe that’s your analogy to Iraq.

Goldsmith: Overnight stays for hip replacements?

Gingrich: See, part of the problem is, nobody started at the top of the system and worked their way down because, by definition, people who tried to do that were socialists. Their answers were always large, cumbersome, bureaucratic models. I’m arguing that there’s a Theodore Roosevelt approach to health care. This is perfectly captured by the Food and Drug Act of 1903, which says that the government sets standards and defines incentives for which it will pay. And the government then allows the market to work within these standards and incentives.


The Federal Role

Goldsmith: I don’t mean to be negative here, but look what the FDA turned into: a ten-year lag between the science at the bench and a product arriving in somebody’s medicine cabinet. How do we avoid that?

Gingrich: The First World War replaced the models of the first ten years of the twentieth century with a centralized command, bureaucratic model. I read a book recently, The Commanding Heights, by Daniel Yergin, which really captures this. You have this interregnum between 1916 and about 1980, with governmental, bureaucratically centered models at the center of our economic system. My argument is this: The way you change systems at large is that you have to change them at the meta level. Every reform at the micro level creates countervailing patterns to avoid reform. We have a $1.6 trillion zone—the U.S. health care system—in which people keep trying to find $10 billion solutions. You’ve got to have an answer that’s the size of the problem. But I’m an optimist, because it strikes me that throughout American history, if you match technology with entrepreneurship with the consumer, you will eventually break the old order.

Jeff Goldsmith (hfutures{at}healthfutures.net) is a health care analyst living in Charlottesville, Virginia. He is the author of Digital Medicine: Implications for Healthcare Leaders (Health Administration Press, September 2003). Newt Gingrich is CEO of the Gingrich Group, a communicatons and consulting group in Atlanta, Georgia. His most recent book is Saving Lives and Saving Money (with Dana Pavey and Anne Woodbury, Alexis de Tocqueville Institution, April 2003), about the transformational potential of medical and information technologies for the health system. This interview was conducted while the outcome of Medicare reform legislation in October 2003 was still in doubt.

10.1377/hlthaff.W3.511
©2003 Project HOPE–The People-to-People Health Foundation, Inc.