Think Gas Prices Are High? Watch Out For Health Care 07/31/2008 01:52pm Gas prices are in the political spotlight right now; this year's spike has been painful and the calls for action — and heads — have pushed other issues to the side. But it is worth remembering that when it comes to real, sustained growth in costs, when it comes to real, sustained erosion of families' disposable income, gas still can't hold a candle to the real elephant in the room: health care. If gas prices had risen during my adult lifetime — since I got out of high school in 1961 — at the same rate as per capita health-care expenditures, gas would not be $4 a gallon today. It would be about $15. In this election season, we need to demand more attention to health care. It's not the squeaky wheel now, but after gas prices have been driven down or we have bought smaller cars, our health-care problem will still be with us. I'm a governor and a former CEO of a publicly traded health-care company. My own experience is that Americans of many different political stripes are ready to stop tinkering and instead devise a fresh and national solution to our health-care challenges. They expect a new administration to act. I'd like to suggest three basic principles to guide us: 1 – Incentives The first principle is to once and for all fix the incentives. There are many reasonable explanations offered for the growth in health-care costs, but they are for the most part symptoms of an underlying disease. The economic incentives are all wrong; they work against value, not for it. If we don't seize the opportunity as a part of broad changes to fix these incentives, we will never get costs under control. Imagine a trip to a grocery store. You walk up the aisles as usual, while attractive displays compete for your attention. You fill your basket, take it to the checkout, and the clerk rings it up. But you never see any price or total, and the bill is just sent to some anonymous party for payment. A box of oatmeal would cost $20 at that grocery, and that is exactly the way our health-care economy works today. That grocery store is not going to be straightened out by tax credits for the purchase of oatmeal or by a better grocery information system. America has a wonderful and efficient economic system where competition drives innovation and value; we can and should put it to work in health care. One way to start would be to develop a national standard for what constitutes optimum quality health care in treating some of the more common and expensive diseases: diabetes and various forms of heart disease, for example. With a legally sanctioned standard, payments to providers could be revolutionized to pay for high quality and value — not just quantity. 2 - An Rx for everyone The second principle is to build a solution good enough for all Americans. The examples are under our noses: Build it as we did Social Security or Medicare. Unlike patchwork and means-tested government programs, they enjoy broad public and political support. They don't read as government largesse, but as a benefit earned by and owned by every American. A national health care solution needs to work the same way. 3 - Incremental change The third principle is to make changes a step at a time. Health care reform is a huge undertaking, involving one-sixth of our economy. We've learned that no one can design the perfect solution right out of the box. Furthermore, health care is not like most other products or services. It's something that people reach out to and depend on when they're scared for themselves or a loved one. When you come to a wide and fast-flowing stream, smart people don't leap into space and hope to land on the far bank; they look for some stepping stones. The first stone might be federal underwriting of the costs of some of the most expensive diseases. Health-care costs are highly concentrated, with 5% of the population accounting for half of all health-care costs. By insuring some of these costs, we could quickly transition our nation to managing many diseases in organized systems of care and paying for quality and outcomes, not procedures and pills. Gas prices and our lack of a comprehensive energy policy deserve all the attention they're getting. But the challenge of our health-care system remains the year-in and year-out elephant in the room. We need to address that challenge now.