Toward Free Market Medicine

Newt: How to Improve Medicaid for Minorities,” by Newt Gingrich and James Frogue,, 7 April 2005,

Former Speaker Newt Gingrich goes almost all the way in diagnosing and fixing America’s health care problems

The current system hurts poor minorities the worst

Ethnic minorities in America, particularly African-Americans, are generally less healthy and suffer from reduced access to quality health care services relative to whites. This should be unacceptable in the richest and most advanced country on the planet. There are a range of socioeconomic and cultural reasons for these troubling findings, but one reason in particular escapes scrutiny – minorities’ disproportionate representation in the outdated and bureaucratic Medicaid program.

The current issue of the journal Health Affairs focuses on racial health disparities. It points out that, relative to whites, infant mortality rates are 2.5 times higher for blacks, life expectancy is 10 years less, and blacks have significantly higher mortality rates from heart disease, stroke and cancer.

The recent trends are not encouraging and yet they are uniquely focused in the health system. In one article, former Surgeon General David Satcher points out that the United States has made marked progress in closing the black/white gap in civil rights, housing, education and income since 1960. But health inequalities remain stubbornly persistent. Standardized mortality rates between blacks and whites have changed very little since 1960. Using 2002 data, there are 83,570 excess deaths annually in the black community as a result of the black/white mortality gap. The gap in deaths from cancer and heart disease has actually widened.

Socialized medicine isn’t the solution, because it is part of the problem

The answer lies in the fact that Medicaid, which serves the poor who are disproportionately African-American (the income gap needs forward-looking solutions as well), largely remains a 1960s era model that is no longer appropriate for 21st century health care financing and delivery.

It is an inflexible system of government-defined benefits and prices that would evoke howls of laughter if anyone suggested it be applied to the markets for food, housing, automobiles or software. Medicaid’s heavily bureaucratic structure is biased in favor of a rigid status quo and against the kind of innovation that can more quickly improve patient care. In short, Medicaid beneficiaries are segregated into second-tier health care, and that is a second tier with demonstrated costs in lives and in quality of life.

Gingrich sees the way forward (while tossing a bone to the federalists)

What is needed is an entirely new Medicaid system that is outcomes-oriented, not process-based. Those outcomes should include a clear and measurable commitment to eliminating the disparities in health outcomes between different groups of Americans. Confident, competent, forward-looking governors should be allowed to opt-in to a new Medicaid system that cuts them loose from federal hand-holding and stifling red tape. In exchange for this new freedom, willing governors would agree to a defined contribution of federal funds from Washington that increases every year at an amount below their recent growth trend. The federal government would save money.

It is important that Congress not compel states to accept the new program. Those governors content with the status quo and secure in their inability to improve the delivery of health care to their poorest and most vulnerable citizens should be allowed to stew in old Medicaid. Allowing a few trail-blazing governors – who are closer and more accountable to their constituents than faceless bureaucrats in Washington – to lead the way would move us closer to a model that best serves the poor. Moreover, instead of auditing the process by which they spend their federal Medicaid dollars, the federal government would audit states based on demonstrated improvements in health outcomes, childhood immunizations, or a closing of the gap in racial health disparities. Washington’s role would change from its current focus on oversight of process compliance to auditor of results.

I agree with the Speaker, but I will go one more step.

We allow companeis to offshore workers. Why not encourage patients to offshore doctors?

Medicare payments should extend to responsible hospitals in low-cost locations, such as India and Thailand. Physician Offshoring allows for substantial cost savings. Even including the costs of a more experienced doctor, first class seats, more attractive patient-centered nursing staff, and a hotel-like suite for a patients room, offshored medical care still is cheaper. Often almost ten times cheaper.

The winners of the current system are protected American doctors, protected American hospitals, and beaurocrats. Let’s put the patients first.

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