Five ways to reform health care

By Tim Pawlenty
Sunday, February 14, 2010

President Obama has asked Republicans to bring ideas to a health-care summit on Feb. 25. This is an opportunity for Washington to start fresh and for conservatives to lead the way after the apparent defeat of the Democrats' plan. In response to the president's challenge, here are five common-sense ways to tackle runaway health-care costs:

(1) Incentivize patients to be smart consumers: When people buy food, clothes or cars, they compare prices and quality. Why should health care be any different? In Minnesota, we've created incentives for public employees to be wise health-care consumers and given them the information to make smart decisions. Under our system, if patients go to a high-quality, low-cost clinic, they pay less; if they don't, they pay more. As a result, the vast majority has migrated to more cost-efficient health-care providers, and we've seen zero or small increases in premiums since 2005. Any federal reforms should similarly make quality and costs more transparent, and incentivize smarter health-care decisions.

(2) Pay for performance: Under America's current system, health-care providers are rewarded for the number of procedures they perform, not for performance. As a result, the system encourages unnecessary tests that increase costs. In Minnesota, we started an innovative program to measure and set performance metrics for providers and make the results public. We are changing our payment system to reward quality rather than quantity. Congress should pass reforms that allow people to stop paying for procedures and start paying for results.

(3) Liability reform: Another way to cut down on unnecessary procedures is to reduce the threat of lawsuits facing health-care providers. This can be a tricky issue for many Democrats, so I was encouraged last summer when President Obama nevertheless opened the door to liability reforms. At a minimum, we should establish uniform standards for medical liability limits to discourage interstate jury shopping that drives up everybody's health-care costs.

(4) Interstate health-care insurance: There is no reason a Minnesotan should not be able to buy health insurance from other states. Doing so would dramatically increase insurance choices and cut costs through improved competition. I've proposed legislation to allow Minnesotans to buy health insurance from other states and am working with other governors to establish an interstate purchasing pool with strict standards. This system would be modeled after the similar insurance exchange that has made life insurance easier to purchase in more than 30 states since 2006. The federal government could facilitate a similar initiative for interstate health insurance.

(5) Modernize health insurance: We need to reform the employee-based health-care system. Workers are likely to switch jobs many times over their careers, but the current system often punishes individuals who switch jobs or start businesses. That makes no sense. We should make health insurance transferable so employees can keep their coverage if they switch jobs; prohibit insurance companies from discriminating against individuals whose preexisting conditions were covered under insurance they lost through no fault of their own; and encourage the expansion of modern forms of paying for health care, such as health savings accounts.

There are many more ways to control health-care costs. Other common-sense ideas that everyone should be able to support include reforming the tax code so individual and group purchases are treated the same way, encouraging healthier lifestyles to combat chronic disease (a huge source of medical costs) and upgrading the informational technologies that health-care providers use.

The health-care reforms proposed by the president and congressional Democrats are meeting stiff resistance because they would take America's health care in the wrong direction. Runaway costs are the underlying reason that so many citizens do not have access to health care and that our system needs reform. Rather than focus on cost-cutting reforms like the ones I described, Democrats focused solely on expanding access -- hoping that more mandates and government spending would somehow circumvent the fundamental issue of runaway costs.

Democrats appear unable to push their approach through Congress, but our health-care system still demands reform. Let's move forward by enacting these common-sense ideas.

The writer, a Republican, is governor of Minnesota.

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