U.S. health care needs a spark

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U.S. health care needs a spark
December 15, 2004
by Newt Gingrich

It is time that we in the United States learn to think of health care as an economic opportunity, not a liability. Despite America's well-documented health-care delivery problems, America's actual health care is the best in the world. U.S. firms are responsible for some of the most important innovations in pharmacology and medical technology. Wealthy foreigners routinely come to the United States for advanced medical services with the best possible outcomes. To take advantage of this position, President Bush should create a new undersecretary for health in the Department of Commerce to promote the American system of health care worldwide.

Composed of 8,500 firms (mostly employing fewer than 50 people), the U.S. medical technology industry already sustains 350,000 high-value manufacturing jobs paying an average of 49 percent more than those in other manufacturing sectors and accounts for roughly half of the $175 billion global production of medical products and supplies. A 2003 New England Health Care Institute study showed that every job in the medical technology sector generates another 2.5 jobs elsewhere in the economy.

However, the $3 billion trade surplus the United States has historically enjoyed in this sector has recently vanished, prompting serious questions about the fairness of overseas markets. Countries such as France and Japan have recently imposed what are called "foreign reference prices" on U.S. technology that prevent firms from pricing products at a rate appropriate to the actual costs of doing business in their countries. Fewer than 1 percent of U.S. products launched in Japan over the last 10 years have received a new product price distinct from its predecessor, resulting in an unfair disadvantage for U.S. manufacturers.

In addition, nationalized health-care systems - confronting aging societies and sluggish economies - are seeking to manage rising health-care costs by limiting patient access to new drugs and medical technologies through price controls and other barriers to market entry. These actions don't just damage U.S. firms; they harm these countries' own health industries and, ultimately, their own populations, whose health is put at risk by limiting their choices to inferior options.

An undersecretary for health would have the important task of ensuring that overseas markets provide a level playing field for exports of the U.S. health economy. He or she could help break down these barriers by accelerating patient access to medical innovations; encouraging robust research and development opportunities (much of which is spurred by small U.S. start-up firms that require venture capital); promoting transparent and consistent product approval policies at home and abroad; and helping ensure predictable pricing that consistently rewards innovation.

The commerce undersecretary for health would also play a major role in increasing information-sharing among medical professionals worldwide through telemedicine and other electronic formats, giving the United States the opportunity to promote its clinical services and medical talent abroad. A key component to successfully marketing our health-care services would be the development of a system of reporting outcomes for specific procedures. That would encourage consumers both home and abroad to make better decisions about providers, which, in turn, would increase quality because of competition.

In every decade since World War II, America has lost jobs in entire sectors of the economy. But in each of those same decades, America has created millions more jobs than those that died away. By focusing on the future, new jobs in health, new drugs and medical technologies, and the development of larger markets for American health care, we will help ensure that our children and grandchildren will have the best, highest-paying jobs in the world, with the large wealth creation that allows our seniors the opportunity of a prosperous retirement.

We must always try to promote industries in which the United States currently holds a clear advantage. Health care should be no exception. The time is right to maximize the enormous potential of the American health economy.