Interview With Grace-Marie Turner: The Galen Institute

'The best way to lower costs is to allow and encourage more competition.'

Grace-Marie Turner is president of the Galen Institute, a nonprofit health and tax policy research organization that she founded in 1995 to promote an informed debate over free-market ideas for health reform. She speaks and writes extensively about incentives to promote a more competitive, consumer-driven marketplace in the health sector. The Galen Institute works toward policy initiatives that transfer power over health care decisions from bureaucracies to individuals. In 2005, Turner was appointed by Health and Human Services Secretary Mike Leavitt to serve on the Medicaid Commission. WebMD's Washington correspondent, Todd Zwillich, interviewed her on the state of the nation's health care and how the election might affect it.



How big an issue is health care to the nation?

Health care is a huge issue for the country. Businesses are saying it's affecting their competitiveness. The recent census figures say 47 million Americans have no insurance. There is growing anxiety in the middle class about the cost of health insurance and fears that if they lose their jobs they won't be able to afford coverage. That's why health care is becoming a first tier issue in the presidential debate.

Is the health care system broken?

I don't think we can say it's broken, but it does need to be modernized to fit with a 21st century economy. But it's distressing to see people tear the system down. When people are sick anywhere in the world, this is where they come for care. We offer the best technology, the best surgeries, and best care on the planet. We do have a vibrant and competitive marketplace in our health care system, but there are many problems that need to be fixed. One is that health care in this country is tied to the workplace. In most other countries that is not the case. The reason we have 47 million uninsured is because people are losing their health care when they lose or change jobs. We need to change the tax structure so people can have insurance that they can own and take with them from job to job. We need to have more visibility of quality and cost in the system so people can look for value and make better decisions about the value of their care. We have way too few incentives to do that now.

What should we do to lower health care costs?

The best way to lower costs is to allow and encourage more competition. Today we have way too many state rules and regulations that dictate the cost of insurance and whom it is sold to. That really dries up competition. It's true competition that could give people more options, more choices, and more affordable coverage. Having price controls is not going to work. They never work because they distort the market. We should allow competition and let people choose and find the best value for their health care. Do that, and you'll see prices come down. That's what we've seen with the Medicare Part D drug plan. The price of the premiums has come down because of competition between plans. The same can happen with private health insurance. If you give consumers more incentives to seek better value in their care, the health care can operate more like the rest of the economy, where buyers seek out faster and better services.

How -- or should -- we try to cover the uninsured?

Every single person with no insurance has anxiety about it. They know if they wind up in accident or an emergency they can go to any hospital, but that is not the same as knowing you have coverage and that you can see a doctor when you need to. But we need to lower the price so more people can afford it. And to do that we need more competition. To do it, we should lift many of the burdens of price controls at the state level that have driven out competition. If we lightened the load of regulation by allowing interstate purchasing of health insurance, just like interstate banking, that would lower the cost of insurance so that more people could afford it. The people at the lower end of the resource scale who cannot afford insurance should have support. They should have refundable tax credits that they use to buy private insurance. We should not expand government programs that are already strained. We should also allow insurance to be more portable by fixing the tax code and letting people get the same tax break to buy insurance on their own that they now get when they get it through their job. That lets people take that benefit with them no matter where they work.

What should we do to make prescription drugs more affordable?

Medicare Part D has caused private health plans to negotiate with the drug companies to get the best possible price. Premiums have fallen because you have competition in purchasing. If we gave people more options in insurance that encouraged that kind of competition, we would see lower costs. The fact that people are using more prescription drugs is not a bad thing. It can save on other costs. Look at what competition has done at Wal-Mart. They're offering 300 prescriptions for $4 for a month's supply. Other companies offer free antibiotics. You can see competition is beginning to work to get prices down. The last thing we want to do is impose price controls because if we resort to them, the next generation of miracle drugs will dry up.

How important is prevention to any health care policy we pursue?

It's important to not have prevention be a centrally controlled decision. It is a constantly evolving art and science, and we should keep prevention decisions as flexible as possible between doctors and patients. We know childhood immunization is a wonderfully effective strategy. But it should be for the market -- and not the government -- to decide whether or not many of the preventive tests coming out now will be worthwhile. This will be especially important as more genetic tests become available. We don't know what the new generation of preventive care is going to bring, so we don't want to lock it into a centralized government decision-making process.