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FEDERAL TRADE COMMISSIONJOINT FTC/DEPARTMENT OF JUSTICE HEARINGON HEALTH CARE AND COMPETITION LAW ANDPOLICY
Thursday, June 12, 20039:15 a.m.601 New Jersey Avenue, N.W.Washington, D.C.FEDERAL TRADE COMMISSION
I N D E X
PANELISTS:
Newt Gingrich, The Gingrich GroupWarren Greenberg, George Washington UniversityHelen Darling, Washington Business Group on HealthGreg Kelly, Coalition Against Guaranteed IssueMichael Young, Aon ConsultingDavid Lansky, Foundation for AccountabilityMarcia L. Comstock, J.D., Wye River Group on Health careHelen Darling, Washington Business Group on HealthBernie Dana, American Health Care AssociationLaura Carabello, CPRi CommunicationsThomas Henry Lee, Jr., M.D., Partners Health careDouglas D. Koch, M.D., Baylor College of MedicineRichard Kelly, Federal Trade CommissionPeter M. Sfikas, American Dental AssociationJohn E. Gebhart, III, DoctorQuality.com
P R O C E E D I N G S
DR. HYMAN:I'm David Hyman, special counsel here at the Federal Trade Commission. Let mewelcome you all to the reconvening of the Hearings on Health Care and Competition Lawand Policy jointly sponsored by the Federal Trade Commission and the Department of Justice.This is the latest in a series of hearings that started in February and are going to lastthrough September, perhaps October, unless I can make it September, and represent an
 
ongoing investigation of the performance of differing parts of the health care market withregard to thecost of the services that are provided, the quality of those services, and the extent towhich ordinary Americans can access information about those services and obtain thoseservices at a time and in a fashion that is desirable to them.This morning we have a very distinguished panel and extensive bios for each of thespeakers, not all of whom, unfortunately, are here just yet, and are published in thisbeautiful book that's available outside. Our rule is, accordingly, short introductionsbecause you can read aboutthe people in the book. The format we're going to follow this morning is our first speaker,Newt Gingrich, is going to make somewhat extended remarks. And then there will be apanel discussionof those remarks, and we'll include, as time allows, members of the audience in thatdiscussion if they have questions or comments that they'd like to make. And thenfollowing the time that we've allotted for that portion of the program, we will then moveinto presentations by individual speakers. At the end of that time, we will then have amoderated panel discussion among the speakers about the issues that we'll be discussingtoday. The focus of our discussion today is financing options and consumer information.It's essentially a constellation of subjects relating to how Americans get their healthinsurance coverage, the availability of informationregarding that coverage, the extent to which current institutional arrangements insure arange of options available to them, and the impact of those financing arrangements on thedelivery system for health care.Our first speaker of the morning is former Speaker of the House Newt Gingrich, theauthor of seven books, including one he's going to speak about today, "Saving Lives andSaving Money." And there's a very nice handout outside that outlines some of the book,which presents Newt's vision of a 21st century system of health and health care. Newt iscurrently the CEO of The Gingrich Group, a communications and consulting firmspecializing in transformational change. He recently launched the Center for HealthTransformation, which advocates for market-oriented health care.And just two other preliminary announcements. If everyone can turn off their cell phones.The Speaker likes nothing better than being interrupted by the sound of your cell phone.And second, time will be kept by Cecile Kohrs over at the table there. So if the speakerscan just keep an eye out for that, it will ensure that we'll have adequate time fordiscussion.Newt, you can either sit or stand at your option.MR. GINGRICH:If it's okay, I'll just sit, if that's all right. And I'll try to go through this pretty rapidly as anoutline. But first of all, Dave, let me thank you and the Federal Trade Commission andthe Department of Justice Antitrust Division for hosting us today. I think trying to think about impediments to competition in health is a very, very important topic, first becauseof the rising cost of health care, second because the scientific and technologicalbreakthroughs are likely to increase the cost of health care, and third, because the agingof the baby boomers guarantees that the sheer volume of health care over the next decade
 
of 15 years is going to continue to go up. If you look at the current crisis in Europe andJapan, one of my mentors, Steve Hanser, just spent a month in Europe. I called him whenhe got back. I said, "What did you learn?" He said, "Well, I was in four countries andthere were four issues: pensions, pensions, pensions, and pensions," he said, "with thecost of health care and unemployment being a distant second and third." And I think if wedon't in the next few years bring to bear a much different approach to how we have acompetitive health system, that in fact we will rapidly move towards some kind of bureaucratic redistributionist and, I think, mediocre system. So what you're focusing on isexactly at the cusp of either finding really dramatic solutions or getting in trouble. As youmentioned, we just finished a book called "Saving Lives and Saving Money," and we justopened up awebsite called the Center for Health Transformation, which is atHealthTransformation.net, or you can go to just my first name, Newt.org. But in "SavingLives and Saving Money," we outline a model for transforming the health system.Let me start by making an argument that I think gives the Federal Trade Commission aparticularly important role in the next ten or fifteen years. It should be the natural productof a scientific, technological, entrepreneurial, free market system to produce morechoices of better quality at lower cost. And I'm going to repeat this because I think inboth health and education you see a tremendous impediment of government blockingwhat should be a natural pattern. The natural pattern should be more choices of betterquality at lower cost. And in a sense, Wal-Mart is, for the 21st century, what Alfred Sloanand General Motors were for the 20
th
century, in the sense that Sloan's investigation of consumer led mass production defined management for most of the 20
th
century. Wal-Mart's model, that lower everyday price is a function of lower everyday cost, and thatthey see themselves as the largest and most efficient market makers in the world, issomething really worthy of study. And any institution that gets 100 million Americans tovoluntarily show up every week is worth looking at and saying, what is it they're doingright? I mean, without arguing about other aspects of Wal-Mart, it seems to me that theyare an institution worthy of study. What we're suggesting is that lowest everyday pricebeing a function of lowest everyday cost should apply tohealth and health care, and that producing more choices of higher quality at lower costshould apply to health and health care, and that to the degree it doesn't, it is largely afunction of the mis-design of the current system. Now, there are three areas where yousee real proof that traditional market behaviors work. They're all in health. None of themare in the third party payment system. The first, which we have here copies of, is lookingat a paper that was done by the National Center for Policy Analysis, which looked at thecost patterns for cosmetic surgery. And it turns out -- and the chart is very, very revealing-- it turns out that all goods goes up at a certain rate. Health care goes up at a much morerapid rate. Cosmetic surgery went up at less than the rate of CPI. That is, cosmeticsurgery actually increased in cost from 1992 to2001 at a lower rate than the consumer price index, while the rest of health care went updramatically faster. The second example is laser surgery. The average cost of surgery pereye dropped from $2,079 in 1999 to $1,631 in 2002. Now, again, this is a healthprocedure. It's afairly sophisticated health procedure. This is not a question of cheap medicine orinappropriate medicine. This is, in fact, an area where the breakthroughs technologically
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