An open letter to the candidates

Business legend Andy Grove shares a few modest proposals to fix health care, from Fortune Magazine.

By Andy Grove

To: Hillary Clinton, Mitt Romney, Barack Obama, Rudy Giuliani, John Edwards, John McCain, et al.

cc: Newt Gingrich

Each of you will have to address health care, and with good reason. The U.S. health-care system is expensive and uneven, in both quality and availability. Medical spending is 16% of the GDP, and that share is growing; U.S. life expectancy is so-so; and the ranks of the uninsured number 46 million and counting (rapidly).

Your staff is probably working on a big, ambitious plan to fix health care.

Depending on whether you lean left or right, it's either a universal health-care plan or a way to increase market influence throughout the health-care economy. I have a best-of-all-worlds idea too. In my system the government would cover preventive care and catastrophic health-related expenses. The ordinary medical expenses would be left to individuals. The reason I like this approach is that it has built-in incentives to support preventive care, and it would also protect people from financial ruin due to illness. Yet for most situations, the power of the consumer economy would be allowed to do its magic.

The only problem with my plan - and yours - is that it's too much. Look at the history of health-care reform in our country. Presidents have been putting forth plans for comprehensive health-care reform for 100 years. That's not a typo. Woodrow Wilson proposed universal health care. So did Harry Truman, Richard Nixon, and Bill Clinton (see table). None of them got there. I believe none of you will either.

Society is simply resistant to fundamental change. Dramatic departures can take place only in a crisis. Example: It took the Great Depression for our government to implement a safety net (the New Deal). It's not that we haven't been making changes. We've been doing that all along. It's just that the successful reforms haven't been all-encompassing; they've improved the health-care system for some. The Veterans Administration was formed in the '30s. Medicare became law in the '60s. Step by step, chunk by chunk, each of those events moved us forward.

This is what I suggest: Fix specific problems of the system. Leave bigtime changes for later, after you've demonstrated that you can solve more limited problems. Until then, I propose that you commit to two - and only two - programs.

Fix the emergency-room emergency

Emergency rooms have become the de facto health-care system for millions. The uninsured go there because they have nowhere else to go - by some estimates they account for a bit over half of all emergency-room visits. The insured go there as well, when they feel that their needs cannot wait for an appointment during business hours.

The first step in fixing this mess is to establish minimum standards for all ERs. A lot of work has already been done to specify methods of dealing with heart attacks, strokes, and other emergencies: Commit to these standards.

The same goes for acceptable patient waiting times: Set the standard, and implement it. How to pay for those upgrades? Levy a 1% surtax on all health-care billings and use the proceeds as a fund for ERs that meet the rules.

Tell hospitals and medical centers that if they want to dip into this new 1% fund, they have to put a lower-cost walk-in clinic under the same roof as the ER. Demand further that the clinic be open 24/7 and staffed with primary-care professionals who can deal with asthma attacks, ear infections, and other nonemergencies on a cash basis. Require a triage system that directs patients to either the ER or the clinic, using well-defined criteria. Running the clinics could even be outsourced. You can already find this kind of clinic in the corners of pharmacies and chain stores like CVS and Target. Their offerings are still rudimentary - flu shots, standard screening tests, that sort of thing. But their capabilities will expand over time. Retailers have ambitious plans for this new line of business: Wal-Mart recently announced a target of 6,600 in-store clinics. I think that company and others would jump at the opportunity to run clinics right next to ERs.

One more thing. Mandate that to qualify for the 1% fund, both the ER and the new clinic must use the Internet to provide a simple health-record system: a file of the stored images of faxed documents, retrievable by electronic locks (a combination of passwords and security codes kept on a chip). By doing so, you will allow patients to "carry" records of their treatment from the ER or clinic to a doctor near their home. Unlike the task of harmonizing the many assorted electronic medical-record systems used in hospitals, this is a technically trivial job if you act now.

Keep parents at home

The cost of caring for the elderly is huge and will only grow as our population ages. Of the $440,000 the average American spends on health care in his lifetime, $280,000 will be spent after age 65.

Probably 50% of that post-65 outlay goes to assisted-living facilities and nursing homes. So it stands to reason that if there were a way to keep elderly patients in their own homes longer - without degrading quality of care - we'd have a cheaper and better system.

And we can do just that using technology. I'm talking everyday, low-cost technology - the sensors, microchips, small radios you'd find in today's PCs, in cellphones, and in Bluetooth earpieces. It's not too difficult to use this stuff as monitoring tools. Not to spy, but to detect trouble. For example, did the patient go outside to get the newspaper or did she wander away? Has the patient taken his meds? The same technology that brings us HBO can watch over the patient and trigger human intervention when needed.

A critical step to make this happen is to have it blessed - and reimbursed - by the dominant health-care supplier to the aged, Medicare. Candidates, I hope to see a phrase in your inauguration speech that starts like this: "I will have Medicare define specifications for electronic equipment that allows the average aging citizen to stay home two years longer than today."

Can we afford all this? Let's do the math. In my estimation, the ER plan can be implemented for $20 billion per year, paid for with the 1% surtax I suggest. As for the elder-care plan, the savings achieved by keeping just 10% of the aging population in their homes can amount to $30 billion a year.

So, yes, Mr./Ms. Presidential Candidate, we can afford it. Not making these reforms would be the same as burning $30 million a day at the local dump.

Commit to doing these two concrete things - now. You will save money. You will improve the lives of millions of citizens. And you will demonstrate to yourself, and to all of us, that we are a country of doers. That is worth the program by itself. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.