America is at the most important crossroads in healthcare policy of our lifetimes. We are on the threshold of creating a 21st-century intelligent healthcare system that saves lives and saves money for every American.

Senior Fellow Newt Gingrich

There is no other sector of our economy with as little information about price and quality as in the $2 trillion healthcare industry. American consumers can find all types of cost and quality information about cars, computers, homes and vacation destinations, but this type of rich consumer information is sorely lacking when it comes to something as important as choosing a physician or a hospital.

The American people clearly want this to change. In one survey, 93 percent of Americans believe they have the right to know cost and quality information about their healthcare providers.

It’s hard to find any issue that garners the support of more Americans. By comparison, “only” 91 percent of Americans support keeping the words “under God” in the Pledge of Allegiance.

Jan. 1, 2004, will be looked back upon as the “big bang” in healthcare policy. It was on this date that health savings accounts (HSAs) became available to all Americans. This was the most significant improvement in healthcare financing in two generations because it began to unleash the value-driven American consumer on the inefficient healthcare market. Barely two years later, more than 3 million Americans own HSAs and all surveys indicate that we could see tens of millions of HSA owners in the next three to five years.

Owners of HSAs are starting to ask their doctors a long-overdue question: “How much does it cost?” That question, so commonplace everywhere else in the economy, has been almost unheard of, until now, in the doctor’s office. But we have not yet reached the point of critical mass where it is self-evident to doctors and health plans that they need to provide this information to patients without being asked.

Government gave a helping hand to purchasers of cars back in 1958 when it required dealers to post the prices of vehicles for sale on their lots. Unbelievably, people bought cars without that knowledge before 1958.

While we vigorously oppose government price-setting, we strongly support the government’s ensuring that every American has the right to know price and quality information before making their healthcare purchases.

Gov. Jeb Bush (R) has shown remarkable leadership in this area by establishing the website floridacomparecare.com, which allows Floridians to research prices for various medical procedures for all hospitals in the state. It also provides hospital-to-hospital comparisons of patient outcomes. This site is a treasure trove of risk-adjusted information that costs the state less than $200,000 per year to operate.

These types of innovations are already having an impact. Hospital administrators with above-average post-operation infection rates, for example, are scrambling to improve their outcomes.

Other major discrepancies are also apparent. For example, Cleveland Clinic Hospital in Weston performs 1,232 cranial tap procedures per year at an average cost of $917. By contrast, Coral Spring Medical Center performs only 40 of these procedures per year but at the much higher price of $5,132.

Myfloridarx.com provides equally useful information on prices for the 50 most commonly used prescription drugs. In Miami, it turns out that 30 pills of Celebrex sell for $91 at Walgreens on 107th Avenue. The same 30 pills cost $220 at the Carolina Pharmacy on 199th Street. This is valuable information to a person with a health savings account and would undoubtedly affect their purchasing behavior.

At the Center for Health Transformation, we have developed a model of drug purchasing called Pilot Rx that offers real-time “Travelocity-style” price information on drugs. We believe this could potentially take 20-40 percent out of the cost of prescription drugs.

Some health-insurance companies are also showing leadership in improving the quality of health information for their customers. Last summer, Aetna launched the “true price transparency” project in the Cincinnati area. The negotiated reimbursement rates of 600 procedures (up to 25 per specialty) performed by 5,000 doctors are now available to Aetna plan members.

The project was launched in cooperation with consumer groups and the physician community to ensure broad acceptability and understanding. It has been successful thus far, and expansion plans for 2006 include more locations and more comparison information about quality data.

With HSAs, Americans have a tremendous opportunity to improve our healthcare system dramatically. The key is having good price and quality information so that consumers can first comparison-shop and then make purchases based on an individualized assessment of value.

As health costs get driven down through this consumer-driven approach, it means less expensive health services (as healthcare providers compete for customers), cheaper health insurance and greater take home pay. It also means a more competitive U.S. economy, which means greater wealth and job opportunities for all Americans.

Newt Gingrich is a senior fellow at AEI. James Frogue is a project director at the Center for Health Transformation.