Senior Fellow Newt Gingrich

Last night, President Bush outlined a series of important policies and priorities in his final State of the Union address, particularly what to prescribe for our broken health care system. Unfortunately, real change is nearly impossible unless the president gets his own house in order and overhauls the Office of Management and Budget.

We have heard a lot about "change" this campaign. But in OMB's service to the president, by advising him on the federal budget and developing his annual tax and spending priorities, these career government accountants are reactionary to change. They view any change in federal spending with scorn and skepticism--even if it will save money in the long term. They simply cannot differentiate between wasteful federal spending and federal investments in our future.

Nowhere does the Constitution mention an OMB power to propose and prioritize policy funding, yet today that office has virtual veto power over any real change--including vetoing the president himself.

Take the issue of health information technology. Bush's administration has made health information technology a high priority.

And rightfully so. Clinging to paper record-keeping in today's digital world is like sending mail by the Pony Express. But because of petty turf battles, or a genuine belief in the paper-based status quo, OMB bureaucrats deny reality and have fought any and all federal investments in health IT.

David Brailer, the first national coordinator for health information technology, had his first budget zeroed out; OMB was the suspected saboteur. Since leaving, Brailer said, "The biggest challenge [to progress on health IT] was that OMB staff wanted to control this agenda, and I found them to be decidedly unhelpful."

By directly undercutting the president, despite being part of the Executive Office of the President, they make his words on modernizing health care ring hollow.

This is not some arcane policy debate. OMB's intransigence has serious consequence for real people, including suffering, injury and death.

The most egregious example is from New Orleans. The Health and Human Services Department recently extended a three-year, $100 million grant to a network of primary care clinics that serve the poor and uninsured. According to former administration officials, OMB bureaucrats were "adamant" that not a single penny of this grant be spent on hardware, software or information technology of any kind.

We have visited these clinics. OMB's prohibition sentences the citizens of New Orleans to receive an archaic delivery of care, with all of its dangers and inefficiencies.

OMB's power to block smart federal spending is not limited to health information technology. OMB tried to slash the health services research budget at HHS by 50 percent. This is research that tries to solve the most important problems we face in health: covering the uninsured, driving care that is based on scientific evidence, eliminating racial disparities in care, and rooting out waste.

OMB estimated the cost of the Medicare drug benefit but not its savings. It did not have the ability or was unwilling to acknowledge that with drug coverage seniors can control their chronic conditions with medication, reduce hospitalizations and utilization and improve their health.

It must change, and Bush can do it. First, he should lift the technology prohibition in New Orleans, and the new OMB director, Jim Nussle, should investigate, identify and fire the bureaucrats that imposed this prohibition. Second, budget models should incorporate modernized, independent tools that are capable of estimating long-term savings. Third, the long-term budget window should be extended to 15 years. A longer budget window would allow for investments to show their rightful return.

OMB officials' inability to differentiate costs from investments makes them penny-wise and pound-foolish. This unwillingness to embrace change coupled with their power to undercut the president's agenda makes transforming health exceedingly clear: Real change in health starts--and may end--at OMB.

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