Leadership and Crisis

by Bobby Jindal

  When I was secretary of Louisiana’s Department of Health and Hospitals, our program faced a $400 million deficit. There were Medicaid mills operating all around the state that were billing us for fictitious services. Working with the attorney general, we cracked down hard on fraud and sent scam artists to prison. I remember going on a raid in New Orleans where we busted a massive operation which gave candy to dozens of kids a week and offered money to their parents simply to sign off on government forms falsely showing they were receiving health-related services.

  For a while it seemed Medicaid fraud was one of the fastest growing businesses in Louisiana. But by adopting reforms including a zero tolerance policy toward fraud, we turned that $400 million deficit into a surplus.

  Sunshine is the best disinfectant, as they say, and that’s why a transparent healthcare system is crucial to reducing fraud, lowering costs, and improving quality. In Louisiana, we’ve established www.healthfinderla.gov, a website allowing people to compare quality, patient satisfaction, and cost among hospitals, nursing homes, pharmacies, and health insurance plans. Moreover, we passed a sweeping reform of Medicaid to allow consumers to choose their own insurance rather than being relegated to the once-size-fits-all, fraud-laden, pay-for-volume system. Our reforms also create incentives for coordinated networks of care that help improve metrics we know make people more healthy—like ensuring children get their well-child exams, people with diabetes have their disease managed properly, and women get earlier breast cancer detection. Notably, our Legislature passed these reforms on a bipartisan basis—proving to Washington that vital, market-based reforms can be achieved with broad support.

  There is an alternative to the trillion-dollar, top-down, government-driven policies of Obamacare. Here’s a list of market-based healthcare reforms that will reduce cost, increase access, and empower consumers:• FIX THE RISK POOLS. The basic premise of insurance is the spreading of risk. Yet the government keeps creating programs that take healthy people out of the insurance pools and put them into government programs like the children’s SCHIP program. This increases the cost of private insurance, because older and sicker people keep their private coverage as younger, healthier people opt out. Called the “death spiral,” this trend is a major reason for the rise in premiums. We should leverage what we spend for healthier populations to help improve the risk of the insurance pools. Providing subsidies for private coverage is a far better solution than expanding government programs like Medicaid.

  • ALLOW PEOPLE TO “OWN” INSURANCE POLICIES THAT STAY WITH THEM WHEN THEY CROSS STATE LINES OR CHANGE JOBS. By ensuring people keep their policies longer, insurers will invest more to improve their customers’ long-term health.

  • ALLOW THE CREATION OF VOLUNTARY PURCHASING POOLS. Small businesses, the self-employed, and others should benefit from the economies of scale currently enjoyed by employees of large firms. They should also be allowed to purchase health coverage through their employer, church, or union without tax penalty.

  • END THE LAWSUIT CULTURE. We can’t ignore the enormous cost of defensive medicine, as doctors order unnecessary tests and procedures solely to avoid lawsuits. Many doctors have even stopped performing high-risk procedures for fear of liability. A study by the American Academy of Orthopedic Surgeons estimated the cost of defensive medicine at more than $100 billion per year.13 Approximately half of Texas’ doctors are paying lower liability premiums than they were in 2001. Indeed, rates have been reduced by 30 percent or more for about 90 percent of the state’s doctors since the 2003 reform. Further, in the years following the reform, Texas has seen thirty rate cuts. And most important, the measure stopped and reversed the outflow of doctors from the state. According to the Texas Medical Association, there has been a nearly 60 percent growth rate in newly licensed physicians in the past two years compared to two years preceding the reform.14

  • COVER PRE-EXISTING CONDITIONS. We can address the issue of pre-existing conditions by restructuring how we finance care for the poor. Federal-state partnership programs like Medicaid should allow people to use subsidies to purchase private coverage and then provide reinsurance to the plans that take people with pre-existing, high-cost conditions. This type of partnership leverages public spending with already existing private-sector assets and helps keep premiums more stable. We need to guard against the moral hazard risk, but health insurance shouldn’t be least accessible when you need it most.

  • INCREASE TRANSPARENCY. Consumers have more information when choosing a can of soup than when selecting a healthcare provider. Provider quality and cost should be made available to all consumers by creating websites with continually updated prices and outcomes.

  • REFORM THE PAYMENT SYSTEM. Rather than pay for activity, why not pay for performance? About 75 percent of healthcare spending goes toward chronic conditions such as heart disease, cancer, and diabetes. But there is little coordination of care. Today’s system results in wide variations in treatment instead of the consistent application of best practices. We must reward efficiency and quality.

  • EXPAND DEPLOYMENT OF HEALTH INFORMATION TECHNOLOGY. The current system of paper records threatens patient privacy and leads to poor outcomes, redundant procedures, and higher costs. In Louisiana, we invested in an award-winning initiative to digitally connect our rural hospitals with a major teaching hospital in Shreveport. Now we can provide digital mammography and other diagnostics in the rural community, with a physician in Shreveport reviewing the results. This has improved access and provided a new way to combat the looming physician shortages.

  • EXPAND TAX-FREE HEALTH SAVINGS ACCOUNTS. HSAs, which allow individuals with a high-deductible health plan to save pre-tax dollars in a portable account for qualified medical expenses, have helped reduce the costs for employers and consumers. By creating incentives to encourage price and quality comparisons, HSAs encourage people to spend their health care dollars efficiently. Research shows that people with HSA plans are more likely to seek preventative care and routine treatments for chronic illnesses.15 In fact, some businesses have seen their healthcare costs decrease by double-digit percentages after adopting HSAs.16 Although millions of Americans use HSAs today, current and proposed regulations are designed to curb their further growth.

  • REWARD HEALTHY LIFESTYLE CHOICES. Providing premium rebates and other incentives to people who make healthy choices or participate in managing their chronic diseases reduces costs and improves health. Auto insurance companies give discounts to people with safe driving records—shouldn’t we provide the same sort of incentives for healthcare?

  • EXPAND PRIVATE COVERAGE. We should provide refundable and advanceable tax credits for the uninsured, and transition Medicaid toward a subsidy model for private coverage rather than a government-run, fee-for-volume program. This is especially true for the healthy moms and their children who comprise the vast majority of Medicaid beneficiaries. This would put resources in the hands of consumers and help low-income Americans acquire insurance they would own.

  • PREPARE FOR THE AGING OF AMERICA. We must start getting ready to provide our mothers and fathers with the dignity of aging in place. Additionally, it is the calling of our time to ensure persons living with developmental disabilities enjoy the opportunity to be independent, elf-determined, and successful. For example, while at HHS I helped expand a program called Cash and Counseling that trusts the disabled and their families to have more direct control over healthcare dollars spent on their behalf. We must equip the next generation to be stewards of their own health.

  Speaking of the next generation, I should mention that our son, Shaan, came through his surgery in great shape. He still sees his cardiologist regularly, but he’s grown into an energetic and healthy boy who likes soccer and basketball. And he has a pretty good sense of humor, too. Recently, a group of politicians came to see me at the governor’s mansion. Shaan made them all stand in “time out” before they met with me.

  CHAPTER 12

  PROPELLING
AMERICA FORWARD

  As governor of one of America’s largest oil producing states, you could reasonably assume that I’m a proponent of fossil fuels. Guilty as charged—and the 2010 oil spill off the Louisiana coast, awful as it is, hasn’t changed that. Some people believe that the oil spill means we need to stop offshore oil drilling. But it’s completely irrational to halt an entire industry when a tragedy happens. When we suffer the tragedy of an airliner going down, for example, we do not respond by stopping all air travel for six months. Rather, we get to work figuring out the root cause and set about trying to make air travel safer.

  But what may surprise you is that along with being a big supporter of fossil fuels, I’m also a big proponent of developing any and all methods of producing energy. I even support pursuing technologies that don’t exist yet. Not all of them will succeed, but we have to consider every option in order to make America energy independent.

  The problem is that many Washington decision makers are either seriously misinformed or willfully ignorant about energy. It’s as if they believe that electricity comes from a light switch and gasoline just magically appears at the pump.

  When energy prices skyrocketed during my tenure in Congress, both parties were more focused on using the issue for political gain rather than solving it. Democrats need apocalyptic rhetoric to raise money from environmentalists and from fearful constituents; many of them even believe high energy prices are useful to their environmental agenda, though they won’t admit it publicly. Meanwhile, Republicans used the opportunity to attack global warming theories instead of finding common ground to craft a sensible energy policy.

  America’s enemies benefit from the paralysis of our energy policy. We continue to send billions of dollars to foreign energy producers, including Middle Eastern despots and self-styled revolutionaries like Hugo Chavez who, to say the least, don’t have America’s interests at heart. All the while, our own tremendous supply of oil and gas lies untapped right here beneath U.S. soil and off our coasts.

  Over the past twenty years oil prices have been rising and they will surely jump even higher once growth returns to the global economy. It’s simple supply and demand—energy is the lifeblood of a strong economy. What’s more, our constant technological progress will not alter this equation. Personal computers, iPads, and other high-tech devices all require electrical power. And high-tech companies need it as much as old industrial companies. You see, it takes a lot of energy to create a wired society. The international demand for energy will also continue to expand with the explosive economic growth of countries like China and India.

  At the same time, world energy production is beginning to level off. Countries like Saudi Arabia, which once functioned as swing producers with their excess capacity, can’t boost production enough to fix this problem. And many of the biggest oil producing countries have locked up their reserves in national oil companies, leaving Western companies such as ExxonMobil and Shell controlling less than 10 percent of the world’s oil and gas reserves.1

  We have to take control of our energy future. Liberals need to accept that fossil fuels are critical to our national security and to our economy, and that they can be developed in an environmentally responsible way. They are a bridge to the energy future, a necessity as we continue to develop alternative fuels. Conservatives, for our part, need to do more than simply shout “Drill, baby, drill”—we need to aggressively pursue the next generation of renewable and clean energy production technologies.

  Republicans seem instinctively to oppose cultivating energy sources favored by the environmental movement, such as solar and wind power. Likewise, Democrats often stridently oppose the expansion of traditional energy sources such as oil, coal, and nuclear power. Here’s an idea: how about we do it all? That’s not a Republican or Democrat solution. That’s an American solution.

  Most of us take it for granted that we can easily and affordably fill up our cars and drive 300 miles. Similarly, we assume that on hot Louisiana summer days or cold Minnesota nights, we can adjust the thermostat to a comfortable level for just a few dollars a day. But affordable, reliable energy doesn’t just happen by itself. Private companies have made huge capital investments and taken big risks to develop our energy supply. And without affordable energy, it’s nearly impossible to develop or maintain a prosperous society. The historical transition from human labor, to animals, to windmills took thousands of years. But with the steady supply of cheap energy delivered by fossil fuels, technological progress has exploded like never before in history.

  Securing a plentiful, affordable energy supply is a vital national goal. There are two main plans discussed in Washington today to achieve it: the liberals’ all-in bet on “green energy” as an alternative to fossil fuels, and the conservatives’ equally one-sided preference for those same fossil fuels. I favor a comprehensive, all-of-the-above approach. We need to unite the public sector, meaning the federal government and our universities, with the private sector behind a common strategy of research and investment. It will be an Apollo mission if you will—except instead of landing on the moon we will try to harness the power of the earth, wind, and sun. Creating and developing a diverse domestic energy supply at low cost should be our unifying goal. The way I figure it: God put oil and natural gas here for us to use. And God gave us creative minds to develop new and better ways to create energy. So let’s cut through the ideology and use some common sense.

  My mom studied nuclear physics, my dad is a civil engineer, and Supriya is a chemical engineer. Thanks partly to this family environment, I am an enthusiastic advocate of expanding the frontiers of science and technology. From my work in policy, I have also learned that free enterprise, not government planning, is the key to human ingenuity and innovation. It is capitalist innovation, not the heavy hand of government-imposed rationing, that helps our economy grow faster and with comparatively less energy than ever before. In 1973, it took 1,400 barrels of oil to support $1 million worth of gross national product (GNP). By 2003 that number had shrunk by more than half.2

  So I wouldn’t bet against America’s ability to develop immense green energy sources. In Louisiana, we’re doing our part. We are working on developing cellulosic ethanol (sugar cane stalks) as a source of energy; we have implemented aggressive tax credits for solar panels and compressed natural gas; and our companies are experimenting with harnessing the power of the Mississippi River and manufacturing the modular components for nuclear reactors. Indeed, we announced that Shaw Modular Solutions would be building the first facility focused on constructing components for new and modified nuclear reactors in the United States. An innovative manufacturer named Blade Dynamics has started a factory in New Orleans to produce advanced blades for wind turbines. We actively supported their efforts with performance-based grants and other incentives. Another company named Dynamic Fuels just completed a facility in Geismar, Louisiana, south of Baton Rouge, that will convert animal fats to fuel. We were eager to work with them.

  But let’s be realistic. A lot of people are portraying green energy as a panacea that will quickly solve our energy problems. Speaker of the House Nancy Pelosi said America needs “an energy policy that will reduce energy prices, reduce our dependence on foreign oil, and reduce pollution.”3 It sounds so easy—one can only wonder why such a simple solution hasn’t already been tried. Ask that question, and you’ll often hear wild conspiracy theories about Big Oil and Big Coal. In reality, while green energy offers tremendous future potential, the technology is still extremely expensive. Coal costs about 4 cents a kilowatt-hour. Compare that to 12 cents for wind and even more for solar, both of which are far less reliable than coal.4 Do you really want your utility bills to triple? Over time, technology will narrow this gap in price and reliability, but you can’t snap your fingers and make unworkable markets work.

  Green energy still needs to overcome other problems as well. For example, wind energy requires enormous landmass—the land covered by a wind power station needs
to be about 2,000 times bigger than a nuclear plant to generate the same amount of electricity.5 While there are some suitable locations for wind farms in small pockets in the Midwest, West, and Southwest, there are relatively few good areas in the eastern half of the United States.

  Even where a good location exists, green energy projects are often opposed by their supposed liberal champions. A case in point is the windmill project off Cape Cod, Massachusetts, that was opposed by members of the Kennedy family who reportedly didn’t want the view spoiled from their nearby compound. After eight years of lawsuits and government studies, the federal government finally approved the project in May 2010.6 Liberals may support green energy in theory, but in practice they all too often shout NIMBY—Not in My Backyard.

  And of course you can’t control the wind (just like the hot air coming out of D.C.); it’s intermittent and sometimes it completely stops (unlike the hot air coming out of D.C.). So even when you have a wind energy facility, you need back-up capacity, which means building a traditional plant that burns coal or natural gas. Don’t get me wrong, I’m all for harnessing wind. But we can’t pretend windmills can miraculously power the U.S. economy—no single energy source can.

  Solar plants present the same sort of challenges: they only work efficiently in some locations, solar radiation is rarely constant, and the plants require large tracts of land. (To replace a power plant such as California’s Diablo Canyon plant, for example, would mean replacing a three square kilometer nuclear plant with a solar plant spanning 687.5 square kilometers.7) And while there is great potential for building large solar facilities in the southwest, transporting the electricity long distances through power lines means we will lose a substantial amount in the process through what they call “line-loss.”