Remarks as Delivered at the United States–China Health Care Forum

I would like to start by extending a warm welcome to my good friend, Minister Gao, and our other distinguished guests from China.

China and the United States face some of the same challenges on health care. Enforcing food safety regulations is costly for both China and the United States, but we both know that the world market will disadvantage suppliers that can't provide an assurance of safety.

I know the government of China understands this. When I was in China in December, food safety was often mentioned as a government priority. After the recent contamination of pet food, we raised the issue at the highest levels of China's government.

I am hopeful the next few days will yield a pathway forward for closer cooperation between our countries on food safety.

China and the United States share other goals as well. We both want to contain costs and extend access to underserved populations.

But, in both China and the United States, there are two divergent philosophies about the role government should play in health care: Some believe government ought to be the proprietor or owner of the health-care system. As the owner, it should define the benefits, set the prices, and bear the risk.

Others see government as an organizer, setting rules, equalizing inequities, and subsidizing the needy.

When governments are the proprietor or owner, the results are predictable: longer waiting lines, less incentive to improve quality, and higher taxes. To keep costs down, governments can only ration care. Innovation dries up, because there's no market to reward risk-taking innovations.

The same thing happens wherever the government is the proprietor. I have seen it in Central America, Europe, Canada, and even the United States.

When government is the organizer, the results are different. Prices drop, and quality rises, as providers compete for business. Innovation blossoms, because those who provide the best value are rewarded by the marketplace.

Under this model, people benefit from greater choice and better access to high-quality, low-cost care.

Let me give you is an example of how this works.

We recently began offering senior Americans and the disabled a prescription drug benefit through Medicare Part D. We could have done this through a single government-run drug plan. Instead, we opted for choice and competition, and the market responded with innovation.

As a result, Part D has turned out to cost a lot less than projected. The price was estimated at $38 per month to buy a prescription drug plan. This year, the average plan will cost $22.

Ninety percent of seniors are now enrolled in a plan. Four out of five tell independent evaluators they are happy with their plans.

Competition works-quality goes up, cost goes down. People are getting the drugs they need to be healthy.

Another way we are trying to organize the marketplace in the United States is through what we call Value-Driven Health Care. This is a movement to transition our growing health-care sector into an efficient system of competition based on value.

In a value-driven system, providers compete against each other on the basis of quality and cost. Consumers weigh the two and come up with their own determinations of value.

For too long, the quality and price of health care in America have been hidden from consumers. Questions of quality and price were just never asked. As a result, costs have gone up, and up, and up.

A better organized market will use competition to lower costs and improve quality.

It will also help us extend access to underserved populations-another goal that China and the United States share.

In the United States, rising costs are pushing more and more Americans away from health insurance. The uninsured still get care, but they get it in emergency rooms, where it costs more, and isn't the kind of care they really need.

To solve this problem, some Americans would like to make the federal government more of a proprietor. We are headed in that direction now. Medicaid enrollment is up 50 percent over a decade ago. The federal government now provides health insurance for 45 percent of all children. Half of all the births are paid for by the government.

The solution is not to put one more car on the train of government-funded, government-run health care. The solution is for every American to have access to basic, affordable insurance.

In our own country, if you're elderly, if you're poor, if you're disabled, government ought to provide coverage to you, and it ought to pay for most of it. Everyone else deserves to live in a state where the government has organized the private marketplace so that they have access to a choice of basic plans they can afford.

In the United States, the individual states have taken the lead, and are coming up with their own plans. More than a dozen states have already organized legislative proposals aimed at shrinking the number of people without insurance. Many more have plans in the works. Each is a little different, but they are all innovating and finding unique solutions.

I know that China is actively engaged in working to find a solution to these problems, too. You have many pilot projects taking place around your country. Each is tackling health-care challenges differently, but each is finding solutions.

I am sure your experience will be much like ours here. The federal government can learn from the states what works, and what doesn't.

I expect the same is true in China. I also expect that China and the United States can learn from each other what works, and what doesn't. These forums will help us both do that.

Change is coming in both of our countries. We can hardly avoid it.

The key is having our governments fully assume their organizing roles. Governments acting as proprietors cannot control costs without rationing care.

Only the competition of an organized marketplace can keep costs in check. And only by keeping costs in check can we, as nations, provide health care for all.

People promise health care for all, but when government tries to provide it, patients wait, and wait, and wait.

Our goal is to use competition, in an organized marketplace, to drive quality up and cost down.

Again, welcome. I look forward to sharing and learning together during this visit.

Thank you.

Last revised: March 13, 2008