This is a partial transcript from "The O'Reilly Factor," Jan. 18, 2005, that has been edited for clarity.

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BILL O'REILLY, HOST: In the "Factor Follow-Up" segment tonight, Americans and their health. A big problem in this country is money. It costs a ton of it to get well if illness befalls you.

Now liberals basically want the government to pay, but that means you and I pay the medical bills of other people. Conservatives are generally free marketplace people, let the medical professionals compete, but that still leaves millions of Americans who can't afford treatment.

Joining us now from Washington, FOX News analyst Newt Gingrich whose new book, "Winning the Future: A 21st Century Contract With Americans," deals with solving the medical malady and some other big problems in the USA.

And we're going to do the medical thing first and then we'll get into some other areas as well. You know, you're a very creative guy. Ted Kennedy actually referenced you in the medical thing over here.

You're not an ideologue. You're not coming at it from that point of view. But, you know, it's a huge problem. Medical expenses are through the roof. How would you solve it?

NEWT GINGRICH, FOX NEWS ANALYST: Well, Bill, I think it comes down to three simple principles:

First, encourage people to take care of themselves so that, for example, if you have diabetes, you get up every day, you know what your situation is, you can check your own health record, you do what's right so you stay out of the hospital because you want to stay healthier if you know how to do it.

Second, go to electronic information, the same stuff we use for automatic teller machines to get cash, the same stuff we use for cell phones, the same stuff we use for airlines to get electronic tickets or to order for reservations. -- Paper kills.

And my guess is that 50,000 to 100,000 Americans a year die unnecessarily because we don't have a system that works the way systems do in other parts of American life.

O'REILLY: But what difference does that make? Say -- I mean, what do you want, me to be able to go to a machine and punch up a prescription for myself...

GINGRICH: No.

O'REILLY: ... or some doctor to know what -- some doctor that I go to see that I don't know and he can punch it up?

GINGRICH: Sure.

O'REILLY: Is that what you're talking about?

GINGRICH: Let's start with exactly -- the exact example of a prescription, OK? My mother had three different doctors. She was taking 17 different medicines. They never looked at the same record. They never knew what each other was prescribing.

Overprescribing is a major problem. Something like one-fourth of the emergency room visits in Rhode Island were senior citizens who had had medication errors of some kind.

O'REILLY: I got it. OK. So all doctors should have access to a data bank where America's health records would be, but then you get the privacy problems there because I don't want to -- anybody to be able to access my records and know what's the matter with me.

GINGRICH: Right. And it should be illegal to access your records unless it's a medical professional or you. You should be able to access your own record, and you want to know what's there.

O'REILLY: But what do I need it for?

GINGRICH: Well...

O'REILLY: What I need to access...

GINGRICH: Well, let's say you're -- let's say you're diabetic, and you want to find out how are you doing with your blood sugar, how does it compare with this time last year, what should you do next to take care of yourself. Just giving people information helps them dramatically. We're working...

O'REILLY: All right.

GINGRICH: We're working with one group...

O'REILLY: But the doctors -- go ahead.

GINGRICH: ... who believe -- we're working with one group of doctors who believe that if you organize treatment for breast cancer correctly, you not only save a lot of lives, but you probably save 50 percent of the costs of breast cancer, which means you'd save between $7 billion and $12 billion -- billion -- a year just on that one disease.

O'REILLY: All right. But, with all the hackers and everything, I'm having a hard time getting people's medical records in a big database. I know you're going to have a hard time with that because of privacy issues because that's an explosive thing. You know, people don't want their medical history...

GINGRICH: Right, but if I tell you -- if I tell you between 8,000 and 9,000 people a year die because we don't know whether or not they're taking the wrong medication, I think the average person would voluntarily say...

O'REILLY: Yes. I think if it's on a voluntary basis...

GINGRICH: ... as long -- then that's the way it ought to be.

O'REILLY: ... then you can do it.

All right. Now the expense of drugs here in the United States, much more than Canada and Mexico, R&D and all of that. Go to the hospital and you're paying through the roof. I mean, it's enormously expensive. Now a lot of that is malpractice to cover that and all, but how can you bring it down?

GINGRICH: The number one thing to do is to have a right to know that -- so you know before you go in a hospital how much does it cost, what's their quality. The minute you learn that, you begin to change behavior.

The same thing with drugs. If you had the same right to know about the cost of drugs and their effectiveness that you have with airlines, prices would come down.

The fact is people don't know today how much the drug costs most of the time when they buy it. They only pay a co-pay. They don't have a clue what the rest of the drug cost is, and they don't know if there are five or six other drugs that could do the same thing that might be less expensive.

O'REILLY: But what do I care if I'm only paying five bucks on a co- pay or 10? What do I care how much the drug costs?

GINGRICH: Well, I think if you design the right model, you'd -- you could get the basic -- drug basically for free, but you'd also have an incentive to get a less expensive drug, and, if you wanted the most expensive drug, you'd pay more.

O'REILLY: All right. So like a menu. You get a menu of prescription drugs.

GINGRICH: Right.

O'REILLY: Now the other thing is that you have doctors who are paying -- you know, $150 now for a visit. You know, a visit to the doctor, $150, a lot of people can't pay that.

GINGRICH: That's right. And if you're a gynecologist or an obstetrician, you may be paying $40 of that visit just to buy insurance against trial lawyers.

So you've got to have litigation reform if you really want to bring down costs because literally, in some states now, the cost of insurance is so dramatic that it is a major component of what you're paying for in health care.

And I think we have to look at a whole issue of how to get to some kind of a health-court system that's not lawyer-dominated, not adversarial where people can solve problems at minimum cost as fast as possible.

O'REILLY: Well, the feds are going to have to set up a pretty big apparatus, though, to make that happen, and that brings me to my...

GINGRICH: Or...

O'REILLY: Go ahead.

GINGRICH: Or just replace -- or replace the current court-dominated system with a mediation system that would work less expensively, faster and without having lawyers involved.

O'REILLY: You'd have to have a lot of mediators, though, boy. You have to hire a ton of those people because there's so many...

GINGRICH: Well, right now, you -- Bill, right now, you have a lot of courts.

O'REILLY: Yes, I understand that. It's chaotic. Does the federal government, in your opinion, owe Americans free health?

GINGRICH: No. I think the American people have the right to expect a system where they can buy insurance. I think for the very poor, we ought to find a way to give them a tax credit to help them buy the insurance. But I think we want to keep health something that you own that you're in charge of.

If you look at places like Canada where everything works fine as long as you're not sick, but, if you're seriously ill, it's nice to be able to go to Buffalo or Detroit or somewhere else to get taken care of. I do not think we want bureaucrats telling the American health system we want you as an individual to have control over your own health.

O'REILLY: Now there are a lot of lobbies, and that's why the politicians don't do what you're suggesting because there are a lot of special interests that don't want any reform because a lot of people are getting rich off sick people, correct?

GINGRICH: Well, that -- I think there's a lot of resistance to change, but, with the passage of the health savings accounts two years ago where people can now put money in a tax-free savings account that builds up with tax-free interest and they can spend it on health-care tax free, we're seeing the first big step in the right direction, and it's something President Bush fought for that I think we can take a lot of pride in.

O'REILLY: All right. "Contract With America 2005," Newt Gingrich's brand-new book. You want to get that for the next century. And there's a whole bunch of other stuff in the book I want to talk to you about.

You're kind of a wild radical environmentalist. Boy, oh boy. So, next time on, we'll talk about that.

GINGRICH: All right.

O'REILLY: Mr. Speaker, thanks very much.

GINGRICH: Thank you.

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