Long term health care budget likened to a dysfunctional relationship

The long term budget outlook for slowing the growth of health care costs was discussed at a hearing before the U.S. Senate Committee on Finance. Panelist Dr. Peter R. Orszag, Director of the Congressional Budget Office (CBO), gave the analogy of a dysfunctional relationship to illustrate the unsustainable state of the federal budget. Orszag said that, like such a relationship, there was no telling how long the budget would last but the end was bound to be messy.

Panelist Mr. Gene Dodaro, Acting Comptroller General of the Government Accountability Office (GAO) cautioned that Social Security cash surplus would start declining in 2011. Dodaro said that this would force increased borrowing from the public, reduced spending or increased revenue. Dodaro also said that American standard of living would be affected in terms of how the types of services would be funded.

Chairman Max Baucus (D-Mont.) noted that Congress would be able to help more if given more data regarding health care costs and guidelines. Orszag agreed and discussed ways to constrain costs without adversely affecting health benefits. Orszag recommended increasing the salience of health costs and improving health care efficiency. He said that might result in a change in cost-consciousness which would shift demand. Orszag also recommended generating more information about effectiveness and changing incentives such that people pay for ‘better care and not just more care’. Lastly, Orszag stressed the importance of adopting measures that promote healthier living such as increasing cigarette tax to discourage smoking.