Tuesday
Mar102009
It's Expensive, Yes, But What is the Cost of Doing Nothing?
Tuesday, March 10, 2009 at 5:16PM
Coffee Brown, University of New Mexico, Talk Radio News Service
Dr. Peter Orszag, previously the Director of the Congressional Budget Office, currently the Director of the President's Office of Management and Budget, told the Senate Committee on Finance that the cost of doing nothing about healthcare reform would be fiscal crisis, decreased take-home pay, 46 million uninsured Americans, and an increasing burden on state governments which is already cutting into other services, such as increased tuition costs for college.
"Do you know of anyone in either party who wants to do nothing?" Sen. Chuck Grassley (R-Iowa) asked.
Orszag replied, "No, Sir. That's why I am confident that we can get healthcare reform passed this year."
Grassley said there was not yet any conflict between Republicans and Democrats about healthcare reform, but that that was partly because the president's budget, while "bold", was "not very detailed."
Still, $634 Billion is a lot of money.
Sen. Max Baucus (D - Mont.) said, "Would healthcare reform now lead to substantial savings?"
"Yes," answered Orzack.
"Should we accept short term deficit spending to achieve that?" asked Baucus.
Orzack replied, "The president's budget for healthcare reform is designed to be deficit neutral for the first 5-10 years, then we should begin to see savings. If we could cut one percent per year from medical cost growth, we could realize savings of 20 percent of GDP in 50 years. For forty years, medical costs have risen 2 to 2.5 percent faster than inflation."
The hearing, at which Orszag was the sole witness, turned from general costs to specific strategies.
Baucus asked, "Can we incentivize consumers to be more cost effective?"
"25 percent of beneficiaries use 85 percent of the cost. That's the group to target," Orszag replied.
"Would costs come down if everyone were covered? And how could we do that?" Baucus asked.
According to Orszag, we need to reduce consumer costs, reduce complexity, and encourage enrollment. We can encourage enrollment by subsidies, mandates, and automatic enrollment with an opt-out choice. Social norms need to change, so that people would be as shocked if you had no health insurance, as they now are if you don't buckle your seatbelt. the key to that is massive public awareness campaigns, he finished.
Grassley said he was concerned that Medicare Advantage might be cut too sharply under the new budget. Physicians might opt out of Medicare if reimbursement is too low.
Orszag said that Medicare Advantage was targeted because it paid substantially more than basic Medicare.
Expansion of the public sector would place new pressures on the private sector.
"Would a public plan undermine Obama's promise that people who prefer to can stay with their current plan? Would Obama support a plan that would 'crowd' 18 million people off private plans onto public?" Grassley wondered.
Sen. Maria Cantwell (D - Wash.) was also concerned about proposed cuts: "We've found medical homes, home care, and Medicare Advantage to be cost effective, but they face cuts under the new budget."
"Evidence strongly favors integrated care...Long term health care is in the budget...Competitive bidding should reflect local costs," Orszag replied.
He pointed out later, however, that the budget office had found that home care typically had much higher profit margins than other sectors of healthcare, and had been targeted for that reason.
Public funding means public accountability.
Orrin Hatch (R - Utah) said, "A Federal Reserve-style medical board would be a disaster, leave standards of care to the specialty boards. Keep these decisions in the private sector. We should not be be setting prices."
"Those problems are common to all the models. Both public and private systems must change," Orszag said.
Sen. Baucus closed the meeting by pointing out that time is of the essence, and the Senate must move quickly.
"We have our sleeves rolled up; we're ready to go," said Orszag.
Dr. Peter Orszag, previously the Director of the Congressional Budget Office, currently the Director of the President's Office of Management and Budget, told the Senate Committee on Finance that the cost of doing nothing about healthcare reform would be fiscal crisis, decreased take-home pay, 46 million uninsured Americans, and an increasing burden on state governments which is already cutting into other services, such as increased tuition costs for college.
"Do you know of anyone in either party who wants to do nothing?" Sen. Chuck Grassley (R-Iowa) asked.
Orszag replied, "No, Sir. That's why I am confident that we can get healthcare reform passed this year."
Grassley said there was not yet any conflict between Republicans and Democrats about healthcare reform, but that that was partly because the president's budget, while "bold", was "not very detailed."
Still, $634 Billion is a lot of money.
Sen. Max Baucus (D - Mont.) said, "Would healthcare reform now lead to substantial savings?"
"Yes," answered Orzack.
"Should we accept short term deficit spending to achieve that?" asked Baucus.
Orzack replied, "The president's budget for healthcare reform is designed to be deficit neutral for the first 5-10 years, then we should begin to see savings. If we could cut one percent per year from medical cost growth, we could realize savings of 20 percent of GDP in 50 years. For forty years, medical costs have risen 2 to 2.5 percent faster than inflation."
The hearing, at which Orszag was the sole witness, turned from general costs to specific strategies.
Baucus asked, "Can we incentivize consumers to be more cost effective?"
"25 percent of beneficiaries use 85 percent of the cost. That's the group to target," Orszag replied.
"Would costs come down if everyone were covered? And how could we do that?" Baucus asked.
According to Orszag, we need to reduce consumer costs, reduce complexity, and encourage enrollment. We can encourage enrollment by subsidies, mandates, and automatic enrollment with an opt-out choice. Social norms need to change, so that people would be as shocked if you had no health insurance, as they now are if you don't buckle your seatbelt. the key to that is massive public awareness campaigns, he finished.
Grassley said he was concerned that Medicare Advantage might be cut too sharply under the new budget. Physicians might opt out of Medicare if reimbursement is too low.
Orszag said that Medicare Advantage was targeted because it paid substantially more than basic Medicare.
Expansion of the public sector would place new pressures on the private sector.
"Would a public plan undermine Obama's promise that people who prefer to can stay with their current plan? Would Obama support a plan that would 'crowd' 18 million people off private plans onto public?" Grassley wondered.
Sen. Maria Cantwell (D - Wash.) was also concerned about proposed cuts: "We've found medical homes, home care, and Medicare Advantage to be cost effective, but they face cuts under the new budget."
"Evidence strongly favors integrated care...Long term health care is in the budget...Competitive bidding should reflect local costs," Orszag replied.
He pointed out later, however, that the budget office had found that home care typically had much higher profit margins than other sectors of healthcare, and had been targeted for that reason.
Public funding means public accountability.
Orrin Hatch (R - Utah) said, "A Federal Reserve-style medical board would be a disaster, leave standards of care to the specialty boards. Keep these decisions in the private sector. We should not be be setting prices."
"Those problems are common to all the models. Both public and private systems must change," Orszag said.
Sen. Baucus closed the meeting by pointing out that time is of the essence, and the Senate must move quickly.
"We have our sleeves rolled up; we're ready to go," said Orszag.
"Spending money I haven't made yet for things I don't want."
Paul Ryan (R-Wis.) said, “The president is proposing to increase our national debt more than all prior 43 presidents combined,” adding $2.3 trillion more “to the national debt in higher deficits” than his own budget office stated.
Ryan said the budget increases taxes and spending. “But what’s so galling about this – we read today the Chinese are talking about a new currency, the Russians are talking about a new currency. We are debasing the value of the American dollar by borrowing way beyond our means,” he said.
“We are consigning our next generation to an inferior standard of living,” Ryan said.
He estimates the national debt will double in six years and triple in ten.
Dan Mitchell, senior fellow at the CATO Institute, a libertarian think tank, said, “That’s just the tip of the iceberg, because … we have trillions and trillions of unfunded liability for entitlement programs, … tens of trillions of dollars of unfunded liabilities in the future. We are in effect on a path to become the next Argentina.”
That other countries would consider a reserve currency other than the dollar is, he says, “a referendum that we are on the wrong track.”
Rep. Jim Jordan (R-Ohio), Chairman of the Fiscal Responsibility Task Force of the Republican Study Committee, said that one of the elements of greatness is the willingness of one generation to sacrifice for the next. The next generation, he said, will never be able to repay this debt.
He quoted Sen. Judd Gregg (R-N.H.) as saying this budget would bankrupt the country.
Rep. Marsha Blackburn (R-Tenn.) said “One of my constituents said it best, ‘I am tired of Congress spending money I haven’t made yet for things I don’t want.’ When you look at the push for nationalizing healthcare, when you look at the cap-and-tax scheme (Cap-and-Trade), this is what people are afraid is going to pile on more and more debt.”
“I look at this as being economic abuse of (her grandchildren’s) future,” she said.
Rep. Gregg Harper (R-Miss.) said, ”When you find out you’ve dug yourself a hole, you should quit digging, but we’ve brought in heavy machinery, and we’re making the hole so deep that we’re not going to be able to get out of it.”
“We tell our children we can’t afford to get everything,” he said, and now the children, the public, are telling the parents, the legislators, “We don’t really have to have that.”