Network News

X My Profile
View More Activity

What Peter Orszag accomplished -- and what he failed to do

orszagleaving.JPGBefore Peter Orszag was named director of the Office of Management and Budget, he led the Congressional Budget Office. OMB is part of the executive branch and advocates for the president's priorities, but CBO is an independent budget watchdog that traditionally contents itself with estimating the likely cost of legislation and the probable size of the federal deficit. Orszag, however, thought the watchdog needed to do a bit more barking: In particular, he believed that the relentless march of health-care costs posed a dire threat to federal finances. People talked about the "entitlement crisis," but that was a mistake: Social Security was a trivial problem. The issue was Medicare and Medicaid, and they were following the trends of the broader health-care sector. Health-care reform, Orszag argued in a series of speeches and blog posts, was entitlement reform.

Orszag paired the gloom-and-doom with an optimistic theory of how to avert disaster. Where most people assumed that controlling health-care costs would eventually mean confronting the dread specter of "rationing," Orszag -- taking his cue from reams of research showing that states that spent a lot of money on per capita Medicare spending didn't have better outcomes than states that spent much less -- argued that a substantial portion of each dollar we spend on health care is wasted. The answer wasn't cutting care, he said, but amassing much more evidence on what worked and what didn't, and then integrating that data into a health-care system armed with electronic medical records and software to help doctors make evidence-based decisions. That was a strategy politicians could support without seeing their careers flash before their eyes.

Soon after, Obama won the election and Orszag was named to the OMB, where he headed up the health-care reform effort. During the process, Orszag played full-court press, fighting internal battles over the shape of the plan, emerging as a key media spokesperson, and proving himself an adept congressional negotiator. After the endless negotiations over the stimulus package, which included billions for the research and computer systems that Orszag thinks crucial to the future of health care, Senate Majority Leader Harry Reid said, "in my mind, if there is a hero in all of this, it is Peter Orszag."

On a policy level, Orszag was wildly, even improbably, successful. A bill was passed. The Congressional Budget Office, now under the watchful gaze of Doug Elmendorf, certified it as deficit-reducing. Orszag's two top priorities -- an independent commission empowered to aggressively reform Medicare and a tax on high-value insurance plans -- survived the process.

But on a political level, he lost the argument: Polls showed that few Americans thought the legislation would reduce the deficit. The conversation has turned to long-term deficit reduction without even a breath spared for the long-term deficit reductions that Orszag muscled into the bill. In the most recent Washington Post/ABC poll, 56 percent of Americans disapproved of the way Obama has handled the deficit. The health-care bill itself is not popular, and the number one concern is cost.

Read the rest ...

Photo credit: By Carolyn Kaster/Associated Press

By Ezra Klein  |  June 22, 2010; 2:38 PM ET
 
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Why is Orszag leaving?
Next: An agenda for the next OMB director

Comments

He lost the argument because the "reform" didn't solve the problem. We're still going to spend 2-3 times as much per capita on health care as any other major industrialized country. We could have recognized that other countries have achived these savings through single payer or tightly regulating the health care market like utilities, but Mr. Orszag and others chose not to make that argument. Instead, we'll study the problem some more, fetishize IT solutions, and laud "best practices" as the route to salvation. When other more successful and empirically verifiable approaches to cost savings were available, he chose to ignore them, and he deserves no credit for that. Shame on you for saying he does.

Posted by: redscott | June 22, 2010 3:10 PM | Report abuse

I think this explains why the relationship between the WH and the CBO was so tight, as they had an inside man that knew the ropes and had a vested interest.Therefore he could help meet the targets by, if not pre-estimating, but knowing the the ins and outs of what they would accept and score.

There were only a couple of times where the WH seemed to not be on the ball as far as the CBO is concerned and my feeling is that he helped greatly.

Posted by: akusu | June 22, 2010 3:19 PM | Report abuse

redscott,

feel free to let me know when you've convinced US doctors to accept 40 cents on the dollar.

You did notice this week how docs in the US getting paid for JUST MEDICARE at a 21% reduction had a "coronary" (pun intended).


Make a LITTLE sense please.

Posted by: visionbrkr | June 22, 2010 3:24 PM | Report abuse

"taking his cue from reams of research showing that states that spent a lot of money on per capita Medicare spending didn't have better outcomes than states that spent much less"
Ezra, you have talked at length about the Dartmouth Atlas report but you make no comment to the critics who challenge it. Good that you linked to the NYTimes article that responded to the Dartmouth researchers. Bad that you chose to remain silent about their points. Short version: Do we want medicine on the cheap without regard for the medical outcome, or do we want to know what's the best price for the best outcome? Orzag is no hero and Dartmouth Atlas has some problems.

Posted by: goadri | June 22, 2010 3:31 PM | Report abuse

redscott

You are correct.

And as long as the US treats health care as a profit enterprise, we will never control health costs.

That said, I do want health providers to profit. The hard part is making sure the profits are reasonable without bankrupting us or causing people to go without care.

Posted by: Lomillialor | June 22, 2010 3:41 PM | Report abuse

Lomillialor said:
"And as long as the US treats health care as a profit enterprise, we will never control health costs."

There is a business model that allows for-profit enterprises to provide necessary services at reasonable cost - regulated public utilities. However, Americans are not at the point where they feel that health care is as important or essential as electricity/gas or basic phone service.

Posted by: tuber | June 22, 2010 4:02 PM | Report abuse

----"On a policy level, Orszag was wildly, even improbably, successful. A bill was passed. The Congressional Budget Office, now under the watchful gaze of Doug Elmendorf, certified it as deficit-reducing."

Why is it considered "success" to get the CBO to score a bill as deficit reducing? Especially when the person helping design it is a former CBO director who knows how to tailor a bill to get a good score?

Ezra has still refused to address a few key points about the supposed deficit reduction of the bill:

1) Over half of the reduction ($70B out of $132B) comes from the new long-term care insurance premiums. But anyone who knows anything about insurance knows that taking in premiums for a long term product means you need to accrue a liability for future benefits. They have not done so, and so the actuarial value of the future benefits from those $70B in premiums has been added to the deficit. (And this liability is likely even larger than $70B since both CMS Chief Actuary Richard Foster and the American Academy of Actuaries have said that the poor design of the program will lead it be insolvent in just a handful of years).

By the logic used here, they could have created a federal life insurance program and sold $500B in life insurance, using the premiums to pay for reform, and then said the bill reduces the deficit by an additional $500B. There's really no limit to the amount of insurance they could sell and call it deficit reduction if they're not going to properly account for the new liabilities they've created. This is blatant budgetary fraud.

2) The CBO has not accounted for the anti-selective nature of employers dropping coverage and sending employees to the exchange for subsidies. As we speak there are insurance agents and accountants figuring out how to game this for maximal employer savings, and optimal for the employer means worst case for the federal budget.

I would love to see Ezra address #1, but he has never even mentioned it throughout the entire debate on health reform and the deficit.

Posted by: ab_13 | June 22, 2010 4:21 PM | Report abuse

Good to know that we're running our health care system for the benefit of the providers and the insurance companies, and not for our benefit. Thanks for the timely reminder!

Posted by: redscott | June 22, 2010 4:26 PM | Report abuse

By the logic used here, they could have created a federal life insurance program and sold $500B in life insurance, using the premiums to pay for reform, and then said the bill reduces the deficit by an additional $500B. There's really no limit to the amount of insurance they could sell and call it deficit reduction if they're not going to properly account for the new liabilities they've created. This is blatant budgetary fraud.


Posted by: ab_13 | June 22, 2010 4:21 PM | Report abuse

OH PLEASE stop giving them ideas. Bernie Madoff is smiling somewhere.

Posted by: visionbrkr | June 22, 2010 4:29 PM | Report abuse

Also, tuber makes sense. We can have arguments about how much we regulate providers and insurance companies on the utilities model, and how much profit we're going to allow them (so that they won't starve, poor dears!) to extract from us. That's a line-drawing question, and a reasonable one to discuss. But tinkering around the edges of a for-profit model that's failed and that will continue to bankrupt us won't solve the problem.

Posted by: redscott | June 22, 2010 4:31 PM | Report abuse

oh if only you had a clue. over 50% of insurance companies are not for profit. most large employers only use insurers for their networks and actually insure themselves so to what benefit is it to say Microsoft to allow Aetna to price gouge them? Or is there some devilish conspiracy afoot?

Excuse me while I go back to beating my head against a brick wall.


http://www.nonprofithealthcare.org/resources/BasicFactsAndFigures-NonprofitHealthPlans9.9.08.pdf

Posted by: visionbrkr | June 22, 2010 4:48 PM | Report abuse

"with the earnest, precise air of a well-sharpened pencil"

Incredibly apt description.

I'll admit that I'm going to miss Orszag. Not the tabloidy fratboy Orszag but the well-sharpened pencil Orszag. And I don't know how much responsibility he bears for public opinion regarding healthcare, but I think his influence on policy was beneficial, overall. Or, at least, that's how it seems.

Posted by: slag | June 22, 2010 4:51 PM | Report abuse

Someone needs to do Orszag a favor and tell him to buy a new rug. The one he wears now looks like something the cat dragged in.

Posted by: checkered1 | June 22, 2010 5:23 PM | Report abuse

any chance you could get fareed to read this post and the linked-to article aloud to bill gates? those two seem to think all that was done was expand coverage to the 47 million uninsured.

Posted by: jackjudge4000yahoocom | June 22, 2010 5:59 PM | Report abuse

Orszag was successful at getting stupid women to have sex with him. Other than that, he has been a dismal failure. He lied about the stimulus, health care, and there is no budget as of today.

Disaster. I would call him a D.C. oil spill.

Posted by: Cornell1984 | June 22, 2010 7:01 PM | Report abuse


"Over half of the reduction ($70B out of $132B) comes from the new long-term care insurance premiums. "

Where is this documented?

In http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf
somewhere ?

Posted by: AndrewDover | June 22, 2010 7:53 PM | Report abuse

For months Obama has tolerated deep divisions between his military and civilian aides over how to implement the counterinsurgency strategy he announced last December. The divide has made it practically impossible to fashion a coherent politico-military plan, led to frequent disputes over tactics and contributed to a sharp deterioration in the administration’s relations with Afghan President Hamid Karzai. …Obama has truly reaped what he sowed.

Obama's Viet Nam

Posted by: JCM-51 | June 22, 2010 10:41 PM | Report abuse

A little night reading:

Perhaps we should think twice about insurers whose profit margins percentage-wise aren't quite as hefty as other industries but whose administrative overhead is quite sufficient to make Americans pay considerably more than they ought to if the insurance industry and the heath care providers were regulated more strcitly. Unless we like what we're paying for, and I don't. But see for yourself.

http://economix.blogs.nytimes.com/2008/11/21/why-does-us-health-care-cost-so-much-part-ii-indefensible-administrative-costs/

Posted by: redscott1 | June 22, 2010 10:57 PM | Report abuse

@AndrewDover: "Where is this documented?

In http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf
somewhere ?"

I'm having trouble finding the full detailed CBO score, my Google-fu is only coming up with discussions of the CBO score. But see here (section titled "Messing with a lock box"):

http://money.cnn.com/2010/03/12/news/economy/debt_health_care.fortune/index.htm

I prefer primary sources, so I'll keep digging for that CBO report. But just google "CLASS act cbo 70 billion" and you'll find lots of discussion about the report.

Posted by: ab13 | June 22, 2010 11:54 PM | Report abuse

redscott,

by 2014 and beyond you'll see that this "administrative excess" is really not there. Insurers will be forced to be more streamlined and trust me, the generic "you" as a patient will not like how it turns out. The old "be careful what you wish for" is about to come true.

Posted by: visionbrkr | June 23, 2010 7:36 AM | Report abuse

No Congressional budget this year. How obscene. Is he hanging around for that with some more speeches. Obviously not. Remember Defense spending almost $800 billion A YEAR- 7 trillion over the last ten years for the wars. The GAo points out hundreds of billions in waste and cost overruns-not a wimper out of him, the President or Congress- SAME OLD, SAME OLD= while Americans lose their jobs,homes and health insurance.
Pathetic!

Posted by: barryhalber | June 23, 2010 11:55 AM | Report abuse

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company