Orszagism Reeling

Orszagism Reeling

Orszagism Reeling

A mostly political weblog.
July 26 2009 5:25 AM

Orszagism Reeling

Orszagism--the idea that health care reform will be able to dramatically "bend the cost curve" and solve the long-term budget crisis, without compromising care-- suffered a couple of blows in the past 24 hours:  

1. A front page WaPo article on heart attack treatments reaches a conclusion that reinforces what many Orszag skeptics have suspected:  


Although inappropriate care, high administrative costs, inflated prices and fraud all add to the country's gigantic medical bill, the biggest driver of the upward curve of health spending has been the discovery of new and better things to do when someone gets sick . ...

"The low-hanging fruit has been largely consumed," said C. Michael Gibson, a cardiologist and chief of clinical research at Beth Israel Deaconess Medical Center in Boston. "We are now facing the battle of a half- to one percent improvements in mortality that will come at very high cost."  [E.A]

2. Lipstick on a fig: The proposed independent board designed to curb ... well, inappropriate care, high administrative costs, inflated prices and fraud--and which Orszag had hailed as "probably the most important piece that can be added" to the House health bill--would only save an estimated $2 billion over the next 10 years, according to the Congressional Budget Office. Orszag counterblogs that's too short a time frame--the "IMAC" panel is one of his "game changers" designed to "bend the curve" over the longer term. (Why might it not be able to? See point #1).

But, a)  Orszag has the chutzpah to actually pretend that CBO has semi-endorsed the plan:  

With regard to the long-term impact, CBO suggested that the proposal, with several specific tweaks that would strengthen its operations, could generate significant savings . ...  [snip]  

The bottom line is that it is very rare for CBO to conclude that a specific legislative proposal would generate significant long-term savings so it is noteworthy that, with some modifications, CBO reached such a conclusion with regard to the IMAC concept. [E.A.]


In fact,

is that, without draconian additions that would impose automatic "fallback" cuts ("such as an across-the-board reduction in payments") if the IMAC panel's economies didn't materialize, the chances of generating those savings were slim:

Although it is possible that savings would grow significantly after 2019, CBO concludes that the probability of this outcome is low for the proposal as drafted ... [E.A.]

Maybe this conclusion is an artifact of the CBO's peculiar methodology, which favors near-certain mechanisms like automatic "fallback" provisions. Maybe, as Bush official Mark McClellan suggests, it wouldn't be that hard to "reduce medical growth by about 1.5 percentage points annually"  through delivery reforms without reducing quality of care.  But CBO didn't say that, and it seems disingenuous of Orszag to suggest they did.  

P.S.: Again, I don't understand why "game changing" has to be an essential part of the bill Congress considers if a) we're talking about changes way beyond a decade hence; b) even Orszag concedes "we don't know today" exactly what those changes will be ; and c) raising the prospect of dramatic cost reduction also raises legitimate fears of rationing and loss of helpful treatments --and makes it almost impossible to generate the public support necessary to pass the coverage-guaranteeing core of Obama's package. Cover everyone, let the Blue Dogs boast about cuts that make the plan deficit-neutral for 10 years, study various alleged game-changers for a few years and then we can have a debate on how much to control costs a decade from now (and how much to instead raise taxes and other payments to cover them).

Save Health Security First! ...  3:27   A.M.