The Wonk Room

Orszag: We’ll Do Health Care And Balance The Budget?

In an interview with the Politico’s Ben Smith, Peter Orszag offers some valuable insight into the Obama administration’s plans for health care in the budget.

According to Orszag, “the moves in the stimulus package are just a hint of what to come in a budget that will begin in earnest the arduous process of health care reform.” The administration plans to unveil “What has already been accomplished is a huge start toward a more efficient [health care] system, and I think you’re going to see more in the budget next week,” [Orszag] told Politico:

Though the budget’s details have been closely held, Orszag revealed, in broad terms, two: A continued focus on health care policy; and a plan “to restore the nation to a sustainable fiscal trajectory over the five-to-ten year window.” The next step on health care, he said, is a set of “changes to Medicare and Medicaid to make them more efficient, and to start using those programs more intelligently to lead the whole healthcare system.”

With a growing body of research finding some practices more cost-effective than others, the programs reimbursement rules can be used to force changes at those hospitals – a sort of back door to health care reform.

By applying reimbursement reform and other cost effective measures to Medicare and Medicaid, Obama hopes to reduce spending in the public health sector and basically muscle health care providers into changing their business practices.

But this plan “to restore the nation to a sustainable fiscal trajectory,” sounds like an incremental approach to expanding coverage. Economists have argued that real push for getting everyone into the system will require a large upfront investment, with savings accruing down the road. You can’t offer universal coverage and balance the budget. But down the road, you can’t achieve fiscal responsibility without fundamentally reforming the health care system.