Friday, July 1, 2011

Peter Orszag rebutted by a Serious Medicine Strategist in Foreign Affairs

Peter Orszag, who spent nearly two years as the director of the Office of Management and Budget in the Obama administration, has published a piece in Foreign Affairs continuing is efforts to bring European-style rationing to the US.  Such policies proved disastrous for the Democratic Party in 2010, and don't even seem to be helping to control spending--but evidently, they still play well in the gilded towers of New York City, where recipients of bank bailouts scan the horizon looking for other people to de-fund. 

In "How Health Care Can Save or Sink America: The Case for Reform and Fiscal Sustainability," Orszag asserts that healthcare costs could cause either a "severe fiscal crisis or a crippling inability to invest in other areas."   As he puts it: 

Rising health-care costs are at the core of the United States' long-term fiscal imbalance. The Congressional Budget Office (CBO) projects that between now and 2050, Medicare, Medicaid, and other federal spending on health care will rise from 5.5 percent of GDP to more than 12 percent. (Social Security costs, by comparison, are projected to increase from five percent of GDP to six percent over the same period.) It is no exaggeration to say that the United States' standing in the world depends on its success in constraining this health-care cost explosion; unless it does, the country will eventually face a severe fiscal crisis or a crippling inability to invest in other areas.

Orszag worries, in particular, that spending more on healthcare will divert money away from education. And that's certainly a concern, but the plain fact is that if people age and grow sick, their care will expensive.   Orszag's answer is to crimp down on that spending, which, of course, is politically problematic.  The crimp-down was a partial explanation for Obamacare, and the same crimp-down helped explain the Democrats' defeat in 2010.

Completely ignored in Orszag's piece is the idea that better health through medical research and new cures is a more politically and economically acceptable way to achieve Orszag’s own stated end: saving money.   It would be nice, for example, if Orszag were to at least consider the option of cures as part of US policy strategy.  Happily, that Serious Medicine point was made in the comments section of Foreign Affairs by one James W: 

Where was Mr. Orszag and his analysis when America first needed him--in 1950 when the federal government estimated that (translated into today's dollars) by now we would be spending over $1 TRILLION/year just on care for polio victims? Americans would have then been able to choose one of his three "strategies for saving", 1) reducing provider reimbursements, 2) direct rationing, and/or 3) consumer-directed health care. Lacking the benefit of his policy insights, ignorant politicians allowed Dr. Jonas Salk to blunder ahead with that vaccine thing of his. Now we will never know by how much Regina Herzlinger's "focused factories" could have bested the cost of treating polio vs. general hospitals, nor will we ever learn what percentage skilled bureaucrats like the author could have used Medicare's market power to negotiate down the price of iron lungs.

Back when Mr. Orszag was running the Congressional Budget Office (CBO), the term for his kind of thinking was "static scoring". It still is. For an alternative view, in which innovation is an option and outright cures are possible (think "Gardasil" vs. "rationing chemotherapy for cervical cancer"), see:

Well said, James! 


  1. Mr. Orszag's "static scoring" has no learning curve. Just goes to show you, there is no accounting for stupidity. Too bad the CBO doesn't know its A, B, Cs. Scary, that such idiots are in high government positions. Maybe they are not idiots, ... maybe they are just stupid people.
    60 yrs ago I was crippled; no not Polio, but 4 of my friends had it. In the Ward next to mine, at Columbia Presbyterian Medical Center, sometimes when I let my mind drift back in time to then, I can still hear those Iron Lungs groaning. TG Jonas Salk paid the DC geniuses no mind. Now, thanks to Dr. Salk we have the sounds of silence. Beautiful thing, "Cures."

  2. Good points. Orzag isn't all bad. He did offer a serious strategy to protect physicians from frivolous medical malpractice lawsuits, which is much more than I can say for his former boss.