Peter Orszag Responds
by Virginia Postrel • Jun 5, 2009 at 4:42 pm
After my Medicare First meme bounced around the blogosphere (thanks, Glenn, for the initial link), I got an email from Peter Orszag at OMB, asking to chat. His major points in our subsequent phone conversation:
1) The administration does have big Medicare changes planned, both immediate cuts in reimbursements and "game changers" to impose more scientific management, potentially realizing savings down the road.
2) "I hope I'm not making anything sound like they're painless." There are going to be "hard, CBO-scored cuts" in Medicare, "mostly involving provider payments." The administration is proposing cutbacks in home-health care and Medicare Advantage payments, for instance. It isn't expecting to get its initial savings from better management.
3) Medicare First--changing Medicare and waiting to see how it works before messing around with the rest of the health care system--won't work politically. "I don't think you're going to get these aggressive changes in Medicare unless you do some coverage expansion now." The AARP, for example, has said it will accept significant changes in Medicare only if the money goes to expanding coverage.
1) Unlike critics (including me), Orszag does not regard the administration's plans as a significant change in the health care system because "you're keeping employment based insurance in place and you're adding coverage in way that can be dialed up or down."
2) He's not particularly interested in my personal obsession, the effects of centralized controls on long-term medical innovations, which may require very modest incremental improvements that cost a lot but lead to bigger improvements later.
3) The administration is beginning to realize that it overreached when it tried to spin health-care reform as a free lunch.