No Back Burner for Health Care-Kiplinger

Washington Matters


No Back Burner for Health Care



Given two wars, a financial crisis that won't quit, a failing auto industry and a whole basketful of smaller problems that could erupt into larger ones, you can count on President-elect Obama scaling back his agenda. But he has signaled clearly that one thing he's not going to let slide for long is shaking up the health care system.

His reported pick of former Senate Democratic leader Tom Daschle in charge of the Department of Health and Human Services was the first big clue. Daschle understands the issue itself, the politics that make it so difficult, and -- perhaps most importantly -- the levers in Congress that have to be pushed and pulled to draft and pass complex legislation. Daschle will not only head HHS, but he'll be the health czar for the White House, a key condition for exerting influence.

But Obama also has made another crucial but far less noticed pick that makes clear he believes that getting a handle on health care is the only way to get control of the two biggest burdens around the government's neck, entitlements and soaring budget deficits.

Obama reportedly has settled on Peter Orszag, the head of the Congressional Budget Office, to serve as his budget director, a Cabinet-level post that will be among the most challenging jobs in the Obama administration. Like Daschle, Orszag is familiar to most members of Congress and respected by both parties. While Orszag is a Democrat who served as a senior economist in the Clinton White House, he is known as a trustworthy and hard-nosed numbers guy. That's crucial at CBO because it's a nonpartisan agency whose impartiality must be unquestioned since its analyses and calculations are used in evaluating the costs and budget implications of legislation and assessing the government's overall fiscal health. With rare exception, CBO judgments are universally accepted as fact by lawmakers.

That alone should give Obama a leg up in dealing with Congress because one of the constant sources of tension between the White House and Congress is the habit of both sides to play budget games that disguise problems and hide spending. Orszag will be far less likely to engage in such games.

But what could make Orszag such a crucial player in the coming years is his depth of understanding of health care policy and its implications for government budgets. Since the beginning of his tenure at CBO last year,  Orszag has been preaching that controlling the rise in health care costs is the only way to control federal spending -- and indeed, the key to the overall health of the U.S. economy. If there is any number that brings into focus the threat health care poses to the budget and economy, it's this one: Left unrestrained, Medicare an Medicaid, which made up 4% of the federal budget last year, would account for a fifth of GDP in 2089 -- which roughly is what the entire federal budget's share of GDP is now.

What may encourage Republicans, who are strong believers in using market forces to restrain health costs, is that Orszag believes that little can be done unless those who use health services become disciplined health care consumers. On the theory that spending your own money is a far more serious matter than spending the money of an insurance company or the government, Orszag favors giving Americans more direct control over -- and greater responsibility for -- money spent on health. Finally, Orszag also is a big booster of studying and using human behavior to shape health care policy.

If you want a glimpse of Obama's budget and policy priorities, look at Orszag's own words. He warned in October, less than a month before the election and when he was an informal adviser to Obama, that turning a blind eye to health costs while dealing with more immediate concerns could be disastrous. "Many observers have noted that addressing the problems in financial markets and the risks to the economy may displace health care reform on the policy agenda -- and that may well be the case for some period of time....Although it may not seem immediately relevant given our current difficulties, it will be crucial to address the nation's looming fiscal gap -- which is driven primarily by rising health care costs -- as the economy eventually recovers from this current downturn," Orszag wrote in his blog.




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