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“Loosey-Goosey” Anxiety Over Health Reform

November 30th, 2009 . by economistmom

doctor_goose_by_jkbunny

A story by Lori Montgomery in today’s Washington Post offers an interesting critique of those of us who worry about fiscal sustainability in the context of health reform (emphasis added):

As the long battle over health care is rejoined in the Senate this week, experts remain deeply divided over whether the legislation would rein in soaring health-care costs or simply add millions of people to a system that is already driving the nation toward bankruptcy…

[Senate Majority Reid's bill] would not deliver on Democrats’ most ambitious claims, the CBO found. While the package would not worsen the nation’s record deficits, it would not significantly improve them, either now or in the future. Reid’s bill would shave less than 2 percent from deficits projected to top $9 trillion over the next decade. And it would make only “small reductions” after that, the CBO said — about 0.25 percent of GDP — to deficits projected to balloon to roughly 14 percent of the economy by 2035…

Many budget experts also worry that lawmakers may not have the stomach to keep the new taxes and spending cuts intended to pay for the package. Republicans are already planning to offer an amendment to strike more than $400 billion in proposed Medicare cuts from the package, a move that would blow a huge hole in financing for the bill.

In merging bills drafted in committee, meanwhile, Reid significantly watered down two of the most important cost-containment provisions: a tax on high-cost health insurance policies that was opposed by labor unions and an independent commission that had been designed to automatically and methodically restrain Medicare spending. Senior White House officials have called those provisions critical, but House leaders are adamantly opposed to both.

“I do give them credit for shooting for deficit reduction as a target,” said Robert L. Bixby, executive director of the nonprofit Concord Coalition, which promotes a balanced federal budget. “But this bill is not bending the cost curve. Even if these things work, it’s not of the magnitude that is needed to prevent us from going over the cliff.”

As the Senate prepared to return to the debate, the White House pushed back aggressively against such criticism, touting endorsements from outside experts…White House Budget Director Peter R. Orszag questioned the expertise of the administration’s critics, telling reporters in a hastily arranged conference call that their “loosey-goosey” anxieties were ill-informed.

But the article goes right on to explain why Peter thinks critics (or rather “skeptics”) are being unfair (emphasis added):

In a separate interview, Orszag said health reform was never intended to reduce deficits immediately, but rather to set in motion a process that would avert a fiscal catastrophe decades down the road. The president will propose additional steps for reducing the short-term deficit in his next budget, Orszag said, though he declined to offer details. Calls are growing louder in Congress for a bipartisan commission to rebuild the tax system and cut spending on Social Security, Medicaid and Medicare, and Obama has expressed support for the idea.

But with health costs poised to swamp the federal budget, Orszag said, such additional efforts would be almost pointless without reform.

“The legislation is reflecting all the ideas that have been put forward in health policy circles for years and creating a feedback-and-continuous-improvement loop that will allow us to learn as we go,” Orszag said. “When someone says it’s not guaranteed to work, my response is: Doing nothing is guaranteed to fail.”

Well, it seems to me that with all our hopes pinned on those future and as-yet-unspecified (and unspecific) policies that will successfully “bend the cost curve,” it can’t be rational to assume that doing anything is guaranteed to make things better (and not worse).

So we’ll get more specific about our anxiety over (or confidence in) health reform and the overall fiscal outlook as soon as the proponents of health reform (the Obama Administration included) get more specific about their proposed solutions and show us how willing they are to follow through on their specific plans.

Until then, if all we hear about are “loosey-goosey” plans to “bend the cost curve” and “loosey-goosey” talking points that presume health care reform will be a net positive no matter what (because “doing nothing is guaranteed to fail”), then we can only offer “loosey-goosey” criticism and skeptism.

“Loosey-goosey” out, “loosey-goosey” back at ya.

7 Responses to ““Loosey-Goosey” Anxiety Over Health Reform”

  1. comment number 1 by: AMTbuff

    It’s sad to see the brilliant Peter Orszag reduced to peddling dreck. I wonder if he is wishing he were still at Brookings, where he could speak his mind and thereby keep his credibility intact. Now he has to pretend to believe obvious untruths. How pathetic.

    Let Orszag’s sad experience be a lesson to anyone tempted to jump into politics: You will become a lowly pawn or at best a minor piece, fully expendable in the service of the King. A long and distinguished career as a referee beats a short and messy career as a gladiator.

  2. comment number 2 by: SteveinCH

    /signed.

    I feel a bit bad for Peter as well. It’s a hard position to be in when it’s clear that when the game comes, there are going to be a whole lot of people upset at all of the players.

    In my opinion, we need a national dialog about the role of government and where and how government should intervene. Out of that dialog could come implications for the budget. Hitting the budget first is, I think, beyond the capability of our current crop of politicians and would require some sort of populist revolt to ever come about and I’m not sure I”m excited about the policy implications that would be brought about by a populist revolt.

  3. comment number 3 by: Brooks

    I have to hand it to the Obama Administration and the Democrats in Congress in terms of clever rhetoric. I’m reminded of a scene in The Manchurian Candidate when the wife of the McCarthy-based character keeps giving him a particular, but varying number to present to the media as his number of “known communists” in the government even though they have no such knowledge or even basis for such an assertion. Feeling embarrassed and frustrated at the inconsistency (and perhaps at the baselessness) of the numbers he is giving the media, he finally asks her why she is insisting that he keep giving the specific numbers. She responds that it’s smart to do because as long as he keeps giving numbers, the media and the people will be asking how many communists there are, not if there are any communists (or if there are any significant number).

    To the best of my knowledge, the Obama Administration has provided no analysis that shows that “reform” will reduce long-term federal spending on healthcare in present value terms vs. current law, or even reduce it at all in real terms anytime vs. current law in the foreseeable future.

    What we know they are doing is adding an expensive new entitlement requiring substantial incremental, ongoing spending that will grow faster than the economy. Perhaps they will “bend the curve” in the sense of growth rates once we shift the curve up when the entitlement is added to reflect the increase in the baseline. But of course that’s misleading. What we care about is not growth rates in federal healthcare spending per se, but how much we spend.

    And we know they are offering something labeled “offsets” to present the package as “deficit-neutral”, getting each bill scored as such by CBO and focusing the budgetary aspect of the debate on these CBO figures vis a vis “deficit-neutrality”. Well, as I’ve pointed out numerous times on this blog, even if we assume the sacrifices per the bill will be implemented (a BIG “if”), these offsets are sacrifices we need to make anyway to mitigate the long-term fiscal imbalance we already face. It is farcical to call them “offsets” to offer the pretense that the package as a whole doesn’t make it more difficult — and ultimately more costly and more painful — to solve our long-term fiscal imbalance problem. Whatever sacrifices are actually implemented will be the politically easiest and least painful to the public. Using them as “offsets” rather than to reduce deficits means reducing deficits will require us to dig deeper into more painful sacrifices.

    So even though the concern is the federal government’s long term fiscal imbalance, the clever game plan apparently has been and is to keep talking (1) about the bills as written (i.e., assuming the sacrifices will actually be implemented), (2) about “bending the curve” without actually talking about spending, and (3) about scoring of the bills in terms of “deficit-neutrality” without acknowledging that increasing spending and “using” budgetary sacrifices that are already inevitable as “offsets” worsens our fiscal outlook (in practical terms) and our ultimate pain. Then claim that they are offering a free lunch — universal (or near universal) coverage and health/financial security that is not only cost-free (”deficit-neutral”) but actually improves our fiscal outlook! Yippee!

    And the result: Much of the media (new and traditional) and the public focus on the categories of numbers to which they are directed without stopping and asking “Wait a minute. What do you mean we need to do this to ‘bend the curve’ on federal healthcare spending? Aren’t we going to spend more with this ‘reform’? And are those budgetary sacrifices really going to be implemented? And even to the extent that some are implemented, aren’t we wasting (from a budgetary perspective) inevitable sacrifices that could have helped us address the fiscal imbalance, making the problem worse?”

    They’ve gotten the media and the public so focused on their chosen terms of debate that rational, common sense conceptual questions slip the minds of many and they are almost never called on their misleading assertions and specious argumentation, just as the McCarthy figure and his wife got everyone focused on exactly how many communists there were rather than if there were any (or any significant number) or if they had any basis for their contention that there was some very troubling number of them. Maybe instead of a 1962 movie I should have used a more current analogy like “The Chewbacca Defense” :-) http://en.wikipedia.org/wiki/Chewbacca_defense

  4. comment number 4 by: SteveinCH

    Brooks,

    I’ll put this comment in my “all time best comments on a blog” section.

    Why doesn’t anyone get the fact that “paid for” is a meaningless concept in a world where everything isn’t paid for now?

  5. comment number 5 by: Underwriterguy

    Brooks, Kudos! I echo Steve’s comment above. Why don’t you send this to every major media outlet inn the country. Maybe we can get you on Sunday morning TV (behind a screen and with your voice distorted for privacy).

  6. comment number 6 by: Brooks

    Steve and Underwriter,

    Thanks, gents. Nice of you to say.

  7. comment number 7 by: Jim Glass

    Peter thinks critics (or rather “skeptics”) are being unfair…

    Calls are growing louder in Congress for a bipartisan commission to rebuild the tax system …

    And we just saw the impressive product those calls produced by way of the tax reform commission, eh?

    … and cut spending on Social Security, Medicaid and Medicare, and Obama has expressed support for the idea.

    Really?? Has anyone heard any “loud calls” from anyone to cut spending on Social Security, Medicaid and Medicare?

    If you people have, I’ll have my hearing checked.

    “The legislation is reflecting all the ideas that have been put forward in health policy circles for years and creating a feedback-and-continuous-improvement loop that will allow us to learn as we go,” Orszag said

    Right. Expert commissions on medical cost efficiency will be directing this “feedback-and-continuous-improvement loop” to produce bend-the-curve medical cost savings. Enough to cover fully 40% of the cost of health care reform.

    In fact, we see this process in action already.

    Just last month, an expert commission on medical cost efficiency determined that women should defer having regular mammograms until the age of 50.

    The “feedback” came darn near immediately, in fact yesterday

    Senate Blocks Use of New Mammogram Guidelines

    Without a vote, the Senate agreed to accept an amendment to the big health care legislation … effectively requiring the federal government to ignore the new recommendations by the expert panel.

    And on the same day that the Senate took this vote, it also voted to affirm that the health reform plan will be financed 40% by cuts to Medicare — cuts to be determined by expert commissions on medical cost efficiency later, only well after the plan is enacted…

    Irony? (Is “hypocrisy” a better word?) Oh, Peter, Peter, Peter…