The health-care system’s maddening inefficiencies — high per-capita spending with poorer overall health outcomes; tens of millions uninsured and tens of millions more underinsured; insane-making battles with insurers to get reimbursements you’re entitled too — are reason enough to spur reform.
But “The Big Fix,” David Leonhardt’s marvelous-but-long piece on the fiscal crisis in last week’s Times Magazine, argues that these inefficiencies are a) a prime example of a vested elite’s ability to manipulate the economy for its own good and b) one of the most serious obstacles to the nation’s long-term financial health because they are a huge drag on the economy.
The costs of health care are now so large that it has become one problem that cannot be solved by growth alone. It’s qualitatively different from the other budget problems facing the government, like the Wall Street bailout, the stimulus, the war in Iraq or Social Security.
During the campaign, Obama talked about the need to control medical costs and mentioned a few ideas for doing so, but he rarely lingered on the topic. He spent more time talking about expanding health-insurance coverage, which would raise the government’s bill. After the election, however, when time came to name a budget director, Obama sent a different message. He appointed Peter Orszag, who over the last two years has become one of the country’s leading experts on the looming budget mess that is health care.
Orszag is a tall, 40-year-old Massachusetts native, made taller by his preference for cowboy boots, who has … [believes] that [health care reform is] far more important to the future of the budget than any other issue in front of Congress. He nearly doubled the number of health care analysts in the office, to 50. Obama highlighted this work when he announced Orszag’s appointment in November.
In Orszag’s final months on Capitol Hill, he specifically argued that health care reform should not wait until the financial system has been fixed. “One of the blessings in the current environment is that we have significant capacity to expand and sell Treasury debt,” he told me recently. “If we didn’t have that, and if the financial markets didn’t have confidence that we would repay that debt, we would be in even more dire straits than we are.” Absent a health care overhaul, the federal government’s lenders around the world may eventually grow nervous about its ability to repay its debts. That, in turn, will cause them to demand higher interest rates to cover their risk when lending to the United States. Facing higher interest rates, the government won’t be able to afford the kind of loans needed to respond to a future crisis, be it financial or military. The higher rates will also depress economic growth, aggravating every other problem.
But this doesn’t mean a complete overhaul, says Orszag; it means making the whole country like the country’s most efficient areas:
[At his presentations, Orszag] would put a map of the United States on the screen behind him, showing Medicare spending by region. The higher-spending regions were shaded darker than the lower-spending regions. Orszag would then explain that the variation cannot be explained by the health of the local population or the quality of care it receives. Darker areas didn’t necessarily have sicker residents than lighter areas, nor did those residents necessarily receive better care. So, Orszag suggested, the goal of reform doesn’t need to be remaking the American health care system in the image of, say, the Dutch system. The goal seems more attainable than that. It is remaking the system of a high-spending place, like southern New Jersey or Texas, in the image of a low-spending place, like Minnesota, New Mexico or Virginia.
To do this, of course, we’d need data; and that would require electronic patient records. It’s the best argument I’ve heard yet for having such records.
It’s a great piece, well worth reading in its entirety. Or if you want just the health-care section, go to section V.