Office of Management and Budget Director Peter Orszag Outlines the President's Health Care Plan
Thursday, June 11, 2009SUSIE GHARIB: President Obama headed for Green Bay, Wisconsin, today, holding up the city's low-cost, high-quality health care as a model for reform. With $1 trillion plus reform effort heating up, Washington bureau chief Darren Gersh spoke with Peter Orszag, the president's budget director. Darren began by asking Orszag why the president thinks the current system is unsustainable.
PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET: Costs are rising rapidly. There are overwhelming state government budgets. They are reducing workers' take-home pay and they are the key driver of our long- term Federal budget deficit.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: A doctor we spoke with asked this question. He said you want me to treat more patients. You want me to give them more services. And yet we're going to lower costs. How is that going to work? So how is that going to work under health-care reform?
ORSZAG: Let's talk about that doctor. Right now often the doctor is not aware of whether he or she is treating people differently than other doctors, often doesn't have specific enough information to help you assess the probability or the likelihood that this treatment or that treatment course would be more beneficial and unfortunately, also faces distorted financial incentives. So if he or she provides higher quality, less intense care to you, financially penalized as a result. That makes no sense. We need to fix all of that.
GERSH: So how do you fix it?
ORSZAG: I think what you need to do is build out the health information technology backbone of the country. We already have a significant investment in the recovery act to do that. A lot more patient- centered health research so that the doctor and you can have a more evidence-based discussion about the right way forward. And then we need to change financial incentives towards better care rather than more care.
GERSH: What does that mean for companies that are spending billions of dollars, millions of dollars on expensive new treatments? Does that mean the government is going to say we don't think that treatment is worth it or you are not going to get the return on that expense that you wanted?
ORSZAG: No, what it means is you need to pay attention to the treatments that are going to not only cost more but actually do better. So we have now a whole series including one that was in the newspapers this week, expensive new drugs or treatments that don't work any better than the things they are replacing and frankly sometimes pose unanticipated risks. Those are being developed in a situation where more and more expensive is what is rewarded. We need to move towards a system in which better is rewarded.
GERSH: Are the big savings in health care in profits because there are a lot of for-profit companies in health care or is it in waste?
ORSZAG: A little bit in both. But the big opportunity here is to move towards -- move away from this dramatic variation that we see across the United States in the way health care is practiced. So it is tests and procedures and days in hospital and the likelihood that you are going to have surgery. That varies so substantially across different parts of the U.S. The president was out in Green Bay. Green Bay has health care costs 30 percent below the national average. If we could do that across the country and that's not theoretical, that's happening today, we would save $700 billion a year in health care.
GERSH: Does that mean you are going to tell people, don't get that test if they live in a high-cost state?
ORSZAG: No, what is happening in the high-cost states is that doctors are much more likely to order lots more stuff. For most of us, the health care that we get is what the doctor suggests. And that is the way it should be and the way it will likely always be. What needs to happen is those doctors need to have better information and better incentive to deliver better care. Vince Lombardi type health care like we have in Green Bay, not the type of excessively costly and frankly risky lower quality care that we have in other parts of country. More is not better there.
GERSH: But can we afford this at a time when the Chinese and other people who invest in our country are starting to think maybe the United States is not the best place to put our money.
ORSZAG: We have a moral imperative to reduce the ranks of the uninsured. We have to do that in a way -- that is where that trillion or trillion and a half dollars in costs is coming from. We have to do that in a fiscally responsible way. It has to be offset fully to savings in Medicare or Medicaid or additional revenue and as a result be deficit neutral.
GERSH: Peter Orszag, the president's budget director, thank you for your time. ORSZAG: Thank you for having me.
