Balancing coverage and cost
JUDY WOODRUFF: You mentioned that there are a number of reforms in this legislation. But people like the head of the Mayo Clinic say that these plans don't really adequately tackle the so-called fee-for-service system that pays doctors essentially piecemeal for the work that they do.
PETER ORSZAG: Well, if you take -- again, take the Senate Finance legislation as an example, it includes not only movements toward value-based purchasing for hospitals and paying doctors for quality, rather than quantity, but it also includes a Medicare commission, which will be a flexible way of moving towards that fee-for-value, rather than fee-for-service, system over time.
And I have had lots of discussions with Denis Cortese. I respect him a lot. But I think even he would say, up or down, Senate Finance bill, he would take it. Perhaps, you know, sitting in a think tank or somewhere else, you could always do more, but in terms of a real piece of legislation, this is moving in an important way towards delivery system reform.
JUDY WOODRUFF: Another criticism one hears, Peter Orszag, is that the -- frankly, the deal that the White House, that you all cut with the hospital industry to, I think, limit hospital payment reductions to about $150 billion over 10 years also puts a crimp in how much savings there really is going to be in health care costs.
PETER ORSZAG: Well, still that's a significant amount of money, more than $150 billion. There are not only improvements in the hospital side of things, but also in the insurance industry and other components of the medical sector that can help finance an expansion in coverage. And that's what this legislation does.
JUDY WOODRUFF: And one other point one hears is that there -- you know, you said yourself there are a series of suggested reforms. But what I'm hearing from critics is that these are just incentives, that they're not really hard, mandated requirements that spending go down.
PETER ORSZAG: Well, there's a combination of hard, mandated requirements that spending go down, for example, with regard to reducing overpayments to Medicare Advantage plans -- those are the private insurance plans that cover some Medicare beneficiaries -- and, then, yes, some incentives to move towards a higher-quality/lower-cost system.
One of the issues there is, in part because we haven't taken this sort of concern seriously enough in the past, we don't know exactly what to do in exactly how to design a bundled payment, for example, where you pay a doctor for treating a disease, rather than for each individual procedure that is done to treat that disease.
We need to move in that direction, but the exact parameters need to be tested out and then moved to scale quickly. But they still need to be tested out. And that's what this legislation is doing.
JUDY WOODRUFF: Final quick question: Do you believe that private insurance premiums are going to go down?
PETER ORSZAG: I do, yes. Private insurance companies -- sorry -- premiums, I believe, will go down.
For example, individuals will now have access to a health exchange, where they won't face the same kind of selection effects that can drive up costs that currently exist in individual markets.
JUDY WOODRUFF: Peter Orszag, budget director, budget adviser to the president, thanks very much.
PETER ORSZAG: Thanks for having me.