Orszag Talks About Personal Choice, MedPAC And CBO Scores

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Obama budget chief Peter Orszag sat with Slate.com last week to talk about health reform. In his answers, Orszag talked about personal choices affecting health care costs, the role of MedPAC and the Congressional Budget Office.

On personal choice: "(B)ehavioral economists have emphasized that people's choices are highly sensitive to factors ignored by rational, 'Econ 101' models - things like simplicity and inertia, which can sometimes be far more important determinants of choice than monetary incentives. For example, behavioral economists have demonstrated the impact from making enrollment automatic in retirement plans - participation has been shown nearly to double after introducing automatic enrollment, and nearly to triple among lower-income workers, despite the fact that workers could opt out at any time. Defaults matter in health plans, too: Most people don't switch their health plans during "open enrollment season," even if doing so would be beneficial to them. The point is that health reform will fall short if it doesn't reflect how people actually go about making decisions in their day-to-day lives."

On MedPAC and avoiding the politicization of health cost choices: "(O)ne approach we're open to involves giving more authority to a body like the Medicare Payment Advisory Commission, a Medicare advisory commission established by a Republican Congress. … it would help to insulate Medicare decisions from undue political influence. Second, it would help us keep up with the ever-evolving health care market and continually reorient it toward better and more efficient care. Moving more decisions into the hands of medical professionals and out of the political process will enable us to continually update the system to reflect new information and changed circumstances - and will make sure that health reform is not just a one-shot deal but an ongoing effort to deliver Americans higher-quality, lower-cost health care."

Orszag also said that he doesn't expect CBO scores to accurately reflect cost-savings because the scores aren't necessarily looking at all parts of a system, only what it costs to the federal government: "Largely, if not entirely, outside CBO's purview is the impact of changes on the health system as a whole (as opposed to the federal budget). And thus while we expect that health care reform over time can achieve substantial savings throughout the system, we don't expect those savings to show up in CBO cost estimates for the next decade - nor should they."

"… I think it's important for those of us wearing the green eyeshades to take them off every once in a while and recognize that policy is about more than dollars and cents. I believe that there is a moral imperative for this country to expand health insurance coverage and reduce the ranks of the uninsured and underinsured. If you lose your job, switch jobs, go off to start a business, move, or get sick, you should not lose your health insurance. I see that as a matter of right and wrong" (Dickerson, 6/29).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

© Henry J. Kaiser Family Foundation. All rights reserved.