President Obama's director of management and budget, Peter Orszag, now vice chairman of global banking at Citigroup, has emailed a reply to the earlier post here about his admission that the growth in health care costs is slowing because of market forces, technological innovation, and the economy rather than because of the ObamaCare law that he helped sell to Congress and the public as a bend-the-curve measure. He wrote:
Mr Stoll,
I was shown a copy of your article on my "admission," which was nothing of the sort at all. Both the perceived shift away from fee-for-service and toward bundling and other payment schemes, and the development of the IT backbone crucial to benchmarking and decision support were encouraged by recent policy changes (the ACA and the stimulus bill respectively), as I have written repeatedly in the past. In other words, two of the three structural changes driving recent deceleration were directly influenced by legislation enacted since 2009. Your article is simply wrong.
Regards,
Peter
By "two of the three," he's leaving out the economic downturn, which his article says accounts for some of the slower growth in health spending. So let's look at the other two, IT and "the perceived shift away from fee-for-service." Somehow, other industries, like news (Bloomberg, which Mr. Orszag writes for) and banking (Citigroup, which offers online and mobile banking and recently eliminated deposit slips for consumer accounts) have moved from paper to computers without the government ordering them to do it, or paying for it. Such a shift was already under way in health care before President Obama even took office: witness Meghan Clyne's 2006 New York Sun article on the "paperless" practice of Karl Rove's otolaryngologist. Or the fact that Epic Systems, the Bloomberg of electronic medical records, had 3,000 employees and reported revenue of $502 million in 2007, when Barack Obama was still a junior senator from Illinois. When Judy Faulkner founded Epic in 1979, was she motivated by a stimulus law that was going to be passed 20 years later?
As for the "perceived shift away from fee-for-service," that, too has a history that long predates either President Obama's stimulus bill or ObamaCare. One big move here was the Medicare Advantage plans created by President George W. Bush's Medicare Modernization Act of 2003. Rather than encouraging these plans, the Obama administration tried to eliminate them. Frontline was covering HMOs and "capitation" back in 2000.
One may ask, if electronic health records and the shift away from fee for service were already under way, why didn't the health care cost curve start to bend until now? First, the growth curve has slowed at other points in the past. Second, in talking about costs it is important to remember that what the money is buying is different — drugs, devices, tests and procedures exist now that didn't exist 20 years ago. Third — and this is the main point — trends that aren't sustainable tend not to continue. It's like the famous story of the pre-automobile warnings that New York would be buried under yards of horse manure. Problems like unsustainable health care costs have ways of getting solved without top-down centralizing spending legislation from Washington.
Bottom line: Mr. Orszag may deny his admission, but it sure looks like an admission to me.
