While Mr. Orszag believes a health politburo can solve the cost-inflation problem, this strategy has failed elsewhere. Britain’s annual health inflation rate was 7% over general inflation for much of this decade. Despite drug price controls and the CDR’s draconian decisions, Canada’s health-care system faces cost inflation rates of 5 - 7%. The United States considers adopting a “game changer” that failed patients and taxpayers elsewhere.
It’s not as though Mr. Orszag isn’t smart or sincere. He’s brilliant and principled. But ideology is the driver here. The Administration’s solution to the rising-cost problem: bring federal budget decisions and a doctor’s treatment recommendations as close together as is politically possible.
Indeed, Washington isn’t simply their solution to the question of, say, reducing drug costs. It’s their solution to everything: Private insurance premiums are too high, so the solution is public insurance; thanks to state-based insurance markets and regulations, local insurance markets aren’t competitive enough, so the preferred Orszag solution is a federally-managed insurance market – to simulate what a market would do if it were actually allowed to exist.
The problem with that philosophy is best seen in a favorite talking point of Mr. Orszag’s – coincidentally a favorite talking point of the President’s. Both rightly point to the Cleveland Clinic and the Mayo Clinic as models of efficient, quality care. The President even visited Cleveland recently to emphasize that point. Left unsaid is the fact that innovative doctors in the American heartland founded and built both organizations from the ground up, not the top down. Neither Mayo nor the Cleveland Clinic came about as the result of a federal insurance company, a federal health exchange, or the work of a federal rationing committee, yet these are the policies that dominate the ObamaCare package.
Peter Orszag doesn’t seem like the type who would enjoy standing in a hospital room to get between a doctor and a patient. But he’s convinced the President to support health-care policies that will have exactly the same effect.