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Reform: "as Soon As Possible"

As I mentioned earlier, Peter Orszag’s confirmation testimony--though barely noticed in the media--was full of hints about the policy directions the Obama administration will take. One particularly important clue came during an exchange with Sheldon Whitehouse, the first-term Democratic senator from Rhode Island.

When Whitehouse got his turn to question Orszag, whom Obama has tapped to head the Office of Management and Budget, Whitehouse suggested the country faces an opportunity. The U.S. can get to work on improving the quality of health care--by creating electronic medical records, focusing more on preventative care, studying which treatments are most cost-effective, and so on. If even some of these efforts are successful, Whitehouse explained, they could reduce the cost of medical care--reducing the pressure rising health care costs place on the federal budget, corporate balance sheets, and family checkbooks. Americans would be spending less but getting more, in the sense that they’d be getting better health care.

But there’s a catch, Whitehouse said: These efforts will take time. If the idea is to cut down on the use of less effective medical treatments, for example, the government first must create some sort of agency for reviewing the available evidence about medical outcomes. Then this agency must do the work of studying different drugs, devices, and procedures. And then--once the agency has made its findings--the government has to figure out some way of putting that data to good use.

Given that, Whitehouse suggested, acting now is essential. Otherwise, health care will keep getting more expensive, until it’s at levels Americans truly find unsustainable. At that point, it will be too late to try all the quality innovations. The only recourse would be to cut off the spigot of money--a move that would bring down costs only by clumsily reducing the medical care, good and bad, that people now receive. As Whitehorse put it,

WHITEHOUSE “...instead of having friendly toolbox A, health information technology, quality improvement, prevention, better payment mechanisms, we'll have ugly toolbox B, which is pay providers less, throw people off coverage, thin out benefits even more, and raise taxes.”

The point of the question wasn’t so much to probe Orszag’s thinking as to confirm Orszag agrees with Whitehorse. And it turns out he does:

ORSZAG: “...I think for that very reason it is crucially important that we put in place as soon as possible, or start building in place the infrastructure, as you termed it, to make more intelligent choices towards moving towards a more efficient healthcare system, so health IT and comparative effectiveness and changes in the payment methodology incentives and promotion of healthy living and prevention. We need to start now for precisely the reason that you suggested, which is that if we haven't started and we don't have that infrastructure in place, as the time comes to be making hard decisions, you're going to be making them ... off a much worse platform.”

Whitehouse followed up to make sure he’d heard Orszag properly:

WHITEHOUSE: And so your words now -- and as soon as possible.

ORSZAG: Absolutely.

If you want to know why health care remains next on the agenda, after the economic stimulus, that’s it. Orszag understands that the clock is ticking. He understands that the best chance for restraining the cost of medical care without sacrificing access or quality lies in immediate action. And, as Ezra Klein pointed out in his recent profile, Orszag has been crusading about this since even before he agreed to join Obama’s White House, going back to his days as head of the Congressional Budget Office:

Many observers have noted that addressing the problems in financial markets and the risks to the economy may displace health care reform on the policy agenda," [Orszag] wrote on his blog. Orszag went on to argue that rising health costs threaten the nation's very solvency. If they continue to grow, investors will no longer be willing to buy Treasury bonds at low rates. And if that happened, the government would lose its ability to mount the sort of costly rescue operations that have kept this crisis from turning into a calamity. "So if you think the current economic crisis is serious," concluded Orszag, "and it is, imagine what it would be like if we didn't have the ability to undertake aggressive and innovative policy interventions because creditors were effectively unwilling to lend substantial additional sums to the Federal government. ... [Orszag] was essentially accusing those who would delay health reform of bringing a Zippo and a can of kerosene to the federal budget.

--Jonathan Cohn