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Orszag Defends Health Overhaul Costs, 10 Years After

June 23, 2009 -- White House budget director Peter R. Orszag defended the approach the White House is taking to hold down the long term costs of a health overhaul, telling the top Republican on the House Budget Committee Thursday that the administration will only support a plan that is deficit neutral over 10 years, including in the tenth year.

Displaying his penchant for amiable but persistent questioning at a hearing by the panel Thursday, up and coming Wisconsin Republican Paul Ryan reminded Orszag of his warnings as director of the Congressional Budget Office against adding to the nation’s deficit woes.

Orszag, who has stated previously that the White House will use CBO scoring to assess whether a proposal meets its requirements for fiscal soundness, noted in his response that CBO doesn’t go beyond ten years in its budget projections. Orszag said deficit neutrality in the tenth year is the best proxy of the fiscal impact of an overhaul plan in the following decade.

He also noted that the Bush era tax cuts and the Medicare drug law spearheaded by the Bush White House had no payment offsets at the time of passage—a not so subtle reminder that GOP sensitivity to the long term costs of major legislation is relatively new.

Ryan praised Orszag for sticking with CBO numbers to evaluate costs rather than switching to evaluations by the White House Office of Management and Budget — which Orszag heads. But he kept after Orszag about what happens after the first decade of an overhaul, noting the possibility the nation will face the equivalent of yet another entitlement fiscal nightmare of Medicare-like proportions if long term controls aren’t tight.

He also pressed Orszag to commit to disclosing longer term estimates by the actuary at the Centers for Medicare and Medicaid Services of the costs of a health overhaul. Ryan faulted the Republican White House for sitting on estimates of the CMS actuary of the Medicare drug law and noted protests by Democrats at the time about the Bush White House not releasing those estimates.

Orszag said he favored disclosure but noted that the expertise of the CMS actuary lies with Medicare and Medicaid projections, not those for the entire health care system. He also said that CBO numbers do not reflect changes the White House favors to transform the health system.

Ryan tried again a different way, asking Orzsag that if what he was saying in effect was that the White House doesn’t really know the long term effects of a health overhaul plan it would favor. Orszag said no, adding that if the numbers are not "falling off a cliff" in the tenth year in the sense of adding to the deficit then that’s the best assurance spending will stay at deficit neutral levels thereafter. He also pointed to an "aggressive set of game changers" that aren’t scored by CBO but that the administration believes will bend down the upward curve in spending over the long term, such as creating "accountable care organizations" to foster provider teamwork to make care more efficient, bundling payments to encourage provider coordination of treatment, studies to identify the best treatments, and mandatory Medicare cuts if spending exceeds certain levels.

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