Budget director decries costs of health care in visit to UI

Original News-Gazette Story

CHAMPAIGN – Ever wonder what Americans are really getting by continuing to pay more for health care?

They're getting more health care, that's what.

But it's not necessarily better health care, according to Peter Orszag, director of the Congressional Budget Office.

"I think we have largely misdiagnosed the cost-of-health-care problem," said Orszag, who visited the University of Illinois campus Tuesday at the invitation of UI Center for Business and Public Policy.

Orszag said there's a common misconception that all the aging baby boomers and their increasing medical problems are driving up the nation's health care costs, but that's just a small part of the problem.

The much larger issue, he contended, is how much costs have been rising per health care beneficiary and outpacing the average income.

Or, to put it another way, "Your take-home pay would be higher if your health care didn't cost you so much," he said.

One of the big reasons it may be costing you so much is there's so little analysis done on what works to improve health care outcomes and what doesn't, other than clinical trials done for new drugs, Orszag said. And even then, he added, the studies are focused on whether a drug works better than a placebo, rather than whether the drug works better than non-pharmaceutical options.

Meanwhile, America just keeps paying for more care, especially in the technology arena, Orszag said.

One of his findings: Health care costs vary widely in different areas of the country, with cost per beneficiary in Miami, for example, being twice as high as they are in Minneapolis. And yet, higher-spending areas don't have better health outcomes than lower-spending ones.

"And nobody can explain why," Orszag said.

As daunting as all this sounds, Orszag said he sees a substantial opportunity for reducing health care costs to have an effect on the financial challenges facing the nation as a whole. And he's devoting more of his office's resources on finding ways to accomplish that.

Some of those solutions may involve building health care providers' electronic medical records systems, which could provide a wealth of data as long as patient privacy issues can be protected, Orszag said.

Health care delivery systems and doctor payment incentives may also need to be changed, and the government may need to do much more to help people be as healthy as they want to be.

For example, experts already know many more people elect to put money in their company's 401(k) retirement plan when they're asked to opt out of participation rather than asked to sign up for it, Orszag said. Yet very little of this insight into the effect of inertia on human behavior has been applied to improving health, he said.

The gym down the hallway would be used more than the gym three or four blocks away, he said, and more people are going to eat fruit when it's sitting at the beginning of the cafeteria line than when it's at the end.

"There are a lot of things we could be doing to encourage people to lead healthier lives that we're not doing," Orszag said.