Committee for a Responsible Federal Budget Annual Conference
Fiscal Policy Experts Explore Policies, Politics Needed to Address Looming Crises
A detailed recap of day's conversations -- including the afternoon round table, OMB Director Robert Portman's spech, and the subsequent dinner panel -- is provided below.
Budget Round Table
Leon Panetta remarked that "we govern either by leadership or by crisis," a theme that he was to repeat throughout the board meeting. "At this point," he continued, "we know what the policy solutions on these issues need to be"; the real challenge is how to implement those solutions at a time of deep hostility and mistrust between the two political parties. In that respect, Maya's third question may be the most important of all.
2) Social Security is often spoken of as the easiest of the three major entitlement programs to fix, but this gets it backwards. When dealing with health care, there is an opportunity to eliminate waste and inefficiency without affecting health outcomes. On the other hand, Social Security is a cash-transfer program, so the only way to cut costs is to reduce benefits.
3) There is no crisis unique to Medicaid and Medicare. The problem is with systemic inefficiencies in the health care system, and so it follows that the solution is not to cut benefits, but to figure out a way to bring down costs.
As Alice Rivlin pointed out, however, much of the relevant work has already been done by Dr. Jack Wennberg and his team at Dartmouth Medical School, who have published a series of studies on the variation in health care costs across the United States. Dr. Wennberg found that it costs 2.5 times as much to be treated in Miami as it does to be treated in Minneapolis, but that there is no appreciable difference in the quality of health outcomes between the two cities. The solution to rising health care costs, she stated, is a system that rewards doctors for following best practice guidelines and producing good outcomes. The current system incentivizes overtreatment by paying doctors more for every procedure they perform.
But Tim Penny evinced skepticism, contending that 1) even if it were possible to come to an agreement on best practices, getting buy-in from the medical community would be difficult; and 2) the states that spend more money on health care tend to be the largest states with the biggest Congressional delegations, presenting an intractable political problem to anyone who wants to scale back that funding.