Monday, February 23, 2009

Re-orienting how we think about entitlement reform (Updated)

Remember the old phrase "it's the economy, [bleep]?" Well, it is still priority one for the new Administration but a new phrase is taking shape for today's "White House Fiscal Summit." That phrase is "it's Medicare and Medicaid, [bleep]." And since Medicare-aid plays in the private market, that really means "it's health reform, [bleep]."

[OK, I fess up, I edited out all the 'stupids' as I kept wincing every time I looked at the screen. ~BAA]

As pointed out by Ezra Klein in his column at the American Prospect, the phrase "entitlement reform" is one of those loaded phrases that sends shivers down the spine of half of the population but the phrase has been nuanced to mean something a bit different in the new Administration, "health reform." Below, are some excepts from Ezra's column:

What everyone agrees on is that the thinking entered government in the person of Peter Orszag. In 2007, Orszag was named director of the Congressional Budget Office. From that perch, he brought Kogan and Horney's thinking to the halls of Congress. Orszag liked to show a particular slide in his public presentations and speeches that broke down the interplay between the government's various fiscal commitments:

Government spending and Social Security, it says, will hold relatively constant in coming years. It's Medicare and Medicaid that chew up federal spending.

This graph, however, could be used as evidence for a simple focus on Medicare and Medicaid. The programs are unsustainable. They need to be slashed. The next slide in Orszag's presentation is titled "misdiagnosis the problem." The fiscal threat, it argues, is not more beneficiaries or the type of beneficiaries that are the factors internal to Medicare and Medicaid. It's the cost per beneficiary. Orszag has a graph for this, too:

And since Medicaid and Medicare pay for health services on the private market, this can only be fixed through broader health reform. Orszag now directs the Office of Management and Budget. He will lead today's "health care" breakout session...

Fiscal responsibility, in other words, is no longer a stand-in for entitlement reform. In Obama's Washington, it means health reform.

The White House blog has a post including the President's statement and Q&As and the Washington Post posted a summary of the break-out sessions from the summit today. ~BAA