Peter Orszag: Thoughtful, handsome, and misguided

Image: Office of Management and Budget

Image: Office of Management and Budget

Former White House budget chief and Obamcare czar Peter Orszag says Paul Ryan is a good guy but a wrong-headed wonk. Here is Orszag in a Bloomberg oped: “Paul Ryan: Thoughtful, handsome, and misguided”:

Over the past several years, health-care costs have decelerated dramatically — suggesting our broken arm may slowly be starting to heal. But rather than reinforcing that progress, Ryan would chart a drastically different course, one that would not only shift substantial risk to beneficiaries but also, according to the Congressional Budget Office, actually raise health-care costs.

1.Yes, the growth rate of healthcare spending has been moderating since 2002.

And for that you can thank the sorts of things RomneyRyanCare would focus on:  a) medical innovation and b) great consumer choice — not the path Obamacare charts, which is one of more regulation and top-down bureaucratic control.

AEI’s J.D. Kleinke of the impact of innovation:

A generation of breakthrough drugs for chronic disease, mental illness, HIV and cancer were developed in the 1980s and ’90s at great cost. Dozens of these drugs—like Zocor for heart disease or Zyprexa for schizophrenia—are now widely available, many in generic form. There are now countless electronic ways of telling patients about them. And health insurers are driven by their own evolving market disciplines to make sure patients start taking them and keep taking them in the cheapest available versions.

And on consumer choice:

 Combine all these new medicines, information channels and business compulsions with the slow, steady transfer of economic responsibility for health care—from corporate and government bureaucrats to consumers and their families—and suddenly health-care starts to look almost like an actual market.

Much of this change got off the ground around 2001 as managed care (i.e., the hated “HMOs”) gave way to a renewed era of unlimited consumer choice and access—for a price. Those with insurance were suddenly free again to choose whatever health care they wanted, but this time with their own money. Higher deductibles, new co-payments, Health Savings Accounts, “tiered” drug plans—these were all rolling out between 2000 and 2004, the same years that health-care inflation was starting to cool.

2. As for the tired cost-shifting argument, AEI’s Joe Antos points out that theory would be true only if there  were no room to improve health care efficiency or if plans ignored opportunities to cut costs, increase market share, and improve their bottom lines.”



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