It was an inside story in the Wall Street Journal, which meant it wasn’t THAT important. But as someone who pays attention to the cost of health care generally — and the cost of Medicare and Medicaid in particular — it caught my attention. Peter Orszag, the director of the Congressional Budget Office, is making health care costs — and especially the future growth in Medicare and Medicaid spending — the primary focus of his operation. Orszag is quoted in the story as saying, “This (health care) actually is our fiscal future, and policy makers do not have as much analysis and options as they would need to make sound, long-term decisions.” He even has a chart over his desk that projects what he calls the “unsustainable” growth rates of Medicare and Medicaid into the future — and hammers on the fact that the hospital trust fund for Medicare is expected to run out of money in 2019. This is before the Baby Boomers — who start to become Medicare eligible for the first time in 2011 — really land on the Medicare program.

Orszag appears to be particularly interested in practice pattern variation — the Dartmouth Atlas work referenced previously on this site — and comparative effectiveness research, which is all the rage in most other countries around the world, but still a relatively new idea in the U.S.

The Dartmouth work demonstrates — over and over and over — that people with the same condition are treated differently from place to place — with enormous differences in cost and resource use — but almost no difference in outcomes. Needless to say, this is a big issue, if you think — as Orszag does — that the feds don’t have the dough to fund Medicare and Medicaid under the status quo. Comparative Effectiveness Research studies two kinds of things. First, it studies whether or not new treatments are better than existing ones, once the cost of the new treatment is factored into the equation. It also reviews whether or not one existing treatment protocol is better than another, given the cost and outcome of each.

Since health care now represents 18% of GDP — and is growing at a faster clip than the rest of the economy by a wide margin — it’s not surprising that the guy who worries about the federal budget for members of Congress would latch onto these concepts. Whether or not he can move the needle forward, given all the political pushing and shoving that’s associated with doing anything to slow the growth rate in health care spending, remains to be seen. But it’s nice to know that he’s paying attention.

Posted by Charlie Baker in Health Care Costs, Medicare