Monday, February 09, 2009

Orszag’s Dilemma

In my last posting I mentioned Peter Orszag, President Obama’s budget director. According to an article in the New York Times Magazine of February 1, 2009, Orszag, while director of the Congressional Budget Office, had expressed the view that the cost of health care was “…far more important to the future of the [federal] budget than any other issue in front of Congress.”

Orszag had also discussed the importance of the ability of the federal government to borrow money, going on to observe that “Absent a health care overhaul, the federal government’s lenders around the world may eventually grow nervous about the ability to repay its debt.” That would result in higher interest rates that “….will also depress economic growth, aggravating every other problem.” Not a pretty picture.

Orszag hasn’t had a good week. Last Wednesday, President Obama signed into law an extension of the State Children’s Health Insurance Program (SCHIP). This is a program which allows the states to offer Medicaid to children with families of modest income but above the regular level of eligibility. The new law loosens eligibility rules so that four million children can be added to the seven million covered under the program as originally enacted in 1997.

Orszag, like all the rest of us, no doubt thinks it good that children should be covered by health insurance. But he would also know that what his boss did dug the health care cost hole a little deeper by pumping more money - $32 billion over the next 4.5 years - into a health care system that already spends at levels that threaten the country’s economic well-being.

One wonders if the health care cost issue will end up something like the subprime home mortgage problem – a ticking bomb that many recognized but that people were unwilling to tackle until it blew up.

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