Hearing of the House Budget Committee - Congressional Budget Office's Long-Term Budget Outlook

Interview

BREAK IN THE TRANSCRIPT

REP. XAVIER BECERRA (D-CA): Dr. Orszag, thank you very much for your testimony and your sobering words.

Let me ask, I know that during the Depression, the Great Depression, we had any number of people in America who were destitute, having a difficult time. And that included people who were seniors, retired, no longer working and in many cases suffering worse than those who were of working age because they were beyond their years and had to make ends meet without any particular financial support.

President Roosevelt enacted Social Security to address those dire circumstances that so many older Americans faced. And to this day, Social Security has continued to pay benefits, never missing a day, paying benefits to people and can continue to pay benefits beyond the 75-year threshold with some adjustments all the way to the 100 percent benefit that most people expect.

Medicare, which came into being in the mid-'60s, the 1960s, was also an effort to try to address the problems that seniors were having in coping with the cost of health care in their retirement so that their entire pension wouldn't be used to pay for their health care in their golden years.

These are programs that have become essential, I think, to most seniors living in dignity in their retirement. There are some pretty scary numbers that we see.

I want to make sure I understand something. Are you saying -- you're not saying we should eliminate Social Security and Medicare, are you?

MR. ORSZAG: No. (Laughs.)

REP. BECERRA: All right. It's a matter --

MR. ORSZAG: I'd say I didn't use the word "should" on anything --

REP. BECERRA: Okay.

MR. ORSZAG: -- other than you should act to avoid this problem. (Laughs.)

REP. BECERRA: And so the crisis here is in our expenditures and managing our expenditures. And you had some interesting charts at the end that talked about what we have to do to try to manage the cost of health care -- whether it's in the public sector, meaning Medicare or Medicaid, which is health care for low-income individuals including many seniors, or whether it's in the private sector through whatever the marketplace offers people for individual insurance or otherwise.

Question for you: I know that other developing countries have far lower cost in their health care for their people. And unlike the U.S., where we have some 47 million people who don't have health insurance, they're able to provide 100 percent coverage to their people for health care access. In many cases, we find the standard of living higher in some of these industrialized countries, principally in Europe, who offer health care and other social benefits to their population.

What are we doing wrong on health care that they're doing right that their costs in some cases are lower by a factor of 50 percent? And can you give us any comments about what we should be doing to try to reduce our costs?

MR. ORSZAG: First, note that on that chart I showed you with parts of the United States, there are parts of the United States -- Minneapolis, for example -- that are delivering health care at costs comparable to many of those comparison countries and a quality that is also comparable.

So there are parts of the U.S. that are delivering health care at -- in a way that seems relatively good compared to other systems.

I would say the fundamental problem in the nation's health care system is that we have financial incentives -- strong financial incentives -- for more care rather than better care. And that's on both the provider side and the consumer side. And until we spend more time and effort figuring out what is better care and then aligning financial incentives so that we're delivering better care rather than more care, we're going to be spending more than we need to to obtain the results that we hope for.

REP. BECERRA: Thank you.

Turning now to the debt and -- because I want to make sure that as we focus on Social Security, Medicare, Medicaid, we don't lose track of the size of the debt, the interest payments we make on the debt that we have -- on Social Security, one last point. At least 40 percent of today's seniors would be living in poverty if they didn't have Social Security. Today the poverty rate for our seniors is about 10 percent. So some 13 million seniors are lifted out of poverty simply by the fact that we have provided their health and retirement benefits into the future through programs like Social Security, Medicare.

But on the debt, I know over the last five to seven years, the size of the national debt has skyrocketed. And I know that part of that is due to the fact that we have had tax cuts from the president that have been unpaid for -- in essence, paid for by deficit spending, by borrowing.

If we can't sustain this level of debt, can we sustain programs that continue to go through this Congress, whether tax cuts or spending programs, that are not paid for so that we can try to keep a balance to our budget?

MR. ORSZAG: I guess my response is the logic of the PAYGO rules that you have adopted is to, in the face of this very substantial long-term fiscal problem that you already have, avoid making the problem worse. And that's what PAYGO does, is it at least avoids digging the hole deeper in the face of a already substantial long-term hole.

REP. BECERRA: Thank you.

Thank you, Mr. Chairman.

BREAK IN TRANSCRIPT