"Health Care Reform Is Entitlement Reform."

You can certainly be forgiven for thinking that today’s White House summit on Fiscal Responsibility would be… well… as interesting as summits on Fiscal Responsibility normally are.  You might also have been very nervous about the Obama Administration’s willingness to discuss “entitlement reform”, with fresh memories of the Bush Administration’s invention of a looming crisis in Social Security connecting to painful reforms that, given how the stock market is doing these days, might have gutted the program.  But you needn't have worried -- Obama means something very different when he says "entitlement reform."  The title of this post, spoken by OMB Director Peter Orszag, was the message of the day – and it was spoken loudly, clearly and repeatedly.

For one thing, Orszag was the only speaker giving prepared remarks today who didn’t have a fancy-pants title like “Mr. Vice President” or “Mr. President.”  As Ezra Klein noted, “This, in other words, is not just Orszag's message. It's the White House's message.”  Secondly, Orszag spoke for only 450 words – and 260 of them were on the necessity of health care reform.  Thirdly, he talked about health care reform not in moral terms or in good policy terms, but as a leading cost driver for so many of the fiscal problems plaguing the nation.

The single most important thing we can do to improve the long-term fiscal health of our nation is slow the growth rate in health care costs. Health care is the key to our fiscal future.

So to my fellow budget hawks in this room and in the rest of the country, let me be very clear: health care reform is entitlement reform.

The path of fiscal responsibility must run directly through health care.

And he’s not wrong.  Since the U.S. had a trillion dollar deficit before Obama took office and just added $789 billion out of necessity, it will be very difficult to even find enough programs to cut to make a difference.  Although Obama has promised to let the Bush tax cuts expire, even that lost income isn’t enough to bring us down to earth.  Obama has promised to end the Iraq War, which costs upwards of $450 billion each year.  Combine that with the Bush tax cuts, and you’ve scarcely got us halfway.

But there’s a third element here – runaway health care costs (and not, say, concerns about Social Security’s solvency 40 years from now) are truly the drivers for both the crisis of funding in Medicare and Medicaid, but the economic strangulation effect for businesses’ bottom lines, not to mention the wages and budgets of families across the country.  And these runaway costs have been accelerating since the 1990s.  Health care reform needs to be tackled not just for today’s fiscal responsibility, but tomorrow’s, and five years from now, and ten years from now.  The Center for Economic and Policy Research has a Deficit Calculator up that I encourage you to play with.  It shows what our deficit will be like if health care costs are allowed to continue rising to a full 20% of our GDP in a few years, as they’re estimated to do.  It also maps out what our deficit would look like if we controlled costs as efficiently as 31 other nations.  The bottom line:  it won’t even be possible to put our financial house in order unless we tackle health care reform… and soon.

Luckily, Budget Director Peter Orszag knows this all too well, as does the president.  How convincing they can be with Congress and the American people remains to be seen.