Peter Orszag: Paul Ryan's Medicare Fix Is 'Fundamentally Based On A Misconception'

There's a huge obsession with the national debt. And it doesn't take much to realize that expectations of a future debt explosion are driven by health care costs, particularly related to Medicare.

The essence of Rep. Paul Ryan's plan to reduce health care inflation is to encourage the end consumer to find ways to reduce costs.

In an interview with Business Insider, former Obama OMB director Peter Orszag exploded the main flaw with this concept.

"It is fundamentally based on a misconception, which is that consumer-driven health care can dramatically reduce cost."

In other words, it's nice to believe that if we just had more consumer control then prices would automatically go down, but it's very modest.

In this discussion, Orszag discusses some alternative ideas for reducing costs, including incentivizing the provider to reduce costs, an effort that's already bearing fruit in some places.

Video:

Produced by Business Insider Video