This Billionaire Is Spending Big to Control Healthcare Costs. Is That a Good Thing?

Millions more Americans now have health insurance thanks to the Affordable Care Act. And with the battle over coverage winding down, it's fascinating to watch funders ramp up work that tackles America's other two great healthcare challenges: The nation's terrible state of health and excessive health care costs.

Obviously, these two challenges are related, and we've written with keen interest about how funders are taking on each individually, as well as grappling with the nexus between them. In turn, these challenges loop back to the coverage issue: The healthier people are, and the more efficient our health care system is, the easier it will be to sustain efforts to cover every American.

Now, thanks to an initial $200 million pledge by Peter Peterson, new intellectual firepower is being brought to bear on these urgent challenges. Peterson, who made his fortune in private equity, is bankrolling an outfit call the Peterson Center on Healthcare, which already is up and running with an initial staff, a high-powered advisory board, and three initiatives. Its mission is to "make higher quality, more affordable healthcare a reality for all Americans. The organization is working to transform U.S.healthcare into a high-performance system by finding innovative solutions that improve quality and lower costs and accelerating their adoption on a national scale."

Pete Peterson is best known for his long campaign to sound the alarm about America's long-term budget deficits, which has been the primary focus of the Peter G. Peterson Foundation, a New York-based institution that engages in both grantmaking and policy analysis of its own, and is led by Peterson's son.

Of course, though, rising healthcare costs are the main driver of U.S. fiscal problems, with yawning deficits projected for Medicare as aging Baby Boomers line up for decades to come to get treatment for a host of chronic diseases. So it's no surprise that Peterson would focus his resources on healthcare in a larger way. Also, as we've pointed out before, Peterson—for all his giving so far—still has a huge fortune to dispose of (around $1.7 billion, not counting the endowment of his foundation), and as an 88-year-old signatory of the Giving Pledge, he's got to be thinking about his philanthropic end game.

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Sinking tens of millions of dollars into a new center that will grapple with the toughest domestic issue of coming decades makes a lot of sense. Keep in mind that the $200 million that Peterson has pledged so far is an "initial" commitment.

Leading this operation is Jeffrey D. Selberg, a veteran player in the healthcare sector who joined the Peter Foundation at the start of this year to incubate the new center. Selberg doesn't have an overt ideological profile, which is notable given the polarized nature of the U.S. healthcare debate. Likewise, the new center's advisory board and its list of partner organizations shows that it's firmly rooted in the political center. Importantly, as well, the center's advisory board is not populated by corporate leaders with a financial interest in policy outcomes, in contrast to the Peterson Institute for International Economics (a think tank that Peterson chairs) as I have noted here.

Also, if you read through how the center describes its strategies, you'll find zero mention of two words that have provoked epic battles during Washington's healthcare wars: "markets" and "competition." Instead, the discussion is all about changing incentives and increasing efficiency within the healthcare system.

All this looks good and strikes me as money well spent. The only cautionary note I'd add is that Pete Peterson has not always played a positive role in the debate over fiscal policy. To me, his foundation's role in helping fan panic over deficits at the height of the Great Recession—when most economists argued that more stimulus was needed to spark growth, not austerity—was deeply irresponsible. As well, he and his foundation have often deployed statistics about the debt and deficit that are misleading, including an almost comically rigged public opinion survey purporting to show high public anxiety about the deficit—even as polls have repeatedly shown since 2009 that Americans want policymakers to prioritize creating jobs and growth over reducing the deficit.

Given that track record, Peterson would not be my first choice to help develop a new center on healthcare. On the other hand, the center seems like it's off to a great start.