This post appears on the National Journal's Health Care Experts Blog where you can also see what other health policy analysts have to say about Obama's summit on fiscal responsiblity.

There is no greater threat to our long-run fiscal stability than doing nothing about our struggling health system. Former CBO and current OMB Director, Peter Orszag, has long said that we do not have an “entitlement” problem, but rather we have a health care cost growth problem. I could not agree more. (And I object to the use of the word “entitlement,” but that’s a different argument for another day).

The incentives and dynamics associated with health care cost growth are entrenched in our system. These inefficiencies will be defended intensely by powerful interests who stand to lose from value-based, transparent competition. Yet, the truth is we cannot afford to let them stand in the way of real progress anymore.

The single most important thing we can do to improve our long-run fiscal future is reduce the rate of system-wide health care cost growth per capita because Medicare cost growth and system-wide cost growth are linked. This makes perfect sense. Medicare buys the single largest share of services from our health care system as a whole.

What reform strategies should we pursue? Are they the same strategies the White House and Congressional leaders are talking about?

The answer to the second question is yes, so let’s focus on the first.

Serious health care cost growth reduction within 10 years is the key to fiscal sustainability (I can give you plenty of algebra offline). Most analysts agree that payment reforms, more specifically realigned incentives among providers, patients, and payers (including taxpayers), are the key to sustainable cost growth reduction. The fundamental question for the reform debate in 2009 is can we get from payment reform to realigned incentives to cost growth reduction to fiscal sustainability without serious coverage expansion?

The answer to this question is a resounding no. In many cases the hospital sector (the biggest single source of expenditures in our health system) views coverage expansion as a necessary complement to payment reform. Without a commitment to also fund coverage for the uninsured, hospitals will lobby actively to derail payment reform. Those advocates who would consider serious cost control initiatives before coverage expansion are failing to recognize the intricacies of Washington. Whereas if you expand coverage while transitioning to more efficient payment structures, you are in essence granting hospitals some time to adjust to new treatment modalities and forms of payment. Over time, these payment reforms and increased efficiencies will advance our delivery system, improve the health of our population, and make health care more affordable for taxpayers and governments alike.

As we move forward, Medicare has a huge role to play. Medicare must both learn the best ways to implement payment reforms and teach others the pathway to success. Through more efficient, quality-based payment strategies, we can sustain our Medicare program indefinitely and avoid draconian cuts to Medicare benefits down the road. Yesterday’s summit proves that Peter Orszag and the President understand this. The real question is: will 60 U.S. senators eventually agree? Stay tuned.