Monday, March 23, 2009

Is the federal deficit a Catch-22 for health care reform?

The Congressional Budget Office has decided that President Obama's proposed budget will add trillions of dollars to the deficit, substantially more than the administration's own budget office estimates:

"As estimated by CBO and the Joint Committee on Taxation, the President's proposals would add $4.8 trillion to the baseline deficits over the 2010-2019 period. CBO projects that if those proposals were enacted, the deficit would total $1.8 trillion (13 percent of GDP) in 2009 and $1.4 trillion (10 percent of GDP) in 2010. It would decline to about 4 percent of GDP by 2012 and remain between 4 percent and 6 percent of GDP through 2019. Our estimates of deficits under the President's budget exceed those anticipated by the Administration by $2.3 trillion over the 2010-2019 period. The differences arise largely because of differing projections of baseline revenues and outlays. CBO's projection of baseline deficits exceeds the Administration's estimate (prepared on a comparable basis) by $1.6 trillion."

Writing for the Wall Street Journal, John McKinnon suggests that the new deficit numbers could "imperil his health-care overhaul." He quotes several influential senators, Republican and Democrats alike, who reacted to the budget numbers by stating that the President's spending plans, will at least need to be scaled back. Some Republicans have gone further. Senator Judd Gregg (R-NH) argues that this "country will go bankrupt" if Obama's budget is adopted. Senator Gregg's views are particularly important, because he is the kind of Republican from a blue state whose votes the President will need to get his budget, and then health care reform, enacted.

It strikes me, though, that the view that the deficit makes health care reform unaffordable has it backwards. As the CBO itself has stated, the rising cost of health care continues to be the single greatest fiscal challenge to the United States. There is no realistic way to bring the federal budget anywhere close to being in balance without controlling the costs of Medicare. There is no realistic way to make Medicare expenditures sustainable without addressing the larger issue of reducing the rate of growth in overall national health care expenditures. And there is no way to make individuals financially secure without controlling the amount they pay for health care - and by guaranteeing them access to affordable coverage that can't be taken away.

The argument that the deficit makes health care reform unaffordable is a classic Catch-22. We can't afford to fix health care because it will add to the deficit ... but we can't afford not to fix health care because it will add to the deficit. It sets up the idea that deficit reduction and health care reform are on a collision course, when in fact one of the former cannot be accomplished without the latter.

Today's questions: Do you believe that the rising deficit numbers mean the country can't afford health care reform? Or do they make health care reform even more important?


PCP said...

What it really means is we can't give everything(goods/services)to everybody and the politicians don't know a way to tell the people that.
When one looks at the expansion in the flavors of providers that bill/get paid by medicare, the variety of esoteric goods and services that have mushroomed as a result of the coverage decisions and then the marketing/advertising of these as if discretionary goods/services when they ought to be catastrophic needs. You realise that the system has gone awry and needs to be reformed back towards something that resembles the system when it was originally designed. The centrality of the DOCTOR-PATIENT relationship must be preserved and everything else must be on the table. Sadly it is the reluctance of Politicians to do this that has put us on this collision course and I see no way to avoid it.
Rather I see this going to a slow excruciating erosion of the health care system as the ultimate outcome. I see no strength of conviction and leadership ala yesteryear in DC. Perhaps social changes are part of the reason we are this way. Social activism can sometimes work to make indecisiveness the order of the day. When everyone shouts, nothing gets done, and there is no one authoritative voice anymore in health care.

Steve Lucas said...

My answer to this question is colored by politics. The current system is very financially rewarding to a small group of players, thus they have no incentive to change the system. In fact they have a great investment in the status quo.

My political reality is true health care reform is not about access or insurance, but about cutting cost. We need to bring our cost in line with the expenditures of other countries.

Front line doctors and patients have bore the cost of ever escalating profits for insurance companies, hospitals, drug companies, and device manufactures. Only with the head to head testing of drugs and devices, the removal of nonprofit as a tax strategy, and a simplified insurance system will see true health reform.

The current spending plan does nothing to solve these problems and only adds to the deficit.

Steve Lucas