Monday, December 14, 2009

Should federal spending and taxes be taken away from Congress?

The Senate debate on health care reform is on hold until the Congressional Budget Office (CBO) produces a "score" (estimate) of the impact of a compromise negotiated between Democratic centrists and liberals. The new score will update a previous CBO analysis, which estimated the Senate bill "would yield a net reduction in federal deficits of $130 billion over the 2010-2019 period" and "small" reductions over the next decade. The CBO has estimated that the House-passed bill will reduce deficits by about $102 billion over the 2010-2019 period, and continue to have a modest positive impact on deficits in the next ten years.

Some believe that the CBO under-states the cost-saving. David Cutler and Commonwealth Fund President Karen Davis argue the bills will have a much greater impact because "an aggressive approach to health care modernization could result in significantly greater cost reductions." President Obama's Council of Economic Advisers (CEA) has issued a new report that concludes, "The [House and Senate health reform] bills would also significantly lower the Federal budget deficit in the upcoming decade, and extend the solvency of the Medicare Trust Fund by five years."

Robert Samuelson, writing in yesterday's Washington Post, disagrees. He believes that the bills will increase national health care spending and make the deficit worse, in part because he is skeptical that Congress has the will to allow the intended savings to go into effect.

Skepticism about Congress' ability to make tough choices isn't limited to critics of President Obama's health reform initiative. The President's economic advisers tout the benefits of having an Independent Medicare Advisory Board, as proposed by the Senate bill, which "would recommend changes to the Medicare program that would both improve the quality of care and also reduce the growth rate of program spending . . . Absent Congressional action, these recommendations would be automatically implemented."

And today, The Peterson-Pew Commission on Budget Reform issued a report that "calls on policy makers to enact both spending cuts and tax increases to shift our nation's fiscal course." This bipartisan group, headed by former members of Congress, recommends that the White House and Congress adopt a target to reduce the public debt to 60 percent of GDP by 2018; negotiate a specific package of spending reductions and tax increases that are gradually phased in to protect the recovering economy; and create an automatic enforcement mechanism that would require that "any breach of the target would be offset through automatic spending reductions and tax increases . . . [applied] equally to spending and revenue."

I understand the rationale of taking decisions on spending cuts and tax increases away from Congress. Politicians have shown themselves to be chronically incapable of voting for unpopular tax increases and spending cuts.

But I am uneasy about turning over the "power of the purse," which our founding fathers gave exclusively to the people whom the voters elect to Congress, to an unelected commission - or to a process to impose cuts and tax increases automatically if a target is breached. We tried that with the SGR - which triggers cuts in payments to physicians when the SGR target is breached - and we all know how that worked out.

Today's question: What do you think about taking the decisions needed to bring federal spending and revenue into line away from Congress?


Jay Larson MD said...

No matter who makes the revenue and spending decisions, there will be winners and there will be losers.

If you have an organization setting up a system (government elected, government appointed, private,or commercial) the system, will always get the result the system is designed for.

Take for instance the RUC and the RBRVS system. The system is set up to reward procedures over cognitive services. As a result, general internal medicine is going extinct and all the US medical school grads are pursuing ROAD professions.

Federal spending and revenues are in such poor shape that no matter who makes the decisions, a lot of people will be unhappy.

Rich Neubauer MD said...

Assuming that when the dust settles on this first phase of health care reform we have expanded coverage to a majority of Americans, and significant improvements to insurance, we will settle in to the hard work of what comes next.

Next will be working on cost reductions. That the CBO has no idea how to rank the various untested proposals aimed at cost reduction does not mean these are worthless measures. Quite to the contrary, many are well thought out and have potential. Bolstering primary care via the Patient Centered Medical Home, disseminating electronic medical records that enable population based medicine, encouraging better health habits, correcting misaligned incentives, value based purchasing of care, new payment systems, all have merit on a conceptual basis. We as a nation cannot keep spending 17% of our productivity on health care. It is not sustainable.

I’m not convinced that Congress will be able to make the hard choices that lay ahead. What I think is clear is that those hard choices will be mandatory so we will have to find a way. I also don’t think these hard choices can be left just in the hands of physicians. The RUC, for instance, has not proven to be an effective advocate for balance in the system.

Harrison said...

I don't think we should take revenue and spending decisions away from the congress.
But the Senate rules are not in the constitution and they are giving too much power to individual senators, which would be fine if the individual senators were not bought and paid for.
And the Congressional district division lines are also not in the constitution, and they skew representation way too much also.

The problem is not in the constitution.
It is in politics and the money behind it, and the career decisions made by political parties when they are in power to guarantee job security and political power to the parties.

If congress would first focus on its own rules, and its own responsiveness to constituents then other issues would better reflect the national will.

Health care reform would be one of those issues.
Wall street regulations would be another.

If one senator could not block the vote, we would have had health care reform done earlier this year.

If entrenched Congressman were not in charge of Wall street regulations, and influenced by the lobbyists of the banks and investment firms that they oversee, then those rules would not have been undone in the first place.

All of us should regularly write to ask Senators to change the Senate rules, especially the arbitrary number of requiring 60 senators to allow cloture.

And all of us should write as much as we can possibly write to change Congressional district maps in logical and non-partisan ways so that Representatives will have to again listen to all constituents, and not just the ones who subscribe to their particular views.


Steve Lucas said...

I agree with Jay.

One of my many personal disappointments with the political system is that no matter how good, or simple the idea, at the end of the process it is so distorted as to be unrecognizable.

Politicians are just not willing to make someone, anyone, unless it is the opposition, unhappy to accomplish a goal.

Steve Lucas