The ACP Advocate Blog

by Bob Doherty

Tuesday, July 5, 2011

Who’ll be harmed if there is a budget train wreck? Doctors and their patients.

Watching the negotiations over the debt ceiling legislation is like watching an impending train wreck.

You see a train hurtling down the track, you see an unobservant trucker about to cross, you know that the train engineer and the truck driver have only a few moments to avert disaster, you try to yell and scream to get them to pay attention before disaster strikes—but you have this sinking feeling that your voice won’t be heard until it is too late.

Well, that is how I feel watching the collapsing negotiations over raising the debt ceiling. Responsible persons in both political parties know that a failure by Congress to authorize an increase in the debt ceiling will create incalculable harm to our country, even though some politicians seem to think that default would be no big deal.

But it would be a big deal, and here is why. If August 2 rolls around and Congress hasn’t authorized the government to borrow more, the federal treasury won’t have enough money to pay its bills. It is a simple matter of arithmetic.

According to a new report by the highly respected Bipartisan Policy Center, the federal government on August 3 would have a cash deficit of $20 billion (obligated spending in excess of revenue collected). On August 4, it will have a cash flow deficit of $26 billion.

On August 5, the daily cash flow deficit would be $31 billion. By, August 9, the daily cash flow deficit would be $39 billion and by August 15, the gap between cash on hand and obligated spending will be a whopping $74 billion. According to the Center, the U.S. government would immediately have to cut spending by 44% creating enormous “economic disruption.”

The Treasury Department would effectively have to choose among 80 million monthly payments so that 40–45% of bills are NOT paid.

Excluding interest on the debt, Social Security and Medicare and Medicaid are next in line in obligated federal spending, followed by defense contractors, unemployment insurance benefits, and military active duty pay.

Given the cash flow shortfall, “Handling all payments for important and popular programs (e.g., Social Security, Medicare, Medicaid, Defense, active duty pay) will quickly become impossible.”

As a result, many service providers would be unpaid, including Medicare and Medicaid providers (e.g. physicians, hospitals), defense contractors, and individuals now receiving government checks, creating “widespread uncertainty as decisions are made day by day.”

If physicians think that dealing with the uncertainties of Medicare SGR cuts is too much, how about not getting paid at all for the care they deliver to Medicare and Medicaid patients? Without knowing for how long? With no promise that the government will ever pay them back?

Up until now, much of the debate over the debt ceiling has been about generalities about government spending and taxes, but the numbers don’t lie: failure by Congress to authorize an increase in the debt ceiling will result in millions of people not getting the benefits they’ve been promised and government contractors not getting paid for the services they’ve provided. Not to mention the potential harm to the economy.

And physicians could soon find that they are among those who won’t be paid when the government runs out of cash and Congress won’t let it borrow more.

Today’s questions: What do you think most physicians would do if Congress doesn’t agree to increase the debt limit, and the government stops paying them for treating Medicare and Medicaid patients? What would the impact be on patients?


Blogger JimS said...

AS you say, the damage to the economy would be far beyond medical care. Physicians would still care for patients regardless of their insurance status, but no doubt this would increase the use of hospital ERs for care.Our patients should not be penalized for the lack of responsible action by the Congress. Already, few primary physicians take new Medicare or Medicaid patients and this action would worse tha situation and reinforce to MDs that our government is not a reliable partner in medical care.
(PS see the article in the NY Times published 7/5 about the problems in Spain. The centralized, government supported health care has not kept costs down and is running short of funds)

July 6, 2011 at 4:37 PM  

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Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

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