Tuesday, July 12, 2011

Why physicians should speak up about the debt deadlock

Joe Scarborough reminds us that the divisions in American government are hardly new, paraphrasing Benjamin Franklin’s observation that “When you assemble a number of men, to have the advantage of their joint wisdom, you inevitably assemble . . . all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views. From such an assembly can a perfect production be expected?” (This comes from a September 17, 1787 speech by Mr. Franklin to urge ratification of the U.S. Constitution, read on his behalf because he was too ill to deliver it in person. The Constitution was ratified the same day.)

I suppose we should be encouraged that Congress’s prejudices, passions, errors of opinion, local interests and selfish views are as American as apple pie, and the Republic has somehow survived nonetheless. Still, I find it deeply troubling that today’s politicians can’t find their way to agree on the debt ceiling.

No one should expect a “perfect production” to come out of this Congress and this administration, given how far apart they are on the need for tax increases and entitlement reforms. But they need to agree to something, and they need to do it soon.

I will leave it to others, who know a lot more about global economics than me, to explain what likely will happen to the economy if the debt ceiling isn’t increased by August 2. Let’s talk about the impact on health care, something I know quite a bit about—and why physicians especially should be concerned:

For one thing, as I blogged last week, physicians will be hit squarely in their pocketbooks if the debt ceiling is not increased by August 2. The government will experience a massive and growing cash flow shortage; and as a result, “handling all payments for important and popular programs (e.g., Social Security, Medicare, Medicaid, Defense, active duty pay) will quickly become impossible.”

Without enough cash on hand, the federal government will be forced to prioritize its payment obligations. Is there any doubt that if the choice is between suspending Social Security checks to seniors or Medicare payments to doctors, doctors will the first ones to be shorted?

Physicians should be very, very concerned that weeks could go by in August before they would get even one dime from the federal government for their services to patients. The same is true of hospitals, who may not receive any payments for treating Medicare patients or for paying residents’ salaries.

Failure to reach agreement on the debt ceiling also would result in more than half of the 1.9 million government civilian employees losing their jobs overnight, according for former GOP Senate budget committee staffer Steve Bell. Included will be federal employees who work for the CDC, NIH, FDA, CMS, and the other regulatory agencies that physicians and patients alike count on to keep our food and drugs safe, the protect us from communicable diseases, conduct medical research and administer Medicare and Medicaid.

Let’s say that the politicians do find a way to authorize an increase in the debt ceiling in time to avert massive lay-offs and an immediate suspension of payments to physicians. Physicians should be paying very close attention to how Medicare, Medicaid and other critical health programs may be affected. President Obama has put on the table major structural changes in Medicare, including gradually advancing the age of eligibility to coincide with Social Security—but only in the context of a $4 trillion “grand bargain” on deficit reduction that includes tax revenues, which the GOP has rejected.

The GOP has countered with a smaller deficit reduction package that over ten years would cut Medicare by $250 billion. Included in the GOP proposal, which was rejected by the president, is a $14 billion cut Medicare GME/IME funding, $1.1 billion in savings from requiring prior authorization for high-cost imaging, another $0.8 billion by cutting payments for imaging, $8.5 to 16 billion by charging co-pays for laboratory services, and $38 billion by requiring higher income beneficiaries to pay more into the program. None of the proposals being offered so far by either party appear to include permanent repeal of the Medicare Sustainable Growth Rate formula, a top priority of organized medicine.

Given the high stakes, it has been especially surprising to me that more physicians aren’t speaking up. To recap: if a deal is not reached, they and their patient will bear the brunt of suspended payments. They and their patients will suffer the consequences of massive lay-offs in the agencies charged with protecting public health. If, on the other hand, a deal is reached, the changes it may make in Medicare, Medicaid and other entitlement and discretionary health programs will have a lasting impact on American health care, potentially for generations to come.

Physicians shouldn’t count on politicians, with “all their prejudices, their passions, their errors of opinion, their local interests, and their selfish views”, to come to a responsible debt agreement, never mind a perfect production. They need to enter the debate and join with ACP to urge agreement on a debt ceiling package that lowers the rate of growth in Medicare and Medicaid spending by addressing key cost-drivers, that permanently repeals the SGR, and that preserves funding for essential programs, in time to avert an unprecedented disruption in payments and mass lay-offs of federal employees that are responsible for ensuring public health and safety.

Today’s question: Why do you think physicians have not been more engaged in pressing Congress and the President to reach a debt deal that averts any suspension of payments, responsibly reduces Medicare and Medicaid spending growth, eliminates the SGR, and ensures sufficient funding for critical programs?


Arvind said...

Why has nobody asked the President to start with holding his own paycheck first, then his VP's and WH staff, then Congress and its ataff, before talking about Social Security, Medicare, etc?

Any leader with some degree of morality would be saying this, wouldn't he? Why don't we expect this from our President?

Steve Lucas said...

This whole debt debacle is being played for political advantage and no one group will change the outcome due to the politicians need to make a point. The government has shut down before, and will shut down again, due to the short sightedness of a few.

The reality is that without meaningful changes to government spending we will end up like Greece. Posturing and claims of Grand Bargains, with their own hidden tax increases, will not solve the basic problem of too much out vs. too little in.

Steve Lucas

Harrison said...

We have elected ideological clones to important positions.
The only people their leaders will listen to make hundreds of millions of dollars each year and work on Wall Street.
We have to assume that they will recognize the risk of the full faith and credit of the United States Treasury being compromised and will not allow it to happen.
In the end, it has to be hoped that a clean debt increase bill will be passed.
The ideologues will vote against it, but their protest vote will count for nothing, as protest votes against the exact same thing have counted for nothing in the past.
That is what we can hope for.

The Aug 2nd deadline is real, and one has to hope that the majority of our legislators know that and will not jeopardize the world economy.
Spooking the world's credit markets is really what caused the great depression in the 30's. Nobody trusted anyone else, and credit was not extended.
The US economy is not Greece. We are too big to bail out.
We are truly too big to fail. But if we do fail, the political party that gets blamed historically will go down in history with Herbert Hoover. Right now that is clearly the Republican Party.
They are locked in a political battle for control of their own party.
The Democratic party and the leaders are clearly willing to compromise -- and even when they make it all the way to the Republican position they have seen the rug pulled or the goal posts moved or whatever metaphor works.
That is because the only real political goal of the Tea Party Republicans is the defeat of President Obama.
The don't have leadership or policy goals.
They have power and control goals.

Hopefully the debt ceiling debate will not be a casualty, because it would be a catastrophic one.


ryanjo said...

I think the present debt ceiling deadlock is a reason why our government should not be further involved in health care. The priorities are power, money and political showmanship. Blaming the Republicans is shortsided; the Democrats last year rammed through their programs, often without a single vote from the other side, and celebrated with champagne. The weakest links, physicians & patients, will suffer in order to allow one side or another to "win". Soon, as the budget and specific regulations for provisions of the ACA is debated, we should all expect the same legislative brinksmanship.

Another example of a promise being gutted by political realities is the Medicaid program. An editorial in the the July 14th issue of the NEJM (p. 102) reports on attempts for 20 years to force states to implement fair payments to doctors, mandated by federal law. The issue is now in federal court, and the Obama administration is taking a position against fair payments that would increase access for underinsured patients. So much for "Change that works".

The only reform that can ever succeed is to turn the system back over to the providers of care and their patients, with direct management of healthcare dollars by the customer, open and competitive pricing by providers, with strict regulations to avoid abuse but otherwise no government involvement.

Steve Lucas said...


If you do not like Greece then how about Italy, Ireland, or Spain, it was announced yesterday that the US debt may be downgraded in the near future.

Turning to defaults, the US last defaulted on it’s debt in late 1995. Then President Bill Clinton’s first statement was that Social Security checks would not be paid on time. The world did not come to an end. I am not stating this is a desirable solution, and one we should not be facing, but it has happened before.

Concerning Republicans answering only those making hundreds of millions a year, I think you will find very few people actually make this type of money, even in finance. Of equal concern is the lack of discussion of George Soros, who personally finds many liberal organizations. It is also interesting that he made his billions shorting, or betting on, the decline of currencies.

Those pesky Tea Party Republicans; really? A bunch of older conservatives running around in silly hats has now become the driving force in American politics. I think you just legitimized the whole Tea Part movement.

My reality is that if you take all of the income of every person making over $100,000 per year you would still not be able to fund our current expenditures. In the US over 50% of the population does not pay taxes, in Canada the number is closer to 33%. The Canadian currency is also now stronger than ours.

Germany has a declining population, and a lower unemployment rate than the US. The typical German citizen has little or no personal debt. They have also admitted that unlimited immigration does not work and now if you wish to immigrate to Germany, or any number of EU countries, you must embrace the morals and culture of that country.

The debt crisis is real and should have been solved months ago. I feel that the real issue is our social spending and how we will fund, and at what level, this in the future. When over half of your citizens do not contribute to society, but receive the benefits, it is not hard to figure the remaining half asking: Why work?

This tipping point was also reached under the Obama administration.

Steve Lucas

amandaandjames said...

Our deficit problem is a spending issue, not a taxation issue. Unfortunately our leadership brings the two largest scare tactics to the bargaining table to reach a deal, when there are other less necessary programs to cut. I say take a small percentage cut of all programs across the board.

Harrison said...

We did not default on the debt in 1995.
The social security check threat was part of a government shutdown.
We have never defaulted on the debt.
Doing so would be catastrophic.
Not just for us.
There will be opportunities later this year to fight over a deadline resulting in a federal government shutdown.
That is different.
And it probably will happen.
The August 2nd deadline is real.
It would result in a huge loss of money in our economy and a huge loss of jobs.
Worldwide there would very possibly be a devaluation of the dollar, but as much as that might be nice our buying power would not improve because we would lose capital.
The world would lose a very significant trading partner and the global economy would suffer.

The politicians know they can't let this happen.
The Tea Party Republicans are the exception. They really don't seem to get it.
They talk about paying our debts but cutting our domestic spending, as if we pick and choose what checks we are going to sign and when we are going to sign them.
In August we will have obligations of over 300 billion.
We will have tax revenues of about 170 billion.
Kind of
Sort of
In that ballpark
But what money comes in when and what money has to go out when, well that just isn't clear.
The Congress has already spent this money.
Now they want to blame the President for the problem because they don't want to fund the account he has to pay from.

This is not the right battle to pick.
The battle has to be over what things to buy in the future, not about paying for what we already bought.


Steve Lucas said...



The author is an economist.

Steve Lucas

Harrison said...

It is interesting that a Fox News contributor who is an economist says something different than the former chair of the economy department at Princeton who now runs the Federal Reserve, and the Nobel Laureate Princeton economist who writes for the New York Times, and the head of the President's council of Economic Advisors.
They all seem to think we are at risk of default.
And they don't seem to think that the world will be happy if we go past the August 2nd deadline.
Their arguments make sense too.

I think that the tricks that could allow us to get past a drop dead date have already been played.
The drop dead date was really in May.
The treasury secretary did not see any political will to work on it then, and so he put in place the tried and true delaying tactics.
We're done.
There is no more delay.
Congress actually has to do something.