Out-of-control health spending may bankrupt the nation
David Walker, founder and CEO of the Comeback America Initiative and former U.S. Comptroller General, gave Healthcare Finance News’ Managing Editor Stephanie Bouchard a glimpse of what to expect when he presents his keynote address to attendees of the Healthcare Financial Management Association’s annual conference on June 26.
Q: How do you make the weightiness of mandatory programs like Medicare and Medicaid “real” to people, in general, and to those in the healthcare profession, particularly? And what are the consequences of not being able to make it “real”?
A: The fastest growing program-related expenses in the federal budget relate to healthcare. Medicare and Medicaid are the largest of those programs. Spending for these programs has increased dramatically and is expected to continue to increase absent programs reforms. At the present time, expenses for these programs are deemed to be “mandatory spending” and are not subject to an annual limit. Total “mandatory spending” now exceeds over 60 percent of annual federal spending and this percentage is continuing to increase. Such mandatory spending serves to “crowd out” other important spending programs, including various constitutional responsibilities of the federal government, programs for the poor and needy and investments in our future.
Importantly, based on reasonable and sustainable assumptions, the Affordable Care Act (ACA) will serve to further exacerbate our healthcare cost challenge rather than help reduce it. Simply stated, our current healthcare spending is unsustainable and could eventually bankrupt the country absent dramatic changes in our current healthcare programs and “system.”
Q: As you and others have pointed out, it will take political will to cut healthcare costs. Are our politicians gambling with the country’s financial future and the health of its citizens?
A: Yes, if there is one thing that will bankrupt America it’s out-of-control healthcare costs. If the Supreme Court does not rule the ACA as being unconstitutional, we will need to repeal and replace it. The replacement legislation needs to focus on achieving a level of basic coverage for all (e.g., preventative/wellness and catastrophic protection), coupled with a range of transformational reforms that will reduce costs, improve quality, enhance transparency and increase accountability.
Q: You have said that the Affordable Care Act will exacerbate the country’s fiscal challenges. Do you still believe that? Are you making any bets about what will happen if the Supreme Court overturns the law?
A: According to the Office of the Chief Actuary of Medicare, based on reasonable and sustainable assumptions, the ACA is likely to cost $12 trillion more than claimed on a discounted present-value basis. In my view, it’s likely that the Supreme Court will repeal all or part of the ACA. In any event, it needs to be replaced since it is not affordable and sustainable over time. Unfortunately, the ACA focused primarily on expanding coverage and not nearly enough on controlling costs and improving quality. It was also passed on a straight party-line vote.
Q: How do we restore fiscal responsibility if the people we need to make the restoration possible have economic interests in direct conflict with fiscal responsibility?
A: Additional truth, transparency and presidential leadership are all essential. The 2012 general election campaign for president must make fiscal responsibility and government transformation a top issue. Healthcare reform is a key sub-element of these overall topics. Ultimately, whoever wins the presidential election needs to talk in a substantive and solutions-oriented manner about our fiscal, healthcare and other key sustainability challenges in order for them to have a mandate for action if they are elected.
Q: What is the most important thing you want attendees of your keynote to take with them?
A: The federal government has grown too big, promised too much and waited too long to restructure. It has also way over-promised in the healthcare area. We need to rationalize our current promises, change payment, delivery and malpractice systems and modify current tax preferences and premium subsidies in the healthcare area.
Q: Is there anything about the keynote that I haven’t asked that you think is important to mention?
A: America is a great nation. However, we have strayed from the key principles and values on which we were founded. We also face a range of key sustainability challenges that serve to threaten our future position in the world and our future prosperity and tranquility at home. We are at a critical crossroads in our nation’s history and the decisions that are made or fail to be made by elected officials within the next few years will largely determine whether our future is better than our past. The 2012 election is of critical importance. You need to be informed and involved to help make a difference.