The clock is ticking
Debt talks put bull’s-eye on health spending, but how much pain is necessary?
The deadline draws closer. Judging by the growing intensity in the debate last week over the national debt ceiling, one might think we have a new Doomsday Clock to monitor with trepidation. But that’s not the case. While it’s true that time is ticking away for lawmakers to reach an agreement, default can’t be an option. Certainly the debt load has exploded over the past decade—no, it hasn’t happened only during the Obama administration—and efforts to reassess our nation’s spending priorities are long overdue. But the true risk of catastrophe lies more in some of the proposed solutions to the problem than in the debt itself. Will too much be cut too fast for our fragile economy to handle?
As we all know, healthcare expenditures are already center stage in this drama. The hundreds of billions of dollars in annual Medicare and Medicaid spending make an enticing target because the subtotals have been rising at rates unsustainable in the long term.
Late last week, the White House signaled a surprising willingness to make deeper cuts to Medicare and Social Security than previously indicated. But such cuts will prove unpalatable among many lawmakers. And they certainly will be unpopular with the nation’s seniors, who will let their feelings be known at the polls next year if the proposals advance.
Then there’s Medicaid, supposedly the nation’s safety net specifically designed to ensure healthcare for citizens at their most vulnerable, also left with a large bull’s-eye on its budget. The debt hawks have been circling here for a long time, and Medicaid coverage has already been targeted in state Legislatures, both Republican-and Democrat-controlled.
With the economy continuing to sputter, such actions could most certainly prove catastrophic for a significant number of Americans. Too many of our fellow citizens have nowhere else to turn. Efficiencies can be found to help contain costs, but for a nation with our economic resources, even in the toughest times such budget-cutting priorities are shameful.
The need for cuts in federal healthcare spending and entitlements were highlighted in the final report from the president’s national debt commission last year. But so was tax reform and tax fairness. In recent negotiations on the debt ceiling, the idea of closing tax loopholes and ending some federal subsidies were deemed nonstarters with GOP representatives, this at a time when the same parties said that everything should be “on the table.” Such stubbornness also could prove devastating if the specter of these talks being pushed to the 11th hour spooks the financial markets.
There’s still time to settle this, but the clock is ticking. Loudly.
Staying on the subject of healthcare spending, there’s never a shortage of reports, studies and analyses of just where the money goes and how much is consumed.
Earlier this year came a study showing the overall cost of obesity in America totaled nearly $300 billion annually, including lost productivity, according to the Society of Actuaries. Of that total, the cost of healthcare services to treat the epidemic was pegged at $127 billion.
Another study, this one released last month by the American Medical Association, reported that claims errors among commercial insurers were adding $17 billion in unnecessary administrative expenses.
And a couple of weeks ago, the Institute of Medicine issued a report calling for changes in treatment of chronic pain, which the IOM said costs the U.S. up to $635 billion annually in treatment expenses and lost productivity.
Such costs can never be eliminated, but payers, providers and patients need to chip away at them as much as possible. They’re cuts that actually make sense.