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A trillion here, a trillion there

JerrySlaughtercolorJerry Slaughter
Executive Director

The extremely rancorous political skirmish Congress is engaged in over the question of raising the country's borrowing limit has very big implications for health care. Regardless of how the current fight over the debt limit turns out, what it has done that no other issue could heretofore, is finally focus the national attention squarely on the severity of the fiscal problems facing America. And a very big component of that problem is health care spending.

Annual federal expenditures for Medicare and Medicaid are nearly $1 trillion. Health care is the single largest expenditure line item in the massive $3.6 trillion federal budget. The two programs now cover over 110 million Americans, making the federal government (and the taxpayers, by extension) the largest purchasers of health care services by a country mile. When the Affordable Care Act is fully implemented in a few short years, the numbers and costs get even larger. To put it in perspective, the United States government takes in a little over $2 trillion in total tax revenues annually, and just about half of that is gobbled up by health care as soon as it comes in the door. Throw in costs of $725 billion for social security and $200 billion for interest on the federal debt, and we've spent every nickel of tax collected. For everything else America wants to do, it has to borrow the money (for things like our national defense at $700 billion, for example).

So, with all this attention on the federal deficit, increasingly there is blunt recognition in both political parties, as well as the public at large, that the path we are on with health care spending is not sustainable. Mind you, no one has a good answer just yet. But, there is a spreading consensus that the federal government has to somehow significantly alter its health care spending habits, or it will go broke (some would argue it already is, with annual deficits of $1.5 trillion).

For all the talk about paying for value instead of volume, and using innovative delivery models such as ACOs to share savings while improving outcomes, the truth is sobering and unavoidable – health care spending in the public programs must be cut. It is not anyone's first choice, but there is no other choice. The only question that remains is just how it will be done.

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