Will Politics or Prudence Prevail in Health Vote?

Posted January 11, 2010 at 3:26pm

Congress is engaged in a great debate on health care reform. The battle lines have been drawn and the ultimate result of the debate will likely have significant economic and political implications.

The last great health care reform debate occurred in late 2003. In December of that year, the House passed the Medicare Prescription Drug, Improvement and Modernization Act by a single vote in the wee hours of the morning after many private deals were cut along with considerable arm-twisting. The MMA resulted in creation of the current Medicare prescription drug program.

The passage of the MMA was driven largely by political considerations. The 2004 elections were approaching and President George W. Bush and several Republican leaders saw an opportunity to take a key issue away from the Democrats and, they hoped, maintain control of Congress and the White House for many years. As a result, they decided to pass the legislation despite its approximate $400 billion price tag over 10 years and the fact that it dug the federal financial hole deeper by more than $8 trillion.

Given the results of the last great health care debate, one might ask, will Washington’s current leaders let political considerations trump fiscal prudence once again? Will the result be a further mortgaging of future generations when we should be seeking to lessen the burdens on their shoulders given our stewardship responsibilities and increasing global competition?

I believe this nation should take steps to achieve universal health care coverage that is appropriate, affordable (for both America and Americans) and sustainable. However, we should first focus on getting health care costs under control. After all, if there is one thing that could bankrupt America, it’s out-of-control health care costs. In addition, you can’t reduce health care costs by increasing coverage.

In fairness, President Barack Obama has promised not to sign any health care reform bill that adds to our federal deficit over the next 10 years or in the future. This represents clear progress over the Bush (43) administration’s MMA effort, but it’s simply not adequate given our nation’s current financial condition and projected fiscal outlook.

The plain and simple truth is that the federal government has already made tens of trillions of dollars in health care promises that it doesn’t know how it’s going to keep. Medicare alone is underfunded by more than $38 trillion and growing by around $2 trillion to $3 trillion a year on autopilot.

Given these facts, it seems clear that simply paying for any new health care expansion is just not good enough. Doing so given the state of our current health care system and related unfunded promises would be like adding a new wing on a house that is structurally unsound and headed for foreclosure.

Rather than just paying for itself, fiscally responsible health care reform should meet a four-pronged test based on realistic assumptions. First, it should pay for itself over 10 years. Second, it should not add to federal deficits beyond 10 years. Third, it should result in a significant reduction in the tens of trillions of dollars in unfunded health care promises the federal government already has. Fourth, it should result in total health care costs as a percentage of the economy lower than what would occur absent reform.

Based on independent analyses performed by various government and private-sector organizations, the current bills pending in the Congress do not meet this four-pronged test. In addition, to the extent they allegedly meet any of the tests, they do so by relying on very optimistic assumptions relating to provider reimbursements and other factors.

In addition to meeting these four tests, any health care reform bill should contain mechanisms to ensure that its projected cost-related outcomes become a reality. Namely, it should have automatic adjustment mechanisms in place if the predetermined cost-related targets are not met. It should also provide for a capable, credible and truly independent group that can help pursue adoption of evidence-based practice and other approaches designed to reduce costs and the rate of increase in such costs. In addition, we need a bipartisan Fiscal Future Commission to engage the American people and make recommendations on a range of tough health care, tax, Social Security and other choices that Washington has been punting on for far too long.

Does fiscal responsibility matter? Just ask the American people. Given the latest bipartisan public opinion poll (by Hart Research and Public Opinion Strategies) commissioned by the Peter G. Peterson Foundation, it is clear that fiscal responsibility is a major issue of concern to the American people. Specifically, based on a late November 2009 poll, 80 percent of American voters are concerned about escalating deficits and debt. In addition, voter concern about deficits and debt exceeded concern about health care access and affordability by 24 points. Furthermore, 70 percent of Americans believe that the regular order in Washington is broken and it’s time for a Fiscal Future Commission to become a reality.

Washington needs to start listening to the American people. Given past experience and the latest public opinion polls, Americans are not likely to forgive another legislative effort that further expands government and adds to our huge fiscal challenge, especially when we already have more government than we know how we are going to pay for. Will Members of Congress vote based on private promises and politics as usual or public prudence? Only time will tell, and Americans are watching!

David M. Walker is president and CEO of the Peter G. Peterson Foundation. He was comptroller general of the United States from 1998 to 2008.