Cut where the money is

Our view: If the GOP really wants to reduce the deficit, it should reform health care

January 27, 2010

President Barack Obama is getting mixed responses to his plan to freeze spending on discretionary spending not related to national security, which he is expected to tout in his State of the Union address tonight.

Some conservatives, who have been screaming about the levels of debt the nation is piling up, call it too little, too late. The line of the day comes from House Minority Leader John Boehner's spokesman, who likened the plan to "going on a diet after winning a pie-eating contest."

Some liberals worry that cutting federal spending right now could prolong the recession, as happened when Franklin D. Roosevelt tried to tackle the deficit during the Depression. Paul Krugman, the New York Times columnist and Nobel Prize-winning economist, called the idea "a betrayal of everything Obama's supporters thought they were working for."

In truth, the idea is reasonably crafted insofar as it goes. The administration says the president doesn't intend to freeze all agencies but rather to allow spending to increase in some areas, such as science and education, while others are reduced, and the pledge wouldn't kick in until after a likely jobs stimulus package is approved by Congress this spring, mitigating the effect on policy goals and economic recovery.

But Republican critics are also right that it won't do much to dent the debt the nation is projected to take on over the next decade - the White House estimates the plan would save about $250 billion over that period, a time when the federal government is expected to run deficits totaling more than $6 trillion. What Republicans might like less is that in order to really slow ballooning federal spending, what we really need to do is reform the health care system. That's where the money is going.

Between now and 2020, the Congressional Budget Office expects spending on discretionary, nonmilitary items to grow by 3 percent - not 3 percent a year but 3 percent for the entire decade, from $682 billion to $705 billion. Military spending is expected to grow by about 18 percent, from $690 billion to $813 billion. But spending on Medicare and Medicaid is projected to grow by a whopping 85 percent, from $808 billion to $1.5 trillion.

The Senate's health care reform bill, which doesn't go nearly far enough in efforts to rein in costs of health care, is projected to reduce spending on Medicare and Medicaid by a total of $440 billion over the next decade.

It's unclear whether Republicans really care about deficits - just 16 GOP senators voted this week for a commission that would have forced up-or-down votes later this year on ways to reduce Washington's long-term budget shortfalls. Thirty-seven Democrats supported it, not enough for the 60 votes needed under a previous agreement.

But if Republicans do care about the mounting debt, they should drop the fear-mongering about death panels and rationing and take the current health reform proposal as a starting point to talk about increasing the use of evidence-based medicine, improving electronic patient records to reduce duplicative diagnostic testing, and switching Medicare from a fee-for-service model to one that pays doctors for keeping people well, not performing medical procedures.

If they did that, they would risk passing important legislation that would strengthen the nation's finances while improving its health while a Democrat was president. But that political risk would pale next to the alternative for making a serious dent in the long-term deficit: Social Security reform. If the goal is reducing the deficit, health care reform is the place to start.

Readers respond
I agree that reforming health care is needed, but you can't ignore what's causing the increase in costs. How much is related to an increased number of people on the programs? How much could be trimmed with improving electronic patient records to reduce duplicative diagnostic testing versus the cost to actually make it happen? We need to better detect fraud as well. The change in payment models is intriguing, but how does it create savings? How much does frivolous litigation cost in the system? How can that be fixed without penalizing those who have legitimate claims?

Health care reform done correctly could reduce the deficit. However, using smoke and mirrors to make claims of reduction only makes it much worse.

Ravensfan

How about just expanding Medicare and calling it a day?

As to the rest let's START with the Defense Department budget by pulling out of those misbegotten wars in countries that are NEVER going to get better.

I'm tired of all the half stepping. Get something done.

Mr. Rational


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