« October 2012 Issue
Looking Over the Fiscal Cliff: A Conversation on Health Care and the Budget
After the fall election, Congress will return to Washington for their final "lame duck" session of the 112th Congress. A lame duck Congress includes retiring members (in both Houses) and members who will continue their service in the 113th Congress — and this year combines a unique political environment with a series of crucially important fiscal deadlines — christened the "fiscal cliff.
Unless Congress acts to avoid it, going over the fiscal cliff will trigger across-the-board cuts to government spending agreed on in the Budget Control Act of 2011 (the sequester), which was passed last summer as part of a deal to raise the debt ceiling. The sequester will include cuts to Medicare and will coincide with the end of substantial Bush-era tax cuts.
Some health care funding — such as funding for the Medicaid program — is protected in the sequester. However, as Congress works to avoid the sequester by reaching an agreement on taxes and spending, Medicaid and other vital health care programs could be on the chopping block in another round of negotiations.
Community Catalyst's resident health care policy insider and director of strategic policy, Michael Miller, puts the fight into context and explains the rational course of action for health care advocates and policymakers.
What is at stake for health care in the sequester?
Miller: Medicaid, CHIP [the Children's Health Insurance Program] and other programs that serve low-income people are completely protected from cuts. Medicare is partially exempt from the sequester, but it will still be cut by $11.1 billion over a ten-year period. While it's good some programs are protected, there are a lot of other important health care programs, like funding for HIV/AIDs treatment, facing damaging cuts in the sequester.
What are the big picture problems?
Miller: One really important thing that has gotten completely lost is the distinction between the real problems we face and politically manufactured problems. First, one of the biggest economic problems we face right now is not the debt; it is the lack of jobs and growing income inequality. This is getting too little attention compared to the debt debate.
In health care the real problem is the projected growth in costs over a 20 to 30 year period. This could significantly increase the demand for revenue or crowd out other spending if nothing is done to slow the growth. But, the Affordable Care Act has started to address the problem of health care cost growth and provides opportunity to curb costs over time versus making short-sighted cuts.
Do we have some problems? Yes. Can we address them? Yes. There's a lot we can do. There are rational ways to approach this. But instead of taking a rational approach to solving the real problem of health care costs, Congress has used legislative "choke points" to force ill-advised short-term budget cuts, such as those found in the sequester. The cuts could undermine the economic recovery and push us back into a recession by drawing large sums of money out of a still-struggling economy.
What do you think we're likely to see as Congress tries to avoid the next choke point, the fiscal cliff?
Miller: It's very hard to know, and it obviously depends significantly on what happens in November. You could characterize the Democratic bargaining position as reluctant to entertain cuts that affect beneficiaries, while Republicans are unwilling to address excessive favorable tax treatment for the most affluent. The question is, do both sides hold to this? If the election changes Republicans' bargaining position, then that may open things up for negotiation. If it doesn't, it essentially becomes a game of chicken. The tax cuts will expire, the sequester will go into place, and we still have to raise the debt ceiling. So who is going to blink? Ultimately, going over the fiscal cliff creates economic chaos. That's why I think eventually there will be some deal.
So if there is a deal, what are the rational ideas that should be on the table with respect to health care?
Miller: First of all, there is no rational approach to debt reduction that doesn't start with a more progressive tax structure.
It's also the case, given the amount we spend on health care and the projected rate of spending growth, that we need to look at the sources of excess spending, low-value health care spending, and avoidable health care costs and then devise strategies to go after those things.
The recent Institute of Medicine report found the United States health care system wastes $750 billion a year. There is report after report that shows inefficiency and low value [in the U.S. health care system], and there's just resistance to doing what we know we have to do because every dollar of waste is somebody's dollar of income. Attacking waste in the system-like excessive administrative costs and over-priced medications-and identifying the best ways to deliver care are prime areas for lowering costs and improving care without cutting Medicare and Medicaid services.
Public health also comes into play. Healthier people have lower health care costs, so it's important to attack conditions like diabetes and obesity, the underlying health problems that drive cost. Taxes on sugar-sweetened beverages, alcohol and tobacco are a two for one. They can help improve a public health problem and reduce future health care costs while raising revenue.
What should health care advocates be doing?
Miller: It is vital that advocates educate policymakers especially about how critical Medicaid is to providing care to children, seniors and people with disabilities and the consequences of cuts for people enrolled in the program. It's important to juxtapose cuts to nursing home care, or care for people with disabilities or low-income kids, with the tax breaks that the more affluent Americans and big corporations get. We need to ask policymakers: Who is it going to be? Children, seniors, and people with disabilities, or millionaires and special interests?
Our job as advocates is to make sure that there is really powerful resistance to the idea that the solution is to force Medicare and Medicaid beneficiaries to bear the brunt of the cuts. There has to be a clear reckoning that comes with that. Are we going to stick it to beneficiaries, or are we going to change tactics and attack the inefficiencies and low value in the U.S. health care system?