Out-of-control healthcare spending threatens national fiscal health

David Walker, founder and CEO of the Comeback America Initiative and former U.S. Comptroller General, will be giving the keynote address at 8 a.m. on Tuesday, June 26 during the Healthcare Financial Management Association’s ANI conference. He gave Healthcare Finance News Managing Editor Stephanie Bouchard a glimpse of what attendees may expect to hear.

Q: How do you make the weightiness of mandatory programs like Medicare and Medicaid “real” to people, in general, and to those in the healthcare profession, particularly? And what are the consequences of not being able to make it “real”?

A: The fastest growing program-related expenses in the federal budget relate to healthcare. Medicare and Medicaid are the largest of those programs. Spending for these programs has increased dramatically and is expected to continue to increase absent programs reforms. At the present time, expenses for these programs are deemed to be “mandatory spending” and are not subject to an annual limit. Total “mandatory spending” now exceeds over 60 percent of annual federal spending and this percentage is continuing to increase. Such mandatory spending serves to “crowd out” other important spending programs, including various constitutional responsibilities of the federal government, programs for the poor and needy and investments in our future.

Importantly, based on reasonable and sustainable assumptions, the Affordable Care Act (ACA) will serve to further exacerbate our healthcare cost challenge rather than help reduce it. Simply stated, our current healthcare spending is unsustainable and could eventually bankrupt the country absent dramatic changes in our current healthcare programs and “system.”

Q: As you and others have pointed out, it will take political will to cut healthcare costs. Are our politicians gambling with the country’s financial future and the health of its citizens?

A: Yes, if there is one thing that will bankrupt America it’s out-of-control healthcare costs. If the Supreme Court does not rule the ACA as being unconstitutional, we will need to repeal and replace it. The replacement legislation needs to focus on achieving a level of basic coverage for all (e.g., preventative/wellness and catastrophic protection), coupled with a range of transformational reforms that will reduce costs, improve quality, enhance transparency and increase accountability.

Q: You have said that the Affordable Care Act will exacerbate the country’s fiscal challenges. Do you still believe that? Are you making any bets about what will happen if the Supreme Court overturns the law?

A: According to the Office of the Chief Actuary of Medicare, based on reasonable and sustainable assumptions, the ACA is likely to cost $12 trillion more than claimed on a discounted present-value basis. In my view, it’s likely that the Supreme Court will repeal all or part of the ACA. In any event, it needs to be replaced since it is not affordable and sustainable over time. Unfortunately, the ACA focused primarily on expanding coverage and not nearly enough on controlling costs and improving quality. It was also passed on a straight party-line vote.