A Big Fiscal Deal: Non-Partisan Budget Chief Says New Health Law Unsustainable
“I will not sign a plan that adds one dime to our deficits—either now or in the future.”
— President Obama, speech to a joint session of Congress, September 9, 2009[i]
Even though Democrats claimed their government takeover of health care was fiscally responsible, Congress’ non-partisan budget chief recently made the blockbuster announcement that the new law will not improve the federal government’s fiscal health, and may actually make it worse:
- In a presentation before the Institute of Medicine, Congressional Budget Office (CBO) Director Doug Elmendorf noted: “Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.”[ii]
- CBO also concluded that in its first decade, the law will increase the federal budgetary commitment to health care by almost $400 billion—by raising new taxes outside the health sector, and re-directing that revenue to pay for new health care entitlements.[iii]
- Notably, the non-partisan CBO concluded that fiscal sustainability could be achieved only by cutting elements of the health law just enacted: “Putting the federal budget on a sustainable path would almost certainly require a significant reduction in the growth of federal health spending relative to current law (including this year’s health legislation).”[iv]
- Elmendorf’s blog posting explaining his presentation also raises questions about whether the rosy scenarios CBO was forced to assume while scoring the health care law (such as a 21 percent cut in Medicare physician reimbursements beginning this month) can be maintained.[v] If those favorable assumptions do not materialize, the new law would only increase the negative fiscal pressures CBO found.
- The new analysis by Congress’ impartial budgetary arbiter stands as a devastating indictment of the fiscal irresponsibility of Democrats’ approach—particularly as the Administration had previously attempted to invoke CBO’s score of the health care law as evidence that “we are operating in a new fiscal era.”[vi] In reality, CBO believes that the new law will not improve the federal budgetary picture—and concluded that, to achieve fiscal sustainability, the federal government will need to cut new health care entitlements that have yet to begin.
- The CBO did allude to one possible way to decrease skyrocketing health costs: by having government bureaucrats ration access to care by imposing arbitrary limits on treatments. While noting that “it is not clear what specific policies the federal government can adopt to generate fundamental changes in the health system,” Elmendorf admitted that “efforts to reduce costs substantially would increase the risk that people would not get some health care they need.”[vii] The Administration’s nominee to head the Centers for Medicare and Medicaid Services, Donald Berwick, stands as an adherent of this approach to reducing health spending. He has previously written that “The decision is not whether or not we will ration care—the decision is whether we will ration with our eyes open.”[viii]
The assessment by Congress’ impartial scorekeeper that the health care law is not sustainable in either the near-term or long-term raises serious questions about Democrats’ wisdom in enacting a $2.6 trillion government takeover of health care. However, the White House’s nomination of Donald Berwick raises one possible way by which the federal government will seek to control costs: by rationing access to life-saving treatments that unelected bureaucrats deem too costly. Given the skyrocketing federal tab for health expenditures as a result of the health law and the arbitrary rationing that may result, many are left wondering how this unsustainable—and unacceptable—situation can be characterized as “reform.”
[i] http://www.whitehouse.gov/the-press-office/remarks-president-a-joint-session-congress-health-care
[ii] Douglas Elmendorf, presentation to the Institute of Medicine on health costs and the federal budget, May 26, 2010, http://www.cbo.gov/ftpdocs/115xx/doc11544/Presentation5-26-10.pdf (author’s emphasis)
[iii] Ibid.
[iv] Ibid. (emphasis added)
[v] “Health Costs and the Federal Budget,” Congressional Budget Office Director’s Blog, May 28, 2010, http://cboblog.cbo.gov/?p=1034
[vi] “Responsible and Paid for,” Office of Management and Budget Director’s Blog, March 18, 2010, http://www.whitehouse.gov/omb/blog/10/03/18/Responsible-and-Paid-For/
[vii] “Health Costs and the Federal Budget,” CBO Director’s Blog
[viii] “Rethinking Comparative Effectiveness Research,” An Interview with Dr. Donald Berwick, Biotechnology Healthcare June 2009, http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2799075/pdf/bth06_2p035.pdf