The Central Question for Health Policy in Deficit Reduction


The author of this opinion piece in the New England Journal of Medicine outlines his concern that preservation of Medicare and Medicaid in any form even resembling their current condition must, inevitably, include increases in federal budget revenue generation; in other words: raising taxes. When Congress raised the debt ceiling, it built in an automatic $1.2 trillion deficit reduction, either from a newly-created ‘super committee,’ or a set of automatic cuts (taken half from defense and half from domestic/international spending), that will go into effect should the super committee fail. The author points out, however, that even successful cutting of the deficit by $1.2 trillion over the next decade will ameliorate the deficit picture for only approximately 2 years, at which time we will be in a position roughly identical to that in which we find ourselves today. Yet another $1.2 trillion deficit reduction spread out over another decade would merely postpone for another 2 years a conundrum similar to the current one. Only a politically unfeasible deficit reduction of $4 trillion-$5 trillion spread over a single decade could actually stabilize the ratio of debt to national income for any reasonable period of time—if no taxes are raised. Both scenarios would cut government spending so much that the intended goal of providing the aged, disabled, and poor with the same standard of health care enjoyed by other Americans is virtually impossible, without any government revenue increase in the form of taxes.

Basically, the author makes the point that shrinking the deficit exclusively through cost-cutting without gutting Medicare and Medicaid, is simply impossible given the large portion of the federal budget taken up by health care expenses—and the expected growth in health care costs. He argues that we simply must, at the same time, increase federal budget revenue by raising taxes or else, he threatens without saying, government-funded health care in the future would have to rely on rationing care. The author never discusses what he thinks will happen to Medicare and Medicaid, but opines they would look totally different. Also, he fails to consider that potential health care cost savings may soften the blow. He sounds a bleak warning directly to ‘health care interest groups’ who fail to seek and achieve ‘sizable revenue increases’ as they lobby for their ‘specific interests’: Any policy victories that do not include revenue increases are ‘like securing a nicer cell for a prisoner facing certain execution.’

Keywords: Government, Health Policy, Public Opinion, Cardiology, Delivery of Health Care, Politics, Health Care Costs, Budgets, Medicare, New England, United States, Taxes

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