Here’s some hopeful news on the national debt

By Steve Brawner
© 2015 by Steve Brawner Communications, Inc.

If you’re a person who reads this newspaper section or clicks on this column online, you’re probably aware of the national debt and maybe a little concerned, but you’re not crazy about reading 700 words about it.

I get it. The numbers are mind-boggling and the terms confusing. Could there be any more boring words than “federal budget” and “fiscal responsibility”? We’ve been hearing about this bear in the woods for decades, but he never seems to attack.

But a couple of important things happened this past week – one hopeful, one less so – that are worth noting, so let’s cover them. Bear with me. We’re already at 110 words.

Let’s start with the less hopeful news. The Congressional Budget Office (CBO) released its 10-year projections Monday, which told us what we already knew, which is that the debt is growing unsustainably. Already $18 trillion ($57,000 for every American), the debt is expected to grow to $27.3 trillion by 2025.

Each year, the government runs a deficit that adds more to the debt –about $1 trillion every year during the recession, less so in recent years. In 2014, the government added “only” $483 billon to the debt, and the next three years will be about the same. But then the deficit starts rising. By 2025, the government again will spend more than $1 trillion over what it collects that year.

The CBO reports are typically a good information source, but they are based on some rosy scenarios – for example, that Congress won’t extend tax loopholes that it always extends. Forecasters assume there won’t be a terrorist attack, a natural disaster, or a significant economic downturn between now and 2025. On the other hand, unexpected good things can happen as well, such as the United States’ increasing energy independence.

The CBO projections stop at 2025. The picture does not improve moving forward as the baby boomers age and as spending increases for Social Security and Medicare.

And Medicare is where we get to the hopeful news. The federal Department of Health and Human Services announced this week that it will rely less on the “fee for service” model that has helped create runaway health care costs. Under that model, doctors and hospitals are paid for whatever services they render. They bill, and taxpayers pay, few questions asked, creating an incentive for unnecessary tests and procedures.

In the future, alternative models more often will pay medical providers based on quality of care. This is very hard to do, but it has been tested. Little Rock’s CHI-St. Vincent has been involved in a Medicare pilot program where the hospital and doctors were paid a set amount for joint replacement procedures, and it was up to them to control costs to make a profit. I know we don’t like to think of health care in terms of profits, but the alternative is a government bureaucracy. The result of the pilot program was that patient hospital readmissions after those procedures were reduced by two-thirds. When I asked the hospital’s reform-minded CEO, Peter Banko, why the changes had not been made earlier, he said, honestly defining the problem, “There was no financial incentive to.”

“Until you change how we’re being paid, you’re not going to see changes in the system,” he also said.

At the state level, Arkansas has been involved in a similar effort, the Arkansas Health Care Payment Improvement Initiative, which involves Medicaid, insurance companies and others. As part of the initiative, medical providers have financial incentives to keep costs at certain levels for particular “episodes of care.” One result, according to the Arkansas Center for Health Improvement, is that unnecessary antibiotic prescriptions for certain respiratory infections have decreased 17 percent. Doctors now have a financial incentive not to prescribe medicines that serve no purpose other than making patients feel like something is being done.

These are not perfect solutions. They’re very top-down in a health system that has been becoming increasingly top-down for decades.

But they are hopeful. It is impossible to balance the budget without controlling health care costs. If that could happen, it would be one of those unexpected good things that might mess up CBO’s numbers, in a good way.

Leave a Reply

Your email address will not be published. Required fields are marked *