Healthcare called key driver of federal deficit

A sober discussion on trimming $4 trillion from the national debt got off to an unusual start. Erskine Bowles, who was co-chairman of a commission on fiscal responsibility convened by President Barack Obama, began with a shoutout to his personal orthopedic surgeon, Dr. Walter Beaver, who Bowles said had reconstructed both his knees and both his shoulders.

“Without him, I wouldn't be here,” said Bowles, speaking at the American Academy of Orthopaedic Surgeons annual meeting in Chicago

Then Bowles and his committee co-chair, former U.S. Sen. Alan Simpson, proceeded to describe spending on healthcare as fueling a dangerous rise in deficit spending by the federal government.

Bowles, who worked as President Bill Clinton's chief of staff, said the recent $1 trillion annual budget deficits are “a cancer that will destroy America from within.” And Simpson said that “healthcare is the driving engine that is taking us into the vapors.”

The duo recently unveiled a new framework for reaching fiscal discipline, developed with the Committee for a Responsible Federal Budget.

Simpson, a Republican who represented Wyoming, attributed the rise in healthcare spending to end-of-life care, the aging baby boomer population, rising rates of diabetes and obesity, and the consequences of lifestyle choices marked by heavy use of alcohol, drugs and tobacco. “If you think they're going to a wellness clinic,” Simpson said of the latter group, “drinks are on me.”

Bowles listed healthcare as one of the five biggest drivers of the deficit, along with defense, the federal income tax code, Social Security and interest on the debt. The $4 trillion deficit-reduction figure targeted by the Committee for a Responsible Federal Budget is not the ideal amount, Bowles said, but rather the minimum needed to stabilize the economy.

Healthcare spending, Bowles said, has grown from 10% of the economy in 1982, and could now equal 30% by the end of the decade.

To deal with the problem, Bowles said everyone should have insurance—but not a “Cadillac plan.” Instead, a good “good Chevrolet” will do. He added that patients need to have “skin in the game” and pay more out-of-pocket expenses, and that they need to be connected to a medical home. The primary-care work force, he said, needs to be expanded, and the Medicare program needs to prescribe more generic drugs. Medicare also should be able to negotiate drug prices, he said.

The committee's other proposals for Medicare include means-testing for beneficiaries, paying for quality over quantity, denying of payment for “never events” such as wrong-site surgeries, and reforming end-of-life care.

Bowles also said steps need to be taken to end the practice of defensive medicine, when doctors order tests or procedures because they feel they must to avoid being sued.

“We need real tort reform,” Bowles said. It was the only item on the healthcare deficit-reduction checklist that drew applause from the audience.