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ESTABLISH A LONG-TERM GLOBAL BUDGET
FOR TOTAL HEALTH CARE SPENDING
In December 2010, the Obama White House released The Moment of Truth: Report of the National Commission on Fiscal Responsibility and Reform, a report that the president and the leaders of both parties commissioned to address our nation’s fiscal challenges. The Commission is sometimes called Simpson-Bowles in a reference to its co-chairs Senator Alan Simpson (former Republican Senator from Wyoming) and Erskine Bowles (Chief of Staff to President Clinton). The Commission included 18 members and one executive director appointed by the president. The members included 6 members of the U.S. House of Representatives and 6 members of the U.S. Senate. The report has 6 components: discretionary spending cuts, comprehensive tax reform, health care cost containment, mandatory savings, Social Security reforms to ensure long-term solvency and reduce poverty, and budget process changes. Read the entire report here.
We don't agree with every single thing in The Moment of Truth. However, the recommendations below are directly from the plan's comprehensive Health Care Savings recommendations:
"Establish a global budget for total federal health care costs and limit the growth to GDP plus 1 percent.
Commission members, and virtually all budget experts, agree that the rapid growth of federal health care spending is the primary driver of long-term deficits. Some Commission members believe that the reforms enacted as part of ACA will “bend the curve” of health spending and control long-term cost growth. Other Commission members believe that the coverage expansions in the bill will fuel more rapid spending growth and that the Medicare savings are not sustainable. The Commission as a whole does not take a position on which view is correct, but we agree that Congress and the President must be vigilant in keeping health care spending under control and should take further actions if the growth in spending continues at current rates.
The Commission recommends setting up a process for reviewing total federal health care spending – including Medicare, Medicaid, the Children’s Health Insurance Program, FEHB, TRICARE, the exchange subsidies, and the cost of the tax exclusion for health care – with the target of holding growth to GDP plus 1 percent and requiring action by the President and Congress if growth exceeds the targets. This target should be adjusted to account for any changes in the health care exclusion enacted under tax reform. The target should be measured on a per-beneficiary basis if it is applied only to certain federal health programs, rather than globally. If health care costs continue to grow as fast as CBO and the Medicare actuaries project, or even faster as some Commission members believe will be the case, this process will require Congress and the President to consider further actions that make more substantial structural reforms. If the reforms in ACA are more successful in controlling costs than the estimates by CBO and the Medicare actuary suggest, as some Commission members believe, spending growth should be within the targets and this process would not be triggered. We recommend requiring both the President and Congress to make recommendations whenever average cost growth has exceeded GDP plus 1 percent over the prior five years. To the extent health costs are projected to grow significantly faster than that pace, we recommend the consideration of structural reforms to the health care system."
Evidence:
United States. White House. "The National Commission on Fiscal Responsibility and Reform." December 2010