Fiscal Blindness
by Robert A. Levine. M.D.
Washington legislators have been afflicted with a new and terrible disease, fiscal blindness, which has spread throughout the city in epidemic proportions. In addition, Senators and members of Congress are disseminating the illness around the United States when they hold meetings in their home districts. Ideologic rigidity is a predisposing factor for the disease. The symptoms include an unwillingness to face economic reality and agree to obvious measures that will put the nation back on a sound financial footing. The disease was responsible for the recent downgrade in America’s credit rating by Standard and Poors, the agency believing that the illness would prevent officeholders from enacting a satisfactory plan to bring the national debt under control.
The agreement by the House and Senate to raise the debt ceiling and cut almost a trillion dollars from discretionary spending over the next ten years did not address the major cause of the nation’s financial woes- the accelerating costs of the entitlement programs, Medicare, Medicaid and Social Security. Politicians do not want to antagonize citizens likely to utilize Social Security in the near future, nor the special interests that provide medical care under the current system. But spending on these programs must be constrained or their soaring costs will at some point bankrupt the country.
Growing Medicare and Medicaid expenditures need to be dealt with as a part of overall health care reform. Unfortunately, the Affordable Health Care Act which passed in 2010 will not do an adequate job of reducing costs. Currently, over 17% of the nation’s GDP goes for health care, $2.7 trillion annually. Government spending on Medicare in 2011 is projected to be $568 billion, with Medicaid at $428 billion, according to the Centers for Medicare and Medicaid Services. By 2020, the total cost of health care in the US is estimated to exceed $4.6 trillion, with Medicare at $922 billion and Medicaid at $908 billion.
The Congressional Budget Office three years ago reported that approximately 30% of health care expenditures were going for unnecessary care. That would be over $800 billion in 2011. Studies have also estimated that 15% to 25% of health care spending goes for administration and overhead. At 15%, that comes to about $400 billion. Thus, we have $1.2 trillion allocated for health care this year that is not being used for patient care. And as health care spending increases over the next decade, so will the amount required for administration, overhead and unnecessary care. To bring health care costs under control, it is evident what must be done. Unnecessary care, administration and overhead must be cut dramatically.
The ways Social Security could be fixed are well known to most politicians. Raising the future retirement age, increasing the amount of income subject to the Social Security tax, means testing for Social Security recipients and changing the formula for cost of living increases are all considerations. In all likelihood, a combination of some of these actions will be required for the long term stabilization of the program.
Members of the House and Senate are aware of the path that must be taken to lower the nation’s budget deficits and start attacking the national debt by modifying the entitlement programs. Fiscal blindness can be cured if ideology is put aside to get the job done. Politicians have to place the interests of the country before those of their party, crafting laws based on reality instead of distorted partisan perceptions.
A VietNam vet and a Columbia history major who became a medical doctor, Bob Levine has watched the evolution of American politics over the past 40 years with increasing alarm. He knows he’s not alone. Partisan grid-lock, massive cash contributions and even more massive expenditures on lobbyists have undermined real democracy, and there is more than just a whiff of corruption emanating from Washington. If the nation is to overcome lockstep partisanship, restore growth to the economy and bring its debt under control, Levine argues that it will require a strong centrist third party to bring about the necessary reforms. Levine’s previous book, Shock Therapy For the American Health Care System took a realist approach to health care from a physician’s informed point of view; Resurrecting Democracy takes a similar pragmatic approach, putting aside ideology and taking a hard look at facts on the ground. In his latest book, Levine shines a light that cuts through the miasma of party propaganda and reactionary thinking, and reveals a new path for American politics. This post is cross posted from his blog.