September 1, 2014

Washington Budget Report: May 7, 2013

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Bipartisan Health Care Plans Point Towards Consensus

Several high-profile, bipartisan health care reform plans have demonstrated in recent months that there is a developing consensus among fiscal and health care policy experts on the steps needed to move the country towards a less expensive, more effective and more patient-centered system.

The plans are the Bipartisan Policy Center’s Health Care Cost Initiative, the health care portion of the latest Simpson-Bowles recommendations, a plan from the Engleberg Center for Health Care Reform at Brookings, and a plan from the National Coalition on Health Care.

In the first of three blog posts on the subject, Concord Coalition Policy Director Joshua Gordon points out that all of these groups “took pains to both find scorable savings within the 10-year budget window while also choosing to proffer reforms that would spur a longer-term transformation in the health care system -- making it better while having savings grow beyond the budget window.”

In addition, Gordon writes, these plans “all anticipate that by using the federal government’s market power through Medicare and the tax code, changes would filter through to the private sector, transforming the health care system as a whole.”

It is encouraging that key parts of these proposals have some similarities to proposals in President Obama’s latest budget and, to some degree, the House Republican and Senate Democratic budgets. Gordon’s blog post includes a chart summarizing these similarities.

Looking first at the health care system’s supply side, he says that a key policy shift would be to move “away from fee-for-service medicine – which encourages maximal resource use – towards a value-based system, which rewards effectiveness and efficiency.” This would be done through a series of Medicare provider payment reforms and reductions that would build, in part, on experiments and pilot projects under the Affordable Care Act.

The hope for significant savings from such measures is based on the fact that people with multiple chronic diseases account for so much of the country’s health care spending. Targeting reforms on that spending, Gordon writes, “seems to hold the greatest promise for moving the needle on health care spending over the long term.”

His next two blog posts will look at proposed changes on the demand side of the health care system, including patient sensitivity to costs, and at the effect that reforms could have on government savings and the federal deficit.

Concord/Fix the Debt Forum Series: Madison

At a public forum in Wisconsin, local policymakers, students and others last week heard about the importance of civil discussion and bipartisan cooperation in trying to solve the nation’s budget challenges. Former U.S. Comptroller General David M. Walker, Sen. Ron Johnson (R-Wis.) and Rep. Mark Pocan (D-Wis.) spoke at the event, which was co-sponsored by the Bipartisan issues Group, The Concord Coalition, Fix the Debt and The Can Kicks Back.

Despite their different and sometimes clashing perspectives, both of the federal lawmakers expressed deep concerns over the federal deficit, the challenges it poses to the U.S. economy, and the unfair fiscal burdens that could be passed on to young Americans. The forum was held Thursday night in Madison.

Walker, president and CEO of the Comeback America Initiative, outlined the fiscal, economic and demographic difficulties facing the country. When the government consistently spends far more than it brings in, he cautioned, Americans can expect a day or reckoning.

“The federal government has grown too big, promised too much and needs to restructure,” he said.

Johnson, who along with some other Republican senators recently dined with President Obama, said he found the frank conversation at the dinner heartening.

At the forum, Johnson described the tax code as “a travesty.” Noting that members of Congress in both parties seek American prosperity, he said: “Let’s at least start by not questioning each other’s motives.”

Pocan said that as a new member of Congress, he found it hard to watch how Washington sometimes failed to work as it should. Too often, he said, elected officials simply talk past each other.

“The House has a budget, the Senate has a budget, the president has a budget,” Pocan said. The crucial next step, he added, is for elected officials to sit down together and produce a national budget to guide federal policy.

GAO Highlights State and Local Fiscal Challenges

While Washington continues to struggle with its budget problems, state and local governments face growing fiscal challenges as well. These challenges will likely add to the demands on the federal government in the years ahead, complicating the already difficult task of putting the country on a more responsible path.

“Fiscal sustainability presents a national challenge shared by all levels of government,” the U.S. Government Accountability Office (GAO) concludes in its latest update on the fiscal outlook for state and local governments.

Since 2007, the report says, GAO simulations “have consistently shown that, like the federal government, the state and local sector faces persistent and long-term fiscal pressures and, absent any policy changes, would face an increasing gap between receipts and expenditures in future years.”

The primary driver of the state and local challenges, the GAO says, is the projected growth in health-related costs – specifically, projected spending on Medicaid and health care for state and local government employees and retirees that will exceed U.S. economic growth.

Additional warnings about the fiscal difficulties facing state and local governments have come from the State Budget Crisis Task Force, a private bipartisan organization led by former New York Lt. Gov. Richard Ravitch and former Federal Reserve Chairman Paul Volcker, who also serves on The Concord Coalition’s Board of Directors.

Current tax and spending policies at lower levels of government, they say, simply cannot be sustained. Given such warnings, the public should encourage elected officials at all levels of government to pursue broad fiscal reforms.