NEJM: Pick your poisonrevenue increases or Medicare/Medicaid cuts

As Congress’ deficit super committee approaches the Nov. 23 deadline to submit its plan to tackle the debt, debates over revenue increases and spending cuts are raging in Washington. Unless tax increases account for a large portion of the deficit reduction plan, Congress will be forced to slash Medicaid and Medicare, according to an editorial published in the Nov. 3 issue of The New England Journal of Medicine.

Health programs account for 23 percent of the federal budget and an even higher percentage of the projected spending growth, according to Henry J. Aaron, PhD, senior fellow of economic studies with the Brookings Institution. Medicare and Medicaid are too large to be ignored in a discussion of spending cuts. Whether or not tax increases are also part of a deficit reduction plan, a move many Republicans are adamantly against, will play a huge role in shaping the future of health policy.

“If the no-increase-in-revenues position prevails, both Medicare and Medicaid, as well as other healthcare spending and all other domestic social spending, will inevitably be subject to cuts so large that they will make it quite impossible to meet the commitment the United States made half a century ago to assure the aged, disabled and poor a standard of healthcare similar to that enjoyed by other Americans,” wrote Aaron.

Aaron explained that current projections show government debt owed to the public will reach 90 percent of GDP by 2021, but the modest goals of the super committee to cut the deficit by $1.2 trillion over the next decade will only delay the problem. With a reduction of that size, debt projections will look similarly grim in just two years, and the deficit debate would begin anew.

“Debt fears and deficit angst would become a semi-permanent feature of the U.S. political landscape,” wrote Aaron.

This cycle could be avoided, or at least delayed much longer, with cuts to the deficit of $4 trillion to $5 trillion over the next decade, according to Aaron, but if the debt is reduced exclusively with spending cuts, it will be impossible to maintain Medicare and Medicaid commitments.

President Barack Obama has put forth ideas to modify federal health programs to save around $300 billion, and various other interest groups have brought up other healthcare-focused ideas like limiting reimbursement rates on state taxes paid to providers, along with numerous other proposals. Aaron said the importance of these individual discussions pales in comparison with the impact of including or not including tax increases in a deficit reduction plan.

“Should the various healthcare interest groups prevail on the specific issues that now occupy them without winning sizable revenue increases as part of a deficit-reduction program, it would be rather like securing a nicer cell for a prisoner facing certain execution,” concluded Aaron.