Get Medicare Out of the Debt Debate

The U.S. debt debate is heating up as Congress and the President argue about the “cut, cap, and balance” plan and move closer to the August 2^nd deadline to raise the debt ceiling.

The debt debate is important.  Our U.S. debt is now over $14 trillion, and we need to do something about it.  But Medicare cuts are on the table, and war spending is not.

So I would like to propose a switch.  Take Medicare cuts off the table, and put war cuts on it.

The wars in Afghanistan and Iraq have cost this country over $1.2 trillion since 2001.  The debt ceiling wouldn’t even be an issue if it weren’t for these, because we never paid for them.  We got the two men we wanted.  It’s time to pay the bill and get out.

On the other hand, the 2011 summary of the annual report of the Medicare Trust Fund trustees shows that we still have surpluses in the Medicare Trust Funds.  The Medicare Part A Trust Fund had $271.9 billion in it in 2010.  The Part B and D Trust Fund had $72.1 billion in it. 

Contrary to what some members of Congress would like us to believe, Medicare isn’t responsible for today’s national debt.

We should be talking about Medicare not because it has contributed to our debt, but because Medicare taxes are not covering the full cost of Medicare today and we’re dipping into the Trust Fund balance.

It won’t take very much to wipe out the Medicare deficit - certainly not as much as the Medicare “sky is falling down” politicians want us to believe. 

The net government outlay for Medicare in 2010 was in the vicinity of $450 billion for a program that covers over 48 million Americans.  Gross spending was about $100 billion higher than that, and included premium payments, co-pays, and costs covered by other non-governmental revenues. 

To pay for this, the Medicare Part A Trust Fund had $215 billion of income in 2010, including interest.  $182 billion came from dedicated Medicare taxes.  The Medicare Part B and D Trust Fund had $212 billion of total income, about $205 million of which was general tax revenues.

Those reflect a shortfall in Medicare tax revenues, which are supposed to cover the cost of the program.   The shortfall for this year isn’t insignificant.  It is projected to be $34 billion in the Medicare Part A Trust Fund, and that will have to come from the Trust Fund balance.

However, this short-term problem was almost completely solved by the passage of the Affordable Care Act, which includes a .9% Medicare tax increase for high wage earners beginning in three years.  Because of the ACA, even if Congress does nothing more to address the Medicare shortfall, it will go down to only $6 billion, or 1.8%, by 2016.

But that’s not good enough for the trustees, who also look at the problem from a long term perspective.  Today’s negative numbers will add up before then, wiping out almost half of today’s $270 billion balance in the next five years.

Looking 75 years down the road, the trustees identified another problem.  They calculated the current Medicare cost to be 3.76% of taxable payroll, and project that it will grow to 4.9% of taxable payroll in 2085. The current Medicare tax rate, however, is only 2.9% of taxable payroll.

So, now we know what it would take to close the long-term Medicare shortfall using tax revenues alone – a 2% increase in the Medicare tax rate.  Half of this would be paid by individual taxpayers and half by their employers.

This would cost the average American making $45,000 per year less than $38 per month.  It would preserve Medicare as we know it today for him, his children, his grandchildren, and probably even his great-grandchildren.

That’s it.  If we did this, we wouldn’t need to embrace any of the bad ideas floating around Congress today, such as privatizing Medicare, creating Medicare vouchers, further limiting or eliminating the prescription drug benefit, forcing beneficiaries into HMOs, or raising the age of eligibility.

But if we were to do anything positive to contain costs in the next seventy-five years, such as keeping our population healthier or finding cures for any of our major chronic diseases, it would take even less to guarantee every American low-cost health insurance in retirement. 

Think we can’t afford this?  The average monthly cost per Medicare taxpayer for the two wars for the last ten years has been around $63 per month.  Before continuing the cold war on Medicare, we should stop throwing away money on the hot ones.

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The War on Health

Policymakers across the country have declared war on health.  You may have missed the headline, but this is a war with many casualties.

Its objective is to topple health care as we know it.  When health care falls, our health will be the victim.

Battles are raging in many states to cut the legs out from under health care financing.

The Arizona Senate Appropriations Committee recently voted to eliminate the Medicaid program.  This would make 1.3 million people uninsured and cost the state $7.5 billion in federal funding. 

A Florida Senate leader has threatened to eliminate Medicaid unless the federal government agrees to massive changes.  This would cost Florida over $10 billion, and make 3 million people uninsured.

Wisconsin’s Governor has proposed dropping over 60,000 people from Medicaid because they are too rich.  “Too rich” means a two-person household income of less than $29,100.     

Medicaid isn’t the only target. 

Pennsylvania just cancelled its state-funded health insurance plan for low income residents.  As a result, 42,000 people lost their insurance.  A half million more on the waiting list have to fend for themselves.

New Jersey’s Governor proposed a 15% reduction in state health appropriations this year, six times greater than the overall reduction in his budget in his recent speech to the Legislature.

Florida’s Governor proposed eliminating state-run health department clinics, even when they generate revenue.  In Palm Beach County alone, this would cost 60,000 people their regular source of care.    

This war began quietly while the eyes of the public were focused on federal health reform.  The Center on Budget and Policy Priorities has detailed a number of battles we have already lost:

• New Jersey lowered income limits and reduced eligibility for the state’s Children’s Health Insurance Program.  50,000 more people are uninsured as a result.  
• Mississippi reduced its mental health budget by 22% in the last two years. 
• Illinois and Ohio cut community mental health services for children and reduced or eliminated community mental health services for adults who are not on Medicaid.

Elected officials declared this war on health by suggesting that health care was the weapon of mass destruction of our state economies.  It wasn’t.  The real weapons were the war in Iraq and Afghanistan at a total cost of over $1 trillion (and counting), for which the federal government did not have the courage to pay, and the greed of a financial industry which fattened our burst housing bubble. 

Health care is not a foe of the state, and people who need it should not be treated as enemy combatants.

However, people with mental illness are this war’s prisoners, often jailed instead of given the care they need.  This is not an exaggeration. The three largest mental health institutions in the country are Riker’s Island, the Cook County Jail, and the Los Angeles County Jail.  The largest mental health institution in Texas is the Harris County Jail.  It has 2,400 “patients” on any given day. 

In 2011, Texas is considering cutting $1.1 billion from state mental health services.  

According to the US Bureau of Justice Statistics, in 2005, more than half of over 2 million prison and jail inmates had mental health problems.    Over 1.25 million Americans are being “treated” for mental illness in our prisons and jails.

Elderly women and children are this war’s hostages. 

The Medicaid program funds 68% of the 1.8 million nursing home beds in the U.S.  Almost a million people live their lives in these beds.

650,000 of them are women, the vast majority over 75 years old and widowed.  In his recent speech, New Jersey Governor Christie articulated a fearful future for them.  Others share his vision “to move our aged, blind, and disabled [Medicaid] recipients into modern managed care.” 

These sick, elderly women suffer the indignity of being blamed for the state budget crisis they had nothing to do with creating.  If the Governor’s vision becomes reality, they won’t just have to cope with incredible health challenges.  They will be put at the mercy of the discredited “modern managed care” denial system.

Mostly under the radar, 31 states have already implemented cuts in children’s health programs.  As representatives of the Iowa Child and Family Policy Center and Voices for America’s Children note in their recent publication, The Healthy Child Story Book, for the first time in our history children may live shorter and less healthy lives than their parents.

Meanwhile, legislative bodies in Ohio, Louisiana, and Arizona have found the time to pass laws banning animal-human hybrids.  This is no joke.  The Louisiana bill’s sponsor, State Senator Danny Martiny, said the Louisiana Conference of Catholic Bishops asked him to introduce it.    

Louisiana ranks 49^th among the states in health, ahead of only Mississippi.  While imaginary beings occupy the attention of political and religious leaders, this war will produce millions of all-too-real casualties.

Making Health Services Our Priority

Are essential health and behavioral health services a priority for our elected officials?  We got a clear picture when House leaders offered their 2011 continuing resolution and President Obama proposed his 2012 budget this past week.   

Both the continuing resolution to fund federal agencies for the current fiscal year and the President’s budget proposal for next year cut billions of dollars from the federal budget.  Some essential health services are surprising targets.

Cost Per Person to Restore Proposed Health Cuts

For a total savings of $2 billion, or just over six dollars a person, would we choose to slice what they chose to slice, or would we make health services a bigger priority?

The continuing resolution proposed to cut $1.3 billion from community health centers.  These centers are located in every state.  They provide comprehensive primary care to everyone, regardless of their ability to pay.  They employ doctors, dentists, nurses, counselors, and other health professionals. 

They treat a lot of elders, people with disabilities, and lower income working families because they accept Medicare and Medicaid in addition to private insurance.  They provide high quality services, and meet a significant consumer demand.  According to the National Association of Community Health Centers (NACHC), they served 20 million Americans in all income ranges last year. 

NACHC responded that the proposed cut would cost 3.3 million Americans their care during the next few months, worsening the health care crisis in our country and driving up costs for everyone.

The continuing resolution also proposed a $500 million cut to mental health and substance abuse services, reducing the federal Substance Abuse and Mental Health Services Administration (SAMHSA) budget from $3.7 billion to $3.2 billion.  This is a 10% reduction from actual FY2010 funding.  It affects hundreds of thousands of children and adults with serious behavioral health problems. 

Elected leaders are betting that reducing services won’t backfire and leave more people with behavioral health problems without any treatment.  However, in providing the justification for her budget request, SAMHSA Administrator Pamela Hyde noted that over 10 million Americans already have unmet mental health needs and mental illnesses cost our economy over $100 billion per year, making this at best a risky, pound-foolish bet. 

Essential health services weren’t spared by President Obama in his proposed 2012 budget either.   

The President proposed taking $133 million from prevention by eliminating funding for the Preventive Health and Health Services Block Grant and halving funding for the Healthy Environment program aimed at preventing asthma and other chronic conditions. 

Though asthma has become one of the most common chronic conditions in our country, the President’s budget seems to be throwing in the towel on asthma prevention.  In justifying the cut in his proposed budget, his budget office writes “there are currently limited proven means of asthma prevention. In asthma care, the key intervention is to increase use of inhaled corticosteroids...” This is an uncharacteristic and remarkably one-sided rationale for emphasizing treatment at the expense of – instead of in concert with – prevention.

Each state decides how to allocate the prevention dollars it receives through the Preventive Health Block Grant, choosing 265 programs of local importance to support. 

In Florida, for example, the block grant has been used for chronic disease prevention programs, water fluoridation activities, and services for victims of sexual violence.  In Connecticut, it has funded childhood lead poisoning prevention, youth violence prevention programs, older adult fall-related injury prevention, and cardiovascular disease prevention.  In Texas, it has been used for sanitation services in rural border counties, support for a trauma registry, and support for local public health services.

While the President argues that there are other prevention services available, the long-standing problem in this country is not that we fund too many prevention services, but too few.    

Funding for this block grant is already $50 million less than it was in 1994, and it should come as no surprise that our health status as a nation has declined across a number of indicators since that time. 

What if we said no to cuts to these community health centers, behavioral health services, and prevention programs?  The $2 billion this would cost would add up to approximately $6.19 per person for the year.  Spending this $6.19 would result in the retention of hundreds of prevention programs across the country, up to 11 million physician visits, and services to over 200,000 adults and children with behavioral health problems. 

Have our nation’s resources really become so scarce that we can’t afford $6.19 a person to buy all this?

Maybe so, but I suspect the real answer lies in our priorities.  They spend this much every week on the war in Afghanistan, and both the President and Congressional leaders have made Afghanistan their continuing priority.  It’s past time for some new ones.