The Federal Budget & Rising Health Care Costs

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Health care expenditures are the largest portion of the federal budget and are projected to grow faster than all other categories, except for interest on the debt. This rise is driven by escalating health care costs, particularly prescription drug costs, and the aging of the population.

Learn more about federal spending on health programs and services in light of ongoing Congressional discussions on a budget compromise, ahead of the September 30th deadline. In this webinar, expert speakers also discussed policy and legislative options, and market solutions to make health care more affordable without reducing quality.

Speakers discussed:

  • The federal budget process, including the impact of the growing federal budget deficit, and the looming insolvency of the Medicare Trust Fund
  • Mandatory and discretionary funding for health programs and options for controlling increasing expenditures
  • A health plan's initiatives to make health care more affordable by addressing the social, economic, and environmental factors that impact health and health care costs


Good afternoon. I'm Kathryn Santoro, Director of Programming at the National Institute for Health Care Management Foundation. On behalf of NIHCM, thank you for joining us today for this important discussion on health care and the federal budget.


Rising health care costs, particularly prescription drug costs, and the aging of the population, are driving up federal spending on health care and threatening the nation's fiscal future.


In 2021, the United States spent four point three trillion, or 18% of the national economy on health care. Yet, our health outcomes are no better than other developed countries.


Today, we will hear from a prestigious panel of experts to learn more about federal spending on house programs and market solutions that can help forge a roadmap to more affordable health care.


Before we hear from them, I want to thank NIHCM president and CEO, Nancy Chockley and the NIHCM team, who helped to convene today's event.


You can find biographical information for our speakers along with today's agenda and copies of their slides on our website.


Closed captioning information for today's event can also be found on our website, as well as in the webinar chat.


We also invite you to join the conversation on Twitter using the hashtag affordability roadmap.


Am now pleased to introduce our first speaker, Maya Mckenna's.


Maia serves as the President of the Bipartisan Committee for a Responsible Federal Budget.


As a leading budget expert and a political independent, she has worked closely with members of both parties. And serves as a trusted resource on Capitol Hill maia testifies. regularly before Congress has published broadly across numerous outlets and appears regularly as a commentator on television.


We're so honored to have her with us today to help us understand the current state of the nation's fiscal health.


Wonderful. Thank you so much. Great to be with everybody today. Thanks for joining. And thanks for having me on the panel.


I'm basically going to set the stage on the overall fiscal picture, which health care is a huge component of, and then, turn it over to folks who are going to go dig much deeper into the actual healthcare issues. So, let me just start with the fact, as you can tell from the title of this presentation, Deficits, Deficits Everywhere, the fiscal pleat picture is bleak. We are not in a situation where we are headed towards any kind of a sustainable fiscal situation in the foreseeable future. And many changes are going to have to take place, in order to, to set the fiscal health of the country back on track. That's going to include healthcare reforms, and that's going to include a lot of other reforms.


OK, so first slide, please.


one of the first things that we knew was, that there are times when you should borrow, and there are times when you should not borrow. So, a group like ours, the Bipartisan Committee for a Responsible Federal Budget, isn't at all against using debt.


It's against using debt for the wrong reasons, or for not not economic reasons. So there are many times when we have to for Emergencies barro.


Obviously, the coven was one of those times, and Barile, we did.


It was the right thing to do. We borrowed upwards of five to $6000 billion. And that kept the economy from tanking. Basically, we are slamming the economy shut.


But once your economy is strong and recovered, again, you don't want to be borrowing nearly as much. But as you can see from this picture, we still are on track and we have an upward trajectory that is going to continue to grow. The deficit is going to be continuing to grow through these years.


Based on structural issues, so it's not that we're borrowing for emergencies. It's that we have a situation where our healthcare costs are growing.


Our retirement costs are growing. Interest on the national debt is growing, and revenues are not coming anywhere close to keeping up with those spending commitments.


It's interesting if you look at the numbers for this year, we're actually where It's in 2023, where it's saying one point five trillion dollars. We're going to see a deficit that's larger than that. We now know that, and if you take some accounting gimmicks out not gimmicks, the way that we scored student debt forgiveness, it's actually going to have grown almost double from 50 billion to 22, which would be the number not looking at the student data facts, which the Supreme Court struck down into, About 100 billion 23. The point is that we are seeing very, very large, gross growth in our budget deficits. We're going to continue to see that for years going forward.


Next slide, please.


Just like the deficit is the amount that you borrow each year and it's problematic. This ends up contributing to growing levels of national debt.


Now, the national debt right now, which is just under 100% of GDP, is actually approaching the highest level that it's ever been.


The last time, the record of our national debt was 106%, and it was right after World War II, which makes sense.


Bought a World War. And we actually brought that debt as a share of GDP back down very quickly. In the subsequent years, through economic growth, cutting spending revenues went up. And so we came back down to much more sustainable levels.


Historically, our debt has been around 50% of GDP. So we're now twice that level.


And within just a few years, we're going to break that level that we hit right after World War II, with the dubious distinction of that we're doing it, without having been through a World War.


Again, this comes from not just borrowing during emergencies. We borrowed a lot during Coburn. We borrowed a lot during the Great Recession, as we should have, but we also are now into a period where we are routinely borrowing significant amounts in-between those emergencies when the economy is strong and there's no economic justification for all of that borrowing.


If you look, then, going forward, you can see that the growth of the debt is going to increase even more. Many of these, of course, long-term projections are, are difficult to make. We don't know what the underlying economic conditions will be, but this assumes that there is not a big recession, which they're quite possibly good. It assumes that interest rates don't go up a particularly great, much higher than they already are.


And that could happen Axiom assumes that there aren't other emergencies which gentleman from the past years there almost certainly will be.


So it's quite likely that these overall debt to GDP numbers, I'm sorry, too dark, are actually underestimating what the overall situation could look like.


Let's go onto the next slide, please.


Not just deficits and debt are not the only problematic things, but we also are facing major trust fund insolvencies in some of our biggest programs. Most programs don't have associated trust funds The ones that do are financed in a way, or benefits are paid out from the trust fund. We have a highway trust fund that is going to be insolvent in 2028.


We have Medicare Part A hospital insurance going to be insolvent in 2031. If we don't make changes, you have provider or benefit cuts of over 10% across the board.


And most troubling probably is the Social Security system facing Insolvency in 2033.


When today's 56-year-olds are starting to retire, many young retirees will just be older retirees. What will happen then?


Across the board, 23% of Benefit Cuts affect everybody, regardless of need. To me, this one, not just because I wrote my graduate thesis a long time ago about how to fix Social Security. But this one is just unconscionable. We've known about these problems for so long.


We've known that we don't have the money to pay for all the promised benefits. And the sooner that we had made changes, and the window of really making the smartest changes has already shut, but the sooner you make changes, the more able you are to pass them. to spread them out.


Gradually, over time, and truly protect people who depend on the programs or aren't in a situation to have their payroll taxes raised. But, because we've waited so long, we're really going to be stuck making some very difficult choices. When it comes to how to fix the problem that's true of all of these. When you know you're facing insolvency, you should take steps immediately. There's actually legislation that I think is great legislation out there.


Something called the trust act.


It is bipartisan and bicameral which is very unusual. The code heads in the Senate are Senator Mansion and Senator Romney, but it basically says, If there's a trust fund that was going to be insolvent within the next 15 years, you should appoint a special a special task force that will focus on what you might do to fix those programs.


And so that would be 15 years in advance, longer would even be better, but it's sort of in my mind, nothing to object to that. It's just saying, if you know there's a problem, you should start thinking about it and put some energy and data, into fixing, that, there's no parameters on what you can or can't do.


For some reason, I will never understand why you have various organizations opposing, trying to fix programs once they're becoming insolvent, in my mind, as long as it's an unbiased structural approach saying we've got to do something instead of nothing, that's just a no-brainer what Congress should be doing. So I favor looking at these trust funds as quickly as possible. Because the longer we wait, the more difficult those solutions become.


Until the next slide, please.


Now, starting to talk a little bit about some of these issues. The big issue and everybody knows that our budget has got discretionary spending divided between domestic discretion in defense. But the big areas of spending are in our mandatory spending and within their Social Security.


Health care programs and interest payments are the biggest areas of spending. And they are clearly where the biggest areas of growth are. So over the next decade, nominal spending growth is explained.


These areas, explain 87% of all spending growth, hugely driven by retirement, aging, retirement, health care. And now interest payments, are contributing to this much more than they were before. because we borrowed so much over the past years, including when times were good. And now with interest rates going up, that means interest payments are growing very, very quickly.


Next slide, please.


The other part of the budget Ledger, of course, is revenues. And over time, our revenues are predicted to grow to pass their historical average. You can see where they are down at 16.8 right now, they're going to be growing, looking forward. But right now, revenues are pretty low. We actually had a boom right after coven, because the Stock Market had done so well, including crypto. And there was a higher level of revenues. But this is all normalizing now.


Revenues do grow on their own because of tax code work, so they continue to grow, But spending will grow much, much more quickly.


Next slide, please.


So, when you have a debt situation like this, it starts to put huge pressure on interest payments, and right now, interest is the single, fastest-growing part of the budget. For quite some time, it was healthcare, but you now have interest in going faster than all other parts of the budget.


We, right now, spend more on interest payments.


Then we spend on all spending for children at the federal, through the federal government.


Within four years, we will be spending more on interest payments than we do on national defense.


It is just clearly, not a, could use of those resources that could be spent, whether you're a small government cut taxes, or a big government expanding government programs, Interest payments have the first claim on the overall federal budget, and they are going to be claiming an increasing amount as time goes on.


Next slide, please.


This is, interestingly, really It's a policy problem, but we know how to fix these things. Unfortunately, we've waited so long, that all the fixes have become much more difficult.


There are a couple of no-brainers everything has to be on the table. Anybody who says, I promised not to touch taxes, doesn't understand how much spending cuts it would take. It's just not possible or credible to do this on the spending side alone.


Anybody who says, I promise not to touch our biggest entitlement programs, Social Security and Medicare, you can't get this cut this budget structurally balanced without addressing the problems and as we just went over due to the insolvency challenges, you have to fix them so that they, the programs can be structurally sound and we can be promising things that we will actually keep.


But instead, if you look at this slide, I find this so depressing, it really looks at all the times that we have borrowed versus all of the times that we have saved. And you can see there is a big propensity towards borrowing.


We're actually going to launch something in a month or two, which is just a debt thermometer, which is going to check every year how much we oversaw the debt increasing. So how many new policies were added in 10-year numbers?


What they added to the national debt, I think they'll be really helpful and interesting to track, because I'm not sure Lawmakers' understand. how many of the legislation, the pieces of legislation that they passed all added to the debt.


By the way, no judgment on the policies. We're all gonna have different policy preferences. I will say, a number of these policies are things that I found very important spending, or investments to make. I thought tax reform was a really important idea, but I wouldn't have done those tax cuts. And I thought there were some really important spending ideas. But I wouldn't have offset the costs. So none of this is about the judgement of the quality of the policy. It's whether you choose to pay for it or not. And as you can see from here, we almost never choose to pay for our policies fully and increase, and, in fact, reduce bound.


We tend to debt, debt, and finance the vast majority of the time.


Next slide, please.


This is just a little precursor. We're going to talk about this more with the next do great panelists, but the healthcare care costs are a major driver of deficits. We know they are coming down. This is terrific news. We all just saw that news and a very powerful article on it, but they are still growing. They're still projected to grow in a way that is faster.


Then the economy, and anything that's growing faster than the economy is thereby squeezing out other things. So, we'll take a deeper dive on that, just a moment. And then, last slide, please.


I just want to end with, because we'll be hearing a lot, I hope, about ways to reduce the deficit.


But I also just want to make sure we have a realistic sense of what's doable because sometimes people talk about balancing the budget.


I was talking with a member of Congress.


If they go on to balance the budget in five years, it's, It's not going to happen. Like, we are so structurally out of balance right now. I think we need to be reasonable in what fiscal targets we go after. So, as I think about that, we think about the presidential campaign and what people might work on.


It seems that may be, at this point, merely stabilizing the debt at or below 100% of GDP, which would require just under $6000 billion in savings over the next decade.


Bobby's about the most we could hope to do.


I mean, you gotta keep in mind that, you know, the debt ceiling deal, that we just had saved one to $2000 billion. That was only looking in a small portion of the budget, But it was the easiest portion of that was just spending caps. No one had to be particular about what policies they were enacting.


This stuff is hard. Raising taxes and cutting. Spending is hard.


We have to do it, but if you put a target out there that's so excessive, double-digit, double digits, I just think politically it's not viable.


So I think small or medium are actually pretty big steps, but big steps, but not huge steps are more likely to be politically successful. And I will end by just saying, as I look at the fiscal situation, we're in now.


We're entering a Presidential race, where I'm worried there'll be a competition between candidates to see who can do the least in fixing some of these big structural problems in terms of entitlements, and the need for taxes.


I think it's probably time to think about a fiscal commission like we had 10 years ago with Simpson Bowles. and granted, the fiscal situation one wasn't as bad. Then the political situation was better and it still wasn't able to be enacted. But I think probably the best chance of hope is a fiscal commission, where members and experts are really able to steep themselves in the issue, learn about the problems, learn about the values of their people from other parties and different perspectives, and try to come up with a compromise plan. That is helpful and insulating some of the sitting members of Congress from the tough choices that we absolutely know we need to confront, But right now, we haven't seen the political will to do so.


So with that, I will turn it over to the next panelists. Thank you so much.


Thank you, Maya, for helping us understand why it's so imperative that we address rising healthcare costs, given the trajectory that you showed with health spending and interest crowding out other important public and private priorities. Next, we will hear from ... Glenn Bell a Senior Vice President at the Bipartisan Policy Center, helping to direct and manage fiscal health and economic policy analysis. Throughout his career at Bell has completed 33 years of Federal Government service, including 25 years in the US. Senate staff, He is also an affiliate professor of public policy at George Mason University. We're so grateful. He is with us today to share how health care programs and services fit into overall Federal spending.


Oh, you're on mute?


Me, OK.


I'm unmuted. It says, now. OK, now, Yeah, OK, thank you. I apologize for that.


Thank you.


Thank you for the Institute for the invitation to be with you this afternoon to talk about this issue of the federal budget and, uh, health care costs.


It's always a difficult task act to follow. But I'll, and there may be a little bit of duplication here, we'll leave it to the next panelists to really help us out on thinking about how to solve some of these problems that we're going to outline. First of all, the Bipartisan Policy Center, you should know, was established about 15 years ago by for form majority leaders of the United States Senate.


The late Senator, Bob Dole, and the late Senator Howard Baker on the Republican side. Senator George Mitchell, and Senator Tom ..., on the Democratic side, of former majority leader's United States Senate and all who came together to find see if there were solutions, bipartisan solutions to the challenges that we face. I've asked to focus my comments on health care expenditures nationally, and then more specifically with a framework around the current federal budget. three topics I want to try to cover with you briefly. First of all, we talked a little bit about this already, national health expenditures, and the recent projected growth there. I want to dig down hashtag two on makeup of the federal health care spending, particularly as it relates to what's referred to as mandatory. And discretionary, my, touched on that. And more importantly, here, what's the impact of the Fiscal Responsibility Act?


This means as we come to the end of the fiscal year here, in the next 12, to 15 working days, facing a potential government, shutdown, it's going to be a lot of numbers. So, bear with me.


First of all, sign up the first slide, please.


The first slide is here. I just want kinda kinda exclamation mark on what ... My, my numbers are going down instead of up. But the same concept here. I just want to highlight the fact that the red line shows the projected deficit prior to Coburn. and Ian and you see, on the blue line, when we uncovered hit yesterday, we had a major increase in the deficit as was expected, as my ascent understandably. The Federal Government had to intervene, but, I want, I want to point out here is that blue line coming ... Where we are today is still even less than the deficit is even greater than, it was pretty covert going forward. It, is just to emphasize the fact. But, as indicated we are on an increasing path. here. Next slide, please.


In terms of just the national health care expenditure, gross over the last few years.


And if you look at 2020 there, and not the shaded part there, that's government spending, and we had a major increase in spending 10.3% increase in, spending the hash marks are, are out of pocket expenditures. Third-party expenditures do not include them And what you see is we went into 20 to 21 falling Kovac. We actually had a reduction in the rate of growth in spending, and most of that had to do with the fact that all of the covert spending pandemic spending actually declined over that period of time. But as we go out into the future, here, you can see that we're kind of, We're on a path that, on a national health care expenditures growing, in, that five to 6% range going all the way out to the future. The important point, as we come back. Next slide, please.


What I wanted to take this national health care expenditure and highlight, and most of you are fair, I'm sure.


Well, familiar with most of these numbers, have already highlighted, which spending, at least in 20 20, and the fiscal year that we're in, right now, or that, excuse, I think his calendar year 20, 23, we're spending about four point seven trillion dollars all across the board. Everything federal, state, private, and important.


The first point I'd like to make about this chart here is that it's important to remind ourselves that if you add up the Federal and State here, what you'll find is that this is truly, OK.




And a private-sector endeavor.


Basically, about 50% of our national health care expenditures are our federal, government public expenditures, and the other 50% are in the private sector.


And so, it's clearly a joint effort here in terms of what we're talking about when we're talking about controlling spending going forward, And while I don't know about this or all projections, of course, I'm struck by the fact that as we go up to the near future Here, I circled there the rate of growth in spending. It seems to be a little bit more at the state level and we can come back to that.


And Troy Falling panelists can maybe talk about it, but you see they're also the three major components of federal national healthcare spending, hospitals, physicians, and drugs. And they make up about 24 of all federal spending. So if you're going to focus on controlling costs, let's be honest. You have to focus on at least those particular three major areas, and here, again, I come back at small percentages, rates of growth, that make a big difference.


And what you see there are hospitals, interestingly enough, at least in the projections the, from the Center for Medicare and Medical Management, it's not prescription drugs.


It's hospital expenditures and the per capita expenditures across the board here.


Growing at about 4.5, 4.7% going forward. That's the national picture. Let's go to the next slide, please.


Maya touched upon this one, I look at all overall federal spending, and I'll go over it real quickly here. Basically, it's Medicare, and Medicaid. There are thousands of accounts in the federal budget. You can press your friends and neighbors and say, basically, put all federal budget on one hand. It's Medicare, Medicaid, Social Security.


And just paying the interest on our public debt, which, represents about 14% by the year, 20, 33, and growing, and add in defense. You knew all that, and those, those 1 to 5 boxes there, you can that's basically the total amount of revenues that we can take in. So, what you end up looking at is that little blue box to the right.


And I'm going to come back to this very shortly, and that is, what we call the domestic discretionary programs that make up about 12% of all federal spending. I'm going to focus on that in just a minute. So, next slide, please.


If we look at the issues associated with going out these are projections admittedly. But, for Medicare, over the next decade, we're going to see from 23 to 33 and we're seeing a growth in the neighborhood of about 7.6, the offset by our offsetting receipts. That comes into the tax, is a premium tax, is that people pay. Medicaid is not the not the real dilemma here.


It's 4%, but again, I keep coming back to the fact that it's Medicare as a major grower factor, in all total Medicaid total healthcare programs, then major health care programs, what we call the mandatory programs have Cut Playa talked about, are growing at about 6%.


Next slide, please.


This, this slide is trying to start to address one of these questions that came up. earlier, Maya mentioned, in terms of the New York Times article about the drop off and spending.


If you look at Medicare average annual spending, it has come down in 2022, is about 3.6%, the, the difference is here tonight, I can't see the legend on this chart.


But the legend here is that the shaded part is per beneficiary, the kinda the green part is just population growth.


And what you see here is that we had a major reduction in per beneficiary cost in 20 20, during the, during the pandemic.


It came back in 20 21 and now stabilizing at a roundabout As you can see, 3.1 going to 6%.


It is the per beneficiary expenditures and that we should be focusing on because there's very little we can do about the fact that enrollment in population is going to continue to grow at 2% branch, that's Medicare, if we go to Medicaid, the next slide.


Same, same legend, population growth was exceedingly high, of course during a pandemic 4.8 and in 20 21.


Large increase in, and participation and expansion, coverage and now, come off of that, of course, by the shut down.


The end of the declaration of the pandemic and, and so, we see that at least on Medicare, which bounces all over the place here, in 20 24, you see a real drop.


And participation in Medicaid, but per beneficiary cost are in that 7, 7 to 5% range, going out to the future.


Now, let's turn to the next slide, which gets to a little bit, a little bit hope everybody can see. Unfortunately, you can't see the years here.


What I am looking at is the, what is referred to as this differentiation between mandatory spending and discretionary spending healthcare, we've gone back and pulled out the various charts or various accounts in the Federal budget, and I've added it all up, and what you see is, mostly the growth. And spending is, has been, as, has already been emphasized the number of times already.


That by the year, the year that we're in right now and 2023, total federal spending for health care programs are about 1.8, $1000 billion.


But almost all of that, zero point six of it, is all in the area of the mandatory programs that being basically Medicare and Medicaid. And that might be a good Next slide, please, for me, too.


Highlight the, this is as a percentage of total health care spending. And once again, you can see on the red line here represents what we call the discretionary spending. Which we can talk about and are maybe in our Q&A period. But it's important to note, that you see the little bump out there, which you, in year 20 in the pandemic ears, but it said that the rate of growth is still in the mandatory as a percentage of GDP who were up above 60% of total spending. But most of that again, of course, in that mandatory. So, let's look at the breakdown of the next chart, please.


The overall, uh, spending on those mandatory programs of that one point six trillion. It's basically is, my, has already indicated. It's Medicare and Medicaid that makes up about 87%. The other programs, such as children's health programs, insurance programs, chip, and all, They make up such a small part.


So if you're focusing on spending, you're going to have to focus on those programs on the mandatory side.


Next chart, please.


But interestingly enough, for that 230, some billion dollars we spend annually in 20 this year in 20 23, where is that?


Discretionary spending? that spending, which is subject to annual appropriations and they'll be subject to potential shut down here in a few weeks if we do not pass appropriation bills, nope, dead almost 50, 50% of it is in one area and that is veteran's health. That's a discretionary program, subject to annual appropriations.


The other, the other area here is, it's a green area, I don't, you don't see the ledger on it, the Public Health and Social Emergency Services is about to somewhere in the neighborhood of about twelve point two billion or by 5%. And then, you can see the breakdown, CDC, global health, Administrative costs, HRSA, FDA.


These are all critical, healthcare institutions and agencies. But, yes, even in the area of discretionary spending, most of it falls within the area of veterans' hospitals and medical care.


Let me shift now to the yeah, issue, danger, if you like, I guess, and that's the next slide, I hope we can. Yes. Good.


What does chart shows? Here?


It's a little messy and bear with me, Um, We had an agreement back in the June, what we call the Fiscal Responsibility Act, F R A, Here, and what this chart shows you, it's important as it relates to the deliberations that are going on here in the next couple of weeks, as to the funding levels.


What you see here, we have an agreement that, on what that does, That, now, we're talking about the discretionary budget, we're talking about, the mandatory programs are only talking about those programs that I had in the discretionary budget total. Discretionary.


Not just healthcare, but all discretionary sherbrooke, that is defense and seed for fiscal year 24, I circled it there, that the agreement was, that defense would be 886 billion.


For non defense, dropped down to the lower panel.


For fiscal year 24, B, $704 billion, and comparing those two numbers to what was actually funded for fiscal, would have been what we call the baseline, what would have been funded without the agreement.


You can see that there would have been a slight, very slight increase for defense by today, but for, for non defense and those particular programs, I'm running out of time here.


I apologize. Just a couple of slides left. What this shows is that for that, this discretionary number, non defense discretionary, it is a reduction of about $112 billion from what would have been funded if we just kept this big bar on automatic pilot.




That, and that, quite frankly, is what the appropriations Committees are trying to do, is to put together it, particularly in the Senate.


Bills that meet those caps.


Those specific number, 704 and 886, and particularly for the Senate, and if however, we do not get the appropriation bills done by December 31st, then come next April, end of April, there will be what we call, 1% cut and so there'll be further. Just, this gets very messy, and I apologize for it.


But interestingly enough, if we did not get our bills done, and we fall back to a 1% cut from the previous year's funding, which was 2023.


And there's a slight increase in spending for discretionary.


In the interest of time, let me go to the next slide real quickly.


Darn it. We're not going to be able to see the bottom line here. But the point here is that the difference between that and the far left column, the appropriation committees have been meeting in the Senate are moving very fast, and in a bipartisan manner, not so in the house.


And what they have is they are meeting that target of one It's about zero point six trillion dollars for discretionary spending, and 24 you can see about 200, 195 billion of that isn't that important committee, called Labor, Health and Human Services, However, in the house, the House has chosen to.


It's consider it a floor, as the Senate has the agreement, and spring, but I guess, I would call it, assuming we can go below it according to the House.


And so, their number, if he could see in the circle, that subcommittee is 147.


That's a, that's a $48 billion difference between the House and Senate, going forward overall, adding it all up, It's about a $120 billion difference between the House and Senate.


This is what they're arguing about, this is why it's going to be difficult to get an agreement on here.


And I, I hope that we can avoid that, and we can talk a little bit more about that as the last chart, I think, is something that is the same chart that, in some ways it Maya pointed out, and that is that by Social Security Trust Fund, very dangerous. Exhaust deplete 2033.


Well, as the Medicare, deplete 31. and I just would point out if anybody listeners online here are under the age of the and plan to take early retirement.


If you're under the age of 52, then be prepared.


If we do not, did not address this issue both on Social Security and Medicare, in terms of the trust fund. And then we're looking at, if you're under the age of 52, you're looking at about a 20% reduction in what you thought you were going to get Social Security like for. So, with that, I'll put up the last slide and turn it over to our next speaker.


Thanks, Bell and I think we could see our full slides, but there we also have them available as handouts in case anyone could not see all the numbers, but thank you for sharing the impact of rising health care spending and helping us understand the current appropriations debate as well.


Next, we will move into a discussion on solutions to address the drivers of rising health care costs.


We'd like to use our remaining time to engage in a Q&A session With our audience, our panelists will come back on video and off of mute, and to our audience, you can keep submitting questions, and we'll get to as many as we can.


I'll start with question, and this can be for any of any of the speakers. Are there any emerging trends in healthcare that concern now in terms of contributing to costs, whether it's new technology, pharmaceuticals? We had a few questions about the new obesity drugs, and while Medicare is not currently required to cover them, there are expensive drugs in the pipeline. that could also impact Medicare and going forward.


Got Maia, I'll jump in and just build off what exactly what you said. But, yes, I think we are likely with, with AI and other forms of technological research, about to enter an era of unimaginable progress and innovation in the drug sector.


That is going to mean many more drugs that people rightfully want to have access to, but some, some, what, because nobody quite makes the budgeting understands budgeting about it, they will want access, but they won't want to pay for it.


Whether that's in higher insurance or More premiums for Medicare, there are other programs.


And so there'll be a huge demand from a very powerful group in this country, which is seniors, saying, we want these drugs without much of a sense for how we should pay for them.


Obviously, nothing is free. So we're going to have to figure out how we will be able to access all what things, which are going to be life saving life, and enhancing and wonderful.


And then there's a sort of twisted irony in all of this.


But the longer that we live, which is excellent news, the more expensive our entitlement programs become. I remember once when I was young, I read this report, is that actually smoking saves money because people who smoke don't live longer.


This is back in the days when a lot of people smoke. I thought, well, that's sort of twisted. But it's true, so as we're able to extend life expectancy, which I believe we will be able to, we're going to have to dramatically rethink what that means for work. What that means for health and what that means for what we're willing to pay, and how we budget, where our national priorities are. And keep in mind, we are already putting so much money in healthcare. It's shortchanging these very important areas of investment, whether it's research and development or infrastructure, I think most importantly, human capital.


Just to add to my, as estimates are that if we were to at least 10% of the Medicare population was to qualify for any of the obesity drugs, as have Baker wake up, the Dutch estimates have been made it close to $30 billion a year. And at an all-time are sent to another anywhere up to 19 to $20 billion a year.


So, this is going to be a challenge will make for great technology. Wonderful, But whether or not the benefits are there, long term, much at another situation, but it will have cost upfront.




We had another question, and maybe we could start. Let's let's try on this, because I kind of tease off of your presentation. Can you talk a little bit more about that focus on prevention, and also ties in to start on the life expectancy? Are we are we doing better with preventive care?


What, what are you are focusing on in terms of prevention?


A lot of a lot of the quality metrics that you see nationally, for ACOs, focus on things like, like, screen, so it could be breast cancer screening. It could be colonoscopies, like I mentioned. Also, like, when you're looking at A one C levels in your attributed patients. Making sure that that we are keeping that under control, which ties into drug spending, but I do feel like it's a good measure.


I think, for us, in the, in the rationale, is why we have preventive metrics in our ACO. Quality contracts is that we believe in primary care, we believe in prevention.


And we know that long term, identifying opportunities to improve health early helps, It helps curb costs.


It's a, it's more of a long-term play, and so, that's something that I think is going to continue in value based care.


We want more people to be aligned with primary care physicians. We want more annual wellness checks. We want more preventive screening.


And these are all all great things, um, which can help life expectancy, but we have to be eyes wide open to the ripple effect.


Kathryn, can I just add to that comment? And at the bottom line is like going back to the federal budget, we are a sickness oriented to budget.


And we're not at prevention oriented and that's the discretionary numbers are so small. If we achieve the things that Troy was talking about, we need to refocus that from a sickness to a prevention type oriented budget, and that's that's gonna be tough.


Question for for Maya.


You mentioned the significant role of hospitals and health care costs, and the audience member is just wondering.


Ideas about policies, going forward, tech can strain health care prices and costs.


I don't think I did mention that.


So, I'm not sure, but I do think that one of the important policies that we can have as equalizing, the costs, no matter where one gets procedure so equalizing costs, whether it's in hospitals or in other other patient services area. So, there's a decent amount of savings we have in that, and luckily, there's bipartisan support.


Think I mentioned it and I'm one of the factors that was involved in this and I would focus on, is hospital consolidation? I get myself in trouble with this. But, the consolidation aspect out there is one that, I think drives up cost. And we have to sharpen focus. A lot more on whether or not this consolidation of the large systems is actually, reducing costs are increasing costs.


Well, we are out of time.


So, I do want to thank all of our panelists for being with us today, sharing your valuable work and perspective. I think we all learned a lot. And we'll look forward to continuing to follow the work of all of your organizations. Thank you to our audience for joining this discussion. We hope that you'll take a moment to complete a brief survey that will open on your screen after the Savannah.


And we also hope that you'll check our other resources available on ... website, and stay tuned for additional webinars this fall, and our affordability Roadmap series. Thank you all, again, so much for joining us today.




Maya MacGuineas, MPP

Committee for a Responsible Federal Budget

G. William Hoagland, MS

Bipartisan Policy Center

Troy Smith, MBA

Blue Cross and Blue Shield of North Carolina

Closed captioning was available for this event.


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