It’s an eye-catching cover, that’s for sure.  How many times does one see “brand names” from The Heritage Foundation, The Brookings Institution, The Urban Institute, The American Enterprise Institute, and the The Progressive Policy Institute all on the same letterhead?  The answer to that question is “never.”  So - what did this collection of Washington DC think tank/egg head types all decide to agree on?  They came together to publish a paper that says, “Unsustainable deficits in the federal budget threaten the health and vigor of the American economy,” and, “The first step toward establishing budget responsibility is to reform the budget decision process so that the major drivers of escalating deficits - Social Security, Medicare and Medicaid - are no longer on auto pilot.”

The thrust of the article - which is available at either www.brookings.edu or www.heritage.org - is pretty simple:  the Baby Boomers haven’t even started to turn 65 yet, but the federal government is already operating - with or without Iraq - with an annual operating deficit.  Toss in the compound growth created  by aging Baby Boomers, rising health care costs, and a longer lifespan for these older Americans, and the financial result for Medicare, Medicaid, Social Security - and the rest of the federal budget - is disastrous.

Their primary solution calls for establishing defined, explicit, sustainable (meaning 3-5% annual growth, I assume) long-term (30 years) budgets for Medicare, Medicaid and Social Security - and using triggers that automatically cut recipient benefits and/or payments to providers, or raise taxes to fund any upward deviation against the long-term plan.  “Our leaders have been avoiding this enormous issue - largely because it requires that the public be told that not all past promises can be met.  Our group has come together, from diverse points on the political spectrum, to sound an alarm - if America is to remain strong, such evasion must end…If present trends continue, the nation’s deficit will reach unmanageable proportions, other vital public services will be further squeezed, and/or taxes will have to rise continuously to levels that could restrict economic growth.”

They go on to say that while they are not disparaging the purposes or accomplishments of any of these programs, they believe the time has come to face up to the fact that they haven’t been modernized or re-structured in a way that makes it possible for them to satisfactorily serve an enormous spike in our aged/eligible population.  The authors also trash many of the solutions to these issues one normally reads about - calling them “myths” that won’t do the job.

The changes they suggest to reduce the deficit - combinations of eligilibility adjustments, benefit changes, provider payment reductions, and the like - have all been discussed and, for the most part, either abandoned or overturned in recent years by Congress, illustrating the political difficulty these options will face.  But they close the paper by saying that, “Delaying hard decisions is both risky and irresponsible toward those who come after us…Meeting this challenge requires establishing new ways of making spending and tax decisions.  The newly-elected President and Congress must work together across party lines to achieve these ends.”

This also means recognizing - and accepting - that the political and financial benefits of making nay of these decisions now will accrue to other political leaders many years from now.  Policymakers who put the long term gain over the short term pain will receive little love from the folks back home.  This will be difficult, to put it mildly - and in the end, it will affect everyone and anyone who has anything to do with health care in this country.

Posted by Charlie Baker in Health Care Costs