This week on Facing the Future, Josh Gordon, Director of Health Policy at the Committee for a Responsible Federal Budget (CRFB), joined the show to discuss healthcare spending, prescription drug prices, and more. At CRFB, Gordon heads the Health Savers Initiative.Concord Coalition Chief Economist Steve Robinson joined the healthcare conversation, and later discussed his new issue brief entitled Means Testing Federal Benefits and Tax Expenditures.
The Center for Medicare and Medicaid Services (CMS), recently released their yearly report on national health expenditures. There were various short and long term trends worth evaluating and taking note of, according to Gordon. “We’re in this really unusual transition time where there are still artifacts of COVID-19 and the government’s response to COVID in this report. You also have expiring provisions in 2025 on things like Affordable Care Act subsidies, and you have the current changes because of the prescription drug negotiations and changes to Medicare part D. All these things are happening at the same time. So you have to look at enrollment issues leading to spending increases or decreases. And then you also look at inflation and healthcare inflation issues that contribute to the projections.”
When asked about some of the longer term trends of healthcare spending in the federal government, Gordon said, “It’s worth highlighting for your listeners the federal budget impact of these different levels of healthcare inflation. If healthcare inflation grows faster than the economy, you have a larger percentage of economic resources devoted to healthcare. Right now, CMS projects us going from 17% of GDP spending on healthcare up to about 20%. That is the traditional assumption that healthcare costs will continue to outpace the growth of the economy over the 2010 to 2020 period. That did not happen. And if you look at the difference between what was projected in 2010 to what actually happened with the slowdown, we saved about a trillion dollars relative to projections for that slowdown in healthcare cost growth from the 2010 to 2020 period. So these very small changes in the rate of growth of healthcare costs make a huge difference from a budgetary perspective.”
Moving on to Robinson’s latest issue brief, he provided an overview of the history of means testing and the purpose of his latest piece. “Means-testing has some great political appeal. The argument you often hear is, people like Warren Buffett, they have millions and billions of dollars and clearly they don’t need their Social Security and Medicare benefits to survive. You could reduce benefits for the rich because they don’t need them, and the government would save the money. But traditionally means-testing actually has had a slightly different meaning. Welfare programs like the SSI Program, food stamps, and Medicaid – those programs are means-tested, which means that the Government provides certain federal benefits to low income individuals. And as your income rises, those benefits are phased out or eliminated.”
“What Concord had proposed many years ago, and what I write about in my latest issue brief, is taking the means-testing concept from the welfare side of the equation and applying it at the higher end of the equation to say we could just phase out benefits for high income folks in the case of welfare programs and broader social insurance programs. You would obviously achieve some savings but one of the conclusions of my paper is that you don’t save nearly as much as you might have thought.”
Hear more on Facing the Future. Concord Coalition Executive Director Bob Bixby hosts the program each week on WKXL in Concord N.H., and it is also available via podcast. Join us as The Concord Coalition team discusses issues relating to national fiscal policy with budget experts, industry leaders, and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, Pandora, iTunes, Google Podcasts, Stitcher, or with an RSS feed. Follow Facing the Future on Facebook, and watch videos from past episodes on The Concord Coalition YouTube channel.
