HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Wednesday, February 16, 2005

GAO Proposes Reexamination of "the Base of the Federal Government"

The GAO has published a new report that proposes re-thinking the federal government's role in 12 areas of national life, including (surprise) health care: "21st Century Challenges: Reexamining the Base of the Federal Government," GAO-05-325SP (Feb. 2005). 

The GAO begins with an observation already made by many observers:

[T]he fiscal policies in place today will—absent unprecedented changes in tax and/or spending policies—result in large, escalating, and persistent deficits that are economically unsustainable over the long term. This conclusion is based on the results of GAO’s long-term budget model, which the agency has used since 1992. Over the long term, the nation’s growing fiscal imbalance stems primarily from the aging of the population and rising health care costs. These trends are compounded by the presence of near-term deficits arising from new discretionary and mandatory spending as well as lower revenues as a share of the economy. Absent significant changes on the spending and/or revenue sides of the budget, these long term deficits will encumber a growing share of federal resources and test the capacity of current and future generations to afford both today’s and tomorrow’s commitments. Continuing on this unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living and ultimately our national security. Addressing the nation’s long-term fiscal imbalances constitutes a major transformational challenge that may take a generation to resolve.

Having identified health care expenditures as the primary driver of the unsustainable long-term deficits, it should come as no surprise that the GAO has a very long list of health care commitments that it proposes should be reviewed and reconsidered.  Medicare, Medicaid, the VA system, and DOD are the primary areas of concern:

  • The impact that federal health care outlays have on the federal budget cannot be overstated. Medicare and Medicaid—entitlement programs for which federal spending is mandatory—are consuming increasing shares of the federal budget and shrinking the government's flexibility to pay for other federal obligations, such as national and homeland security, environmental cleanup, and disaster assistance. Today, Medicare and Medicaid's combined share of the federal budget—at 20 percent—has more than doubled in the last 2 decades. Moveover, long-term care for chronic illness will be a growing challenge as the aged population continues to grow. In addition, health care expenditures for the Departments of Defense (DOD) and Veterans Affairs (VA) are increasing. DOD’s health care spending has gone from about $12 billion in 1990 to about $26 billion in 2003—in part, to meet additional demand resulting from program eligibility expansions for military retirees, reservists, and the dependents of those 2 groups and for the increased needs of active duty personnel involved in conflicts in Iraq, Bosnia, and Afghanistan. VA’s expenditures have also grown—from about $12 billion in 1990 to about $24 billion in 2003—as an increasing number of veterans look to the VA to supply their health care needs.  THEREFORE:
  • How can we make our current Medicare and Medicaid programs sustainable? For example, should the eligibility requirements (e.g., age, income requirements) for these programs be modified?  How can the federal government best leverage its purchasing power for health care products and services?  What options are there for rethinking the federal, state, and private insurance roles in financing long-term care? How can the benefits, eligibility, and health delivery systems of VA and DOD be optimally structured to ensure quality and efficiency? For example, should changes in eligibility and the benefit structure of VA and the military health system be considered? With billions of federal dollars going to DOD and VA for health care, what options are available to reduce spending growth through increased collaboration in, and integration of, health care delivery between those two agencies?

There are many, many more questions sprinkle throughout the 6 pages devoted to health care issues, including the continued use of health care tax incentives, how to leverage technology to increase access and improve quality without sacrificing privacy interests, cost-effective responses to emerging infectious diseases, and whether to continue America's central role in the WHO's efforts to contain infectious diseases such as SARS and HIV/AIDS.

If this document is used as it is intended - to provide a blueprint for the federal government's re-examination of its role in promoting health at home and abroad - these six pages are going to be required reading for us all.  [tm]

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