October 9, 2009
By Stuart M. Butler, Ph.D.
A classic "Saturday Night Live" skit sums up much of what's
wrong with the financing part of health care reform and gives a
clue how to fix it.
At a typical kitchen table, debt-burdened Steve Martin and Amy
Poehler are trying to figure out their finances. Suddenly, a
salesman shows up with the solution: a book titled "Don't Buy Stuff
You Cannot Afford." Its message: Save money first, then buy
This concept totally confuses dim-bulb husband Martin.
Congress evidently has not seen the skit. Doubtless it would
find the book's premise just as confusing as Mr. Martin found it.
After all, Congress for years has been piling up acredit card debt
of more than $50 trillion to "pay" for the entitlement benefit
promises it has made. It has run up a $37 trillion debt for
Medicare alone. It's debt that taxpayers will have to pay off in
the future, and it works out to $185,000 for every man, woman and
child in the United States today.
Congress is currently pondering how to afford a huge new health
program for the uninsured that will cost about $1 trillion in just
the next 10 years. Its cost -- and the resultant debt -- will only
accelerate after that.
Some congressional leaders want to pay for much of the new
entitlement the old fashioned way -- simply by ringing up more
debt. They would add to the nationalcredit card the way Mr. Martin
would understand. And they would cover much of the rest by raising
But wait! Maybe some of our leaders, including President Obama,
have seen the skit after all. If they can't get Americans to accept
enough new taxes, Mr. Obama pledges to pay for "every dime" of the
rest with savings from the Medicare program.
Yet why Medicare? That program is already deep in a financial
hole. "Paying for" new coverage partly with Medicare savings is
like reducing your MasterCard payments so you can cover the first
few minimum payments on your new Visa card and head off to
There should be one cardinal principle in the health reform
debate: Any savings from Medicare should be used only to sustain
that program and reduce the debt it has already racked up for
future generations. Not one dime should go to cross-subsidizing a
But let's look even more closely. As Mr. Martin says
sarcastically to the book salesman, "And where do you get this
The answer seems to be through the same kinds of "delivery
system reforms" and cuts to physician payments that Congress has
often promised in the past but invariably failed to deliver. Or as
Mr. Martin puts it, "I think I've got it. I buy something I want
and then hope I can pay for it. Right?"
Right, unfortunately. For years, Congress has forecast Medicare
physician fee cuts into the budget, only to have the cuts
eliminated under lobbying pressure from the physicians. Similarly,
significant changes in the way we organize health, supposedly
leading to big savings, regularly grind to a halt when both health
providers and patients take issue with those changes. The predicted
savings never materialize.
It is time Washington stopped spending fantasy savings. Instead
lawmakers should apply the "Don't Buy Stuff You Cannot Afford"
principle to health reform, and indeed to any proposed federal
spending "paid for" with supposed savings.
Let's apply a "Bank the Bucks First" requirement to any such
proposal, starting with health reform legislation. Here's how it
If an expansion of, say, subsidies for health care coverage were
to be financed by savings in other programs, then those subsidies
could only be sent out from Washington once the savings were
actually achieved and "banked" upfront.
No savings? No spending. Half the savings? Half the spending.
Eligibility for benefits would automatically be adjusted
accordingly. This could be done on a year-to-year basis, with the
rule that spending for the next year is permissible only if the
previous year's savings have materialized.
Who should get to certify the savings are real and have been
banked? Certainly not Congress itself, which could make Bernie
Madoff's accountants look honest. The Government Accountability
Office is best-suited to certify calculations made by the
Congressional Budget Office. GAO is the government's green
eyeshades, and tracks whether money is spent as the law requires.
It routinely exposes corruption and waste.
The Senate will soon take up two vital bills that would be
natural vehicles for putting this principle into effect. In the
next few weeks, lawmakers must vote to keep the government running
by increasing the federal debt to an eye-popping $13 trillion. And
of course they also will vote on the health bill. What perfect
opportunities to add a Bank It First requirement.
Stuart M. Butler, Ph.D., is Vice
President for Domestic and Economic Policy Studies at The Heritage
First appeared in The Washington Times
A classic "Saturday Night Live" skit sums up much of what's wrong with the financing part of health care reform and gives a clue how to fix it.
Stuart M. Butler, Ph.D.
Distinguished Fellow and Director, Center for Policy Innovation
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