The health economy has joined the growing ranks of sustainability issues for the U.S.  Federal debt and health policy are deeply entwined. That debt needs to be financed, the cost of which sucks money away from other uses…like health care.

With the ominous title, The Specter of Financial Armageddon, the reader might imagine the journal article she’s reading is published in Forbes, Fortune, or the Financial Times.

But this Armageddon is described in the New England Journal of Medicine, and it’s much more gripping than Avatar or the Clash of the Titans. The Titans, in this script, are the Federal deficit versus health care: two huge demands on U.S. society, taxpayers and health citizens.

Michael Chernew and his colleagues from Harvard and Mass General have documented this scenario with data from the OECD, ranking the U.S. central government debt  as a percentage of GDP at 53%  in the company of Sweden (36%),  Germany (39%), Turkey (40%), the Netherlands (50%), and France (54%).

The authors point to Greece and California as the first glimpses into how public spending gets short-shrift when debt takes center stage.

How, then, to rein in health spending given the ambitious goal of covering the uninsured when nearly 1 in 5 dollars already goes to health in the U.S.? Chernew and team point to a list initially developed by David Cutler:

  1. Establish insurance exchanges.
  2. Reduce excessive Medicare payments.
  3. Shift from a volume-based to a value-based payment system in Medicare.
  4. Tax generous insurance plans.
  5. Empower an independent Medicare advisory board.
  6. Address and reduce fraud and abuse within the Medicare program.
  7. Enact malpractice reform.
  8. Invest in information technology and comparative-effectiveness research.
  9. Invest in prevention.

Peter Orszag, the head of the White House Office of Management and Budget, has long pointed out the long-term deficit driver of Medicare. The health reform bill that was passed has elements of Cutler’s List of Nine, but even if all of these strategies are adopted, their payback will be a long time coming. Still, they’re the right things to do, and each involves a sacrifice by one stakeholder group or another. Taken together, all health stakeholders will be hit in some way.

The sooner these hits are taken. though, the better. Budget deficits have a nasty habit of growing over time when not tackled head-on in a pay-now, pay-more-later kind of fashion. That will put the U.S. on the road toward health care sustainability.

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