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Robert Reich: Medicare the Single Biggest Budget Pressure Point

February 21, 2011
by Mark Hagland
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In the opening keynote address to some of the 31,000 attendees gathered at the Orange County Convention Center Monday morning for the HIMSS Conference, former Secretary of Labor Robert Reich outlined for attendees the centrality of healthcare spending to the future of the U.S. economy, and put the role of healthcare information technology leaders into a broad socioeconomic context.

After an introduction by C. Martin Harris, M.D., CIO of the Cleveland Clinic organization and chairman of the board of the Chicago-based Health Information and Management Systems Society (HIMSS), Reich spoke for approximately a half-hour to an attentive audience. Reich, who served as President Bill Clinton’s Secretary of Labor from January 1993 through January 1997, first spoke of the current economic crisis and current political situation in the U.S. Congress, and then parsed the challenges facing the Medicare program, for his audience. In discussing the current conflict taking place between Republicans and Democrats in Congress over 2011 federal spending, Reich said there is a 50 percent chance of a federal government shutdown by March 4, when the current continuing resolutions (CRs) that are funding federal government operations in the absence of a 2011 federal budget run out, and the federal government loses the authority to continue spending money.

After analyzing for his audience why the Great Recession has been and remains so severe, Reich turned squarely to the topic of Medicare, calling it “the 3,000-pound gorilla” of the federal budget. “Here is the issue,” he said. “Right now, everybody in Washington is fighting over 12 percent of the budget that is discretionary and non-military,” with just a small discussion around the fringes of military spending. “The real issue is that most of what really needs to be attended to in the federal budget is Medicare, not Social Security… We need to do something about the rise of the healthcare costs underlying Medicare, coupled with the aging of the Baby boomers and the corrosion of these 73 million bodies all at once,” he said.

The political and budgetary challenges will only intensify in the coming decade, Reich warned, as the 76-some million Baby Boomers born between 1946 and 1964 march into senior-hood. “If you think that seniors are politically powerful now, wait until the Boomers become seniors,” he said (Reich noted that he himself was born in 1946, the first “Boomer” year). “And wait until you try to control Medicare costs without doing something about the underlying healthcare costs under Medicare—that’s where the real crisis is. That’s why we should hear more and more about accountable care organizations, about a Medicare commission that will look at outcomes and comparative effectiveness. Whatever aspect, whatever color it comes from, it will still be about outcomes, and quality, and accountability, and capitation.”

Reich then immediately noted that he had been warned not to use the word “capitation” in this address, because of its unpalatable connotations to many in healthcare, but added that, “whatever you call it,” the pressure will be increasing dramatically on providers to deliver care to patients under some kind of financially controlled, non-fee-for-service arrangement, with an even stronger pressure to demonstrate quality for the outlay of expenses for services rendered. He told his audience that “You are all on the front lines of the answer to much of what I’ve talked about this morning. You, dealing with health information technology, have a big part of the solution, and for that reason, I salute you and hope you do a great, great job.”