Policy Initiatives:

Turning the Tide on Red Ink:
Commonsense Policies to Make Federal Health Programs More Sustainable

Significant savings can be accomplished

without cuts to benefits...

Key Takeaways

1. Health spending is the key driver of rising federal deficits and debt, and delaying reforms will necessitate a combination of massive tax increases and large, painful benefit cuts.

2. Sensible reforms, many of which both parties have already supported, would focus on maximizing health care value.

3. Significant savings can be accomplished without cuts to benefits or major restructuring of programs, contrary to common concerns.

4. States have unprecedented cash on hand and should bear a greater responsibility for Medicaid costs. One such reform, eliminating the provider tax scheme, was strongly endorsed by President Biden in 2011 when he was vice president.

It has been 13 years...

…since President Obama remarked that costs in Medicare and Medicaid were threatening the federal budget and needed to be reduced. The need to reform these programs is now more urgent than ever—both to improve the quality of health care services funded by these programs but also to reduce their spending trajectory to avoid massive future tax increases or benefit cuts. Reform is also crucial to ensure that the U.S. government has the ability to respond to future crises, such as wars, recessions, and pandemics. The reforms presented in this paper would collectively save more than what is needed over the next decade to put federal health spending on a sustainable trajectory. Policymakers concerned that rising deficits and debt threaten future American prosperity should seriously consider the proposals contained within.

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Paragon Health Institute (PHI) is a non-partisan, not-for-profit policy research institute. Any views, beliefs, or opinions expressed by PHI’s Public Advisors are those of its Advisors and do not necessarily reflect the official policies or positions of PHI or its employees. Any views, beliefs, or opinions expressed by PHI or its employees belong solely to PHI and do not necessarily reflect those of PHI’s Public Advisors.