Brent James, MD, at the RSNA: What Will We Do Before the Bill Comes Due?

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Emerging from the two addresses delivered by noted health informaticist Brent James, MD, at the last meeting of the Radiological Society of North America (RSNA), attendees could not help but ask the above question. If ever there was a case for managing the utilization of care, that time is now.

James is executive director, Institute for Health Care Delivery Research, and vice president, Medical Research and Continuing Medical Education, Intermountain Health Care, and has spent the past 20 years championing the cause of standardization of clinical care through data collection and analysis. It is James belief that much of the care being delivered today is non-value-added, particularly vexing considering the financial viability—or lack thereof—of the Medicare program.

Citing Treasury Department numbers, James noted that federal spending on Medicare has risen from zero of the federal budget prior to 1966 to 10% in 1986 and 19% in 2006. In laying out the impending crisis, James drew heavily on the work of David M. Walker, the Comptroller General of the United States, who has used his term to travel the country and sound the alarm. “When you think about it, he’s the CFO of the United States,” noted James. “His main his main focus is on what he calls implicit exposures. These are promises the United States has made to citizens currently alive, beyond what current levels of taxation will support with inflation and further growth of taxation built in. These are unfunded liabilities for the United States government.” Our $46 trillion in implicit exposures adds up to $150,000 for every man, woman, and child currently alive and living in the United States.

Here’s a rundown of those implicit exposures (updated since Dr. James presentation):

$6.4 trillion dollars in unfunded liabilities for Social Security.

$13.1 trillion for Medicare Part B (three quarters comes out of the general taxation revenue) in unfunded liabilities beyond current levels of taxation. The new drug benefit by itself represents $8.7 trillion in unfunded liabilities.

$11.3 trillion for Medicare Part A

“It turns out that we have an unfunded liability of about $46 trillion dollars, and two thirds of it is Medicare, $30 trillion dollars,” explained James. “Just to put that in perspective, and in quoting David Walker, the current gross national debt, fiscal liabilities are about $25,000 per person in the country, you your spouse your children your each owe $25,000. The $46 trillion in implicit exposures is about $150,000 per person. Its about $370,000 for a full time worker and it is 19 times the total federal budget. Take all of our assets, all of our value, and it’s just under $50 trillion dollars, and [our implicit exposures] are roughly that sum.

According to Walker we have three choices: raise taxes to handle the explicit liability, which could very destroy the economy; shift money within the federal budget; or control the cost of health care.

Also according to Walker, this bill will become due imminently. “In theory, the Medicare Trust Fund goes into the red in 2018 [revised to 2019 since this address] at current rates of growth,” James said. “The trouble is, in 5 or 6 years, we have to start to pull money out of the Medicare Trust Fund to pay for the increases in care. We’ve been squirreling away money in the Medicare Trust Fund for the past 15-20 years anticipating this problem. It turns out that instead of squirreling away money, what we actually did is take the money and buy US securities, Treasury bonds. What the Medicare Trust Fund contains is Treasury bonds and the only way we can redeem the bonds is to increase taxation, reduce spending, or shift federal spending.

“So Walker argues that the bill comes due in about 5 or 6 years. The real question is do we start to have this debate in this administration or the next? And if you think you’ve seen health care cuts, you ain’t seen nothing yet. It’s going to hit awfully hard.”

Walker is a CPA. He is spending his term traveling the country trying to convince any one who will listen that we have a problem brewing and its coming faster than anyone thinks. He does not pretend to have the answers to the health care crisis. But James, our foremost proponent of the cause of standardization of clinical care, does. In James findings, much of the care being delivered today is non-value-added, a particularly vexing considering the financial viability—or lack thereof—of the Medicare program. In analyzing