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Health Care Tops Fiscal Need List

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President Barack Obama told the nation's governors Monday that the administration is quickly releasing $15 billion from the stimulus package to help them cover soaring Medicaid costs. Video by AP

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By Lori Montgomery and Amy Goldstein
Washington Post Staff Writers
Tuesday, February 24, 2009

President Obama will make reforming the U.S. health-care system his top fiscal priority this year, administration officials said yesterday, contending that reining in skyrocketing medical costs is critical to saving the nation from bankruptcy.

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At a summit on "fiscal responsibility" convened by the White House, top administration officials said they also are committed to stabilizing the Social Security system and to revising a tax code that generates too little money to cover the cost of government.

But the White House offered no timetable for those goals and few explicit ideas for how to achieve them, disappointing some lawmakers and other participants, who had hoped the summit might produce greater momentum to fix the chronic imbalance between government spending and tax collections that is driving the national debt to dangerous levels.

Instead, the 3 1/2 -hour session was designed to demonstrate that the White House could foster a civilized conversation among an ideologically diverse group of lawmakers, academics, economists and interest groups. Obama assured the more than 100 participants that the debate over the nation's long-term financial health "doesn't end when we go home today."

"We've got a lot of hard choices to make," Obama told them. "We need to build off this afternoon's conversation and work together to forge a consensus."

The White House budget director, Peter Orszag, delivered a forceful argument for keeping Washington's focus, for now, on slowing "the growth rate in health-care costs," calling it "the single most important thing we can do to improve the long-term fiscal health of our nation."

"Let me be very clear: Health-care reform is entitlement reform. The path of fiscal responsibility must run directly through health care," Orszag said.

Although the $787 billion stimulus package approved by Congress this month, along with bailouts for the nation's financial system, has bloated this year's budget deficit, administration officials and many outside experts contend that the rising costs of Medicare and Medicaid, the federal health programs for the elderly and the poor, present a far greater threat to the nation's long-term financial stability.

Most of the spending on the stimulus package will run out after a few years; the $700 billion the Treasury Department is investing in banks and other financial institutions promises to pay some returns to taxpayers. But health-care costs for the retiring baby-boom generation are inexorably rising.

Left unchecked, they will quickly push the annual budget deficit to unsustainable levels, and expand the debt owed to foreign governments and other private investors to 300 percent of the nation's gross domestic product by mid-century, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, said at yesterday's summit.

"The recent economic recovery package is not driving the problem," Greenstein said. "The increases projected in federal spending in coming decades as a share of the economy are due entirely to the projected growth in Medicare, Medicaid and Social Security -- which in turn is driven by rising health-care costs and the aging of the population."

Still, with this year's deficit projected to approach a record $1.5 trillion, Obama said he would reduce the budget gap to $533 billion by the end of his first term in office. He then released his guests to five "break-out sessions," each led by top administration officials, to discuss issues related to health care, Social Security, the tax system, government contracting and the budget process.


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