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What is the Healthcare Impact of the Debt Limit Deal? · CareTalk: Healthcare. Unfiltered.

• 0:00
  David: Congress's failure to raise the debt limit has brought the US parallelly close to default.
• 0:05
  David: Republicans have insisted on major cuts to federal spending, including in healthcare in exchange for their votes.
• 0:11
  David: President Joe Biden and House Speaker Kevin McCarthy worked out an agreement in principle which gives in at least partially to the G O P demands, while preserving democratic priorities.
• 0:21
  David: So what's the impact of the debt ceiling deal on healthcare?
• 0:25
  David: What does the current skirmish tell us about future battles over budget and policy?
• 0:30
  David: And if healthcare didn't get hit that hard, what did finally, will the deal have a real impact or is it all just smoke and mirrors?
• 0:48
  David: Welcome to CareTalk, America's home for incisive debate about healthcare, business, and policy.
• 0:53
  David: I'm David Williams, president of Health Business
• 0:55
  John: Group.
• 0:56
  John: And I'm John Driscoll, the president of Walgreens Health.
• 0:58
  John: So David, what does all this mean?
• 1:02
  David: Well, John, I know you don't like a ceiling, and we were gonna tape this outside, but, uh, you know, Vincent, uh, our producer said that wasn't, wasn't a good idea.
• 1:09
  David: Well, the whole, I mean, John, she was,
• 1:11
  John: it's phony.
• 1:12
  John: We, the Congress agreed on a debt limit, which just to be clear, is simply.
• 1:19
  John: A commitment to discuss whether the United States government is gonna pay the bills for things it's already spent.
• 1:27
  John: The, the, the politicians treat who argue about not extending the debt limit are really arguing about whether they, and we don't pay our bills if the United States doesn't pay its bills, which is what increasing the debt limit is the debt to pay and finance.
• 1:46
  John: Bills that have already, that sort of for services already rendered, for meals, already delivered for battleships, already built, then the value of our currency will fall.
• 1:57
  John: Our market, the stock market will fall because bond prices to buy prices of treasuries will go up.
• 2:03
  John: And in fact, the cost of borrowing for everything, every car, every mortgage, every state will go up for something that, for bills that we know we're gonna pay.
• 2:12
  John: The whole thing is silly.
• 2:16
  David: It is, it is beyond silly John.
• 2:17
  David: It's, it's ridiculous.
• 2:18
  David: But, you know, what are the healthcare provisions of this debt ceiling deal?
• 2:23
  John: Well, there's a bunch.
• 2:24
  John: Um, well, let me see.
• 2:26
  John: I think the, the, the, the, the, it's not much of a profile and courage when you've, you've argued for months to discuss whether you're gonna return unspent, covid funds.
• 2:38
  John: Uh, but I think that that's probably a.
• 2:41
  John: You know, reasonable thing to, for both sides to the claim, claim victory over there are increased work requirements for food stamps, which I'm not happy with because every study that's ever been done indicates that those work requirements actually end up just restricting.
• 2:57
  John: But the, but the work requirements for food stamps are what it's called, snap, um, you know, nutrition assistance.
• 3:04
  John: Uh, you know, food assistance for the very poor are, uh, there were already were work requirements in place.
• 3:11
  John: This is just shifted, brought them up from age 50 to age 54.
• 3:16
  John: That'll save about 11 billion.
• 3:19
  John: Um, there are a, um, um, yeah, there, there, there, there's some stuff in there that, uh, talks about the f the, the fda.
• 3:27
  John: There's a, there's a provision that's cutting the budget for that.
• 3:31
  John: The IRS needs to actually.
• 3:35
  John: Go after people who don't pay their bills.
• 3:38
  John: Uh, that, that re that actually probably reduces the amount of dollars that the government can, can re recover for what it is owed.
• 3:47
  John: Um, those, I think those are the big ones.
• 3:50
  John: What did I miss in this, in this, in this?
• 3:52
  John: Yeah.
• 3:53
  John: No, those are some compromise.
• 3:54
  John: Compromise.
• 3:56
  David: John, when they talk about with the covid relief funds, it's a claw back.
• 4:00
  David: They say 30 billion across different agencies now.
• 4:02
  David: There was a lot of money that was spent.
• 4:04
  David: It's actually not clear that it'll all be clawed back.
• 4:06
  David: I think if it's already been sent out, it's not.
• 4:08
  David: It's not gonna come back.
• 4:09
  David: There are some things in there.
• 4:11
  David: As you mentioned, the fda, there's a vaccine efficacy and supply chain monitoring, and the Republicans are happy to point to knocking that one down.
• 4:17
  David: But this is from things like rural broadband and small business loans.
• 4:20
  David: You know, things that were added on probably weren't necessary in the first place.
• 4:23
  David: Your point about, um, you know, no, and don't, don't,
• 4:25
  John: don't forget that in the, in this, in this desire to get to a compromise, we've also got some items that went up.
• 4:31
  John: The toxic burn pit Disability Relief Fund, that was a big, uh, focus of President Biden's bipartisan, and there's a lot of bipartisan support for, for those, um, uh, uh, veterans who may have been disabled or harm, whose health got harmed by exposure to burn pits during the war.
• 4:52
  John: That actually went up by about a, a more than a few billion dollars.
• 4:55
  John: So it's, it's a really quirky compromise that it's much more about budget theater.
• 5:01
  John: Then budget policy
• 5:04
  David: for sure.
• 5:05
  David: John.
• 5:05
  David: So as you were talking about before, there's work rules, uh, being imposed on food stamps and on welfare.
• 5:10
  David: The Republicans actually wanted to impose work rules for, uh, Medicaid.
• 5:14
  David: And so this is sort of the, the compromise.
• 5:16
  David: Now, interestingly, um, this is also one the work rules, whatever they're put in place, the real impact is just to sort of be mean to people and to try to keep them from getting the benefits.
• 5:26
  David: Now in this case, they decided for political reasons to exempt.
• 5:29
  David: Veterans and the homeless.
• 5:32
  David: Now, what that actually does, according to the Congressional budget Office actually increases the number of people.
• 5:37
  David: Uh, receiving food stamps by about 78,000 and, uh, that will drive up the, uh, the cost by 2 billion.
• 5:45
  David: So that's not exactly a fiscal discipline.
• 5:47
  David: There.
• 5:48
  David: You do have these across the board cuts if they're actually come in that are gonna affect things on, uh, spending, on things like N nih.
• 5:55
  David: And there's a lot of things that would be sort of social to determinants of health if they're not in healthcare.
• 5:58
  David: Well, but
• 5:59
  John: directly, before you go there, Dave, I, I think it is important to say they are trying, they did come up with a compromised language on kind of how much certain budget, trend lines will increase.
• 6:10
  John: So rather than allowing them just to rise with whatever they compromise to, I think there's a, a 3.3% increase in defense.
• 6:19
  John: But I believe that after, after next year, the whole budget's only supposed to be increasing at like, 1% a year.
• 6:25
  John: I'm not sure.
• 6:26
  John: Quite, don't quite recall whether defense is in or out.
• 6:28
  John: Yeah.
• 6:29
  John: But the, the Republicans did get some, I think, important relief on the, the total amount of, of, uh, of, of increasing the debt.
• 6:38
  John: And look, they have a legitimate issue.
• 6:40
  John: I, I don't have an agree with them on most of what they asked for, but I think we owe about 37 trillion and.
• 6:45
  John: We are at a higher percent of GDP than, than most of our history, except when we've been at war.
• 6:50
  John: So, I mean, I, and we spent a, the federal government spent a Titanic amount of money during Covid.
• 6:55
  John: So, um, I, I, you know, I do think that there is some merit in raising the question about, you know, budget, sanity.
• 7:03
  John: Uh, it's just to, to to, to dance, to sort of, to posture as if we're not gonna pay the bills that have already been, um, Uh, is sort of incurred is, is crazy and dangerous,
• 7:18
  David: John.
• 7:18
  David: So the non-defense spending is supposed to be flat for next year, and then a 1% rise in 2025.
• 7:23
  David: However, uh, if you look at what it actually covers, it's only a little less than 13% of the budget.
• 7:28
  David: So, you know, just
• 7:30
  John: on 13%, hold on that thought for a second.
• 7:32
  John: Big deal.
• 7:33
  John: I, I don't think people realize that.
• 7:35
  John: So what the argument is, once you exempt.
• 7:39
  John: Entitlement programs, social Security, Medicare, and Defense.
• 7:44
  John: And you're talking about discretionary spending.
• 7:47
  John: That's 13.
• 7:47
  David: And interest on the debt, John.
• 7:49
  John: And interest pardon me and interest on the debt.
• 7:51
  John: It's only 13 cents out of every dollar we spend.
• 7:54
  John: It's, you know, so, you know, we're, we're arguing at the margins.
• 7:59
  David: Well, John, I think one thing that will solve all of our problems is that I understand Joe Manchin got a little gift here in the form of a pipeline.
• 8:05
  David: Am I correct on that one?
• 8:06
  John: He did get an early birthday gift, uh, that, that, that's a, a, a pipeline to transport shale gas across a big chunk of West Virginia.
• 8:17
  John: Um, I believe it, it it goes into, into Virginia from West Virginia and it was, uh, correct.
• 8:23
  John: Well, there's, there's actually two components to that part of the bill.
• 8:27
  John: They'll talk a lot about, uh, improved access to permitting in general.
• 8:32
  John: And I think that most people agree that a lot of the federal processes are kind of.
• 8:36
  John: Uh, cumbersome, slow, and not always effective.
• 8:39
  John: Um, and he got a, uh, uh, so he pushed forward and got relief on that for companies and groups that, that wanna permit a large projects.
• 8:49
  John: But the particular project that he wanted was the shale pipeline, which a bunch of, a number of environmentalists and, uh, advocates in both parties had issues with.
• 9:00
  John: And he got that fast tracked unsupported, uh, with some extraordinarily, um, generous language suggesting that it is sort of like a massive civic benefit when it's, uh, it's actually a, a pretty specific political gift.
• 9:16
  David: John, I think we've been, uh, clear in establishing that this deal doesn't really do anything positive on the spending side.
• 9:24
  David: If we did want to talk about, uh, spending and being disciplined about that in healthcare, what would you do?
• 9:32
  John: Well, I think you've got, I mean, well, first of all, I, I, I, as, as I said, I think, I think this is a stupid kind of political theater as opposed to true economic or, or, or, or fiscal policy.
• 9:45
  John: Uh, but they did beg, they, they, they did get some caps on, on trend lines, which I, I do think could have an impact and could force a, a, a more, a more, um, thoughtful ar discussion about the budget when we borrowed so much money and interest rates are on the rise.
• 9:59
  John: Uh, for me, uh, you know, I, I, I think the most.
• 10:04
  John: The, the, the biggest items of discretionary spending that, um, are eating up state budgets.
• 10:11
  John: It's healthcare, Medicaid, federal budgets.
• 10:14
  John: It's Medicare where 10,000 people turn 65 every day.
• 10:18
  John: And I think that we've gotta have a.
• 10:20
  John: A more honest conversation post covid in the country about how much healthcare inflation are we gonna tolerate and embedded it underneath that.
• 10:29
  John: How much are we willing to pay for the, for, you know, a healthcare system That is it in Norway are the most expensive countries in the world.
• 10:40
  John: Um, and, uh, but we alone have the worst healthcare outcomes in the industrialized world outside of cancer.
• 10:46
  John: So, I, I we're paying more in getting less maternal mortality in general, not just for poor women, has gone up about 50% between 2011 and today 50%.
• 10:57
  John: It's gone from, I think, um, Uh, 20 deaths per, per a hundred thousand to a little over 31.
• 11:03
  John: And that's that, that, that's unacceptable, that we should be paying more and getting less, that mothers are dying at a faster rate in the United States.
• 11:11
  John: I mean, I, I, it's, it's boggles my mind.
• 11:13
  John: So we have to have, I think a more direct conversation about cost, quality and outcomes.
• 11:18
  John: Um, and people are suffering because we're not,
• 11:23
  David: John, I agree with you.
• 11:24
  David: Um, we need to include Medicare and Medicaid in the discussion.
• 11:27
  David: It's sort of been explicitly excluded and you know, Republicans have been in the past willing to talk about.
• 11:34
  David: Cutting these programs and, uh, now they're not, uh, willing to talk about it openly, at least, uh, most of them I think it would be good if they did.
• 11:40
  David: Now there's things to do that are smarter than just cutting.
• 11:43
  David: So if we think about what could make sense, one is the inflation reduction act and actually having more drugs included.
• 11:49
  David: For negotiation.
• 11:50
  David: I think Biden May, may bring that one up on Medicare, Medicaid.
• 11:54
  John: Well, let explain, explain, but don't assume that everyone's listening to that, not everybody's as carefully listener of our episodes.
• 12:00
  John: How does the Inflation reduction Act actually reduce costs for drugs and what does that mean?
• 12:09
  David: Well, Currently what happens is that the drug companies can charge essentially whatever they want for drugs to Medicare, and Medicare has to cover them, which is kind of weird, but that's how it works.
• 12:17
  David: If they've
• 12:18
  John: got a feeling inflation, they've got a, if they've got a feeling, the price goes up.
• 12:25
  David: The Inflation Reduction Act, um, mandates the federal government to actually negotiate, uh, with drug companies and essentially dictate the price for a few drugs, but not starting until 2026 or so.
• 12:36
  David: And then it increases a number of drugs, uh, somewhat over the years.
• 12:40
  David: You could bring that forward, negotiate for more drugs sooner, and have a bigger impact and an impact that sooner without impacting anybody's service or, or, Um, you know, or access, and that would still, the drugs would still be more expensive than they are elsewhere in the world.
• 12:54
  David: So it shouldn't hurt innovation, that's one thing.
• 12:56
  David: And then on Medicare, uh, another thing to do would be to favor, uh, less expensive sites of care.
• 13:03
  David: So you could still have people have treatment, but maybe less spent on hospitals and more spent on, uh, subacute.
• 13:10
  David: Home-based services, uh, and so on.
• 13:13
  David: So there are ways to spend less without quote unquote cuts.
• 13:18
  David: Uh, and you see it in other parts of the world, as you're saying that have spend less and get more.
• 13:22
  David: We should be able to do that.
• 13:23
  David: We do that in other parts of the economy.
• 13:25
  John: Well, and just to be clear, uh, pharma, pharmaceutical companies can't literally raise prices every month.
• 13:31
  John: Um, and, uh, we have, we have as a, as a government and a society accepted that, which is one of the reasons, uh, that, you know, 70% of the, the inflation in drug costs has been, uh, of stable chemical compounds.
• 13:43
  John: Things like pills and capsules, not these cool new biologic cell and gene therapies and.
• 13:49
  John: What you see.
• 13:50
  John: If, if you were to, to make that argument in DC David, what the pharmacy manufacturers would say, look, if we can't charge infinitely high prices, increasingly high prices, uh, that will harm the environment for r and d.
• 14:04
  John: What would you say to that?
• 14:06
  John: That
• 14:08
  David: John, I would say, you know, I think we should be able to get our drugs.
• 14:11
  David: We should have our cake and eat it.
• 14:12
  David: We should have our Adderall and eat it too.
• 14:14
  David: Uh, that's what I think about it.
• 14:16
  David: We're not in any danger of having a lack of innovation, uh, in pharmaceutical.
• 14:22
  David: Uh, spend pharmaceutical innovation here in r and d, we're doing just fine on that.
• 14:26
  David: We don't need to have higher prices for, uh, less innovative drugs in order to drive that engine.
• 14:31
  David: That's what I would say.
• 14:33
  David: But it, John, I have a final question for you, but, but it does.
• 14:35
  John: No, but it does point out the fact that every time we try to reduce a cost in healthcare, the constituency that's making the money says we're, we provide an essential service.
• 14:43
  John: And I think that the, when you ask really, like, how would we solve this problem?
• 14:46
  John: We need to have a larger social conversation about, Well, the, while each person's interest is legitimate, uh, as a society, we're just paying too much, paying too much.
• 14:58
  David: So, John, my last question for you is what's gonna happen in January, 2025, which is the next time we hit the debt limit?
• 15:05
  David: And they actually were specific this time.
• 15:07
  David: They didn't do a dollar amount, right?
• 15:08
  David: It's just all about on the political calendar, when does it go?
• 15:11
  David: So it's just after, uh, the inauguration.
• 15:14
  David: Um, what's gonna happen then?
• 15:16
  David: Nothing.
• 15:18
  John: This is not the platform, the issue or the structure that's gonna create any kinda sane conversation.
• 15:25
  John: We'll have more of the same.
• 15:27
  John: What do you think?
• 15:30
  David: I think it's an unfair question, which is why I asked it, and that it depends on who wins the, uh, the presidential election.
• 15:36
  David: I think what the Republicans are hoping is that Biden wins and that they have a majority.
• 15:41
  David: In Congress, stick it to him and squeeze him and basically run the country without having the former president, uh, back in power.
• 15:48
  David: So I think this is an endorsement of President Biden by the Republicans.
• 15:52
  David: So, wow.
• 15:52
  David: That's it for yet another episode.
• 15:56
  David: That's it for yet another episode of CareTalk.
• 15:59
  David: We've been talking about the national debt ceiling limit.
• 16:02
  David: As you may have it, I'm David Williams, president of Health
• 16:05
  John: Business Group, and I'm John Driscoll, a president of Walgreens Health.
• 16:09
  John: If you like, you heard or you didn't, please subscribe on your favorite service..