Ending CHIP will permit chronic conditions to grow in prevalence

This fall, a decade-long campaign to trim federal health spending managed to successfully disrupt federal health care programs.

Unfortunately, the target fell on the Children’s Health Insurance Program (CHIP), community health centers (CHCs), and chronic disease prevention programs.

{mosads}These essential initiatives weren’t the enemies that spending hawks set out to confront. Nor will their disruption amount to the hoped-for victory over long-term federal spending growth.

Was this simply a miscalculation at the bargaining table? Were the 8.9 million kids on CHIP and 26 million health center patients accidentally pulled into the melee when broader legislation regarding Medicaid and the Affordable Care Act sputtered this summer? To some degree, yes.

But something else is at work here.

The idea that government spending, particularly federal spending, is the nation’s central policy problem is increasingly influential. Unfortunately, this narrative, regardless of its merits in other policy arenas, just isn’t that helpful in fixing our health care spending problem.

First of all, the diagnosis, that federal health care spending is out of control, is too narrow and over simplified. Health care costs are indeed escalating, but those increases are driven by complex dynamics playing out across the public and private sides of the health system — not only in federal health care programs.

Second, the usual prescription, that we cut spending on health and safety net programs whenever and wherever possible, ends up treating the symptom of health care spending in ways that exacerbate the underlying causes of the disease.

What’s actually ailing America’s health system is this: The combination of rent-seeking in the marketplace and government subsidies for inefficiency and waste has swelled health costs across public and private sectors, even as it has undermined efforts to combat non-communicable chronic conditions.

Examples of rent-seeking and wasteful subsidies span the health system. The persistence of volume incentives in Medicare provider payment exemplifies how we directly subsidize inefficiency. Gaming of patent and FDA laws, which allows brand name drug companies to keep generic competitors out of the marketplace, is a classic case of private actors preserving their ability to charge unjustified rents, through manipulation of the machinery of government.

It is time that lawmakers take this condition seriously — if they hope to relieve the pressure on family budgets and on federal taxpayers.

A serious treatment strategy requires applying a scalpel to a complex set of misguided policies and waste generating behaviors that have metastasized across the health sector.

But its application is not easily accomplished in today’s environment. Serious bipartisan policy making loses out to, on one side, a knee-jerk skepticism about even the most worthwhile public initiatives and, on the other, the instinct to oppose any effort to trim those public programs when they are under siege.

Thus we find ourselves where we are today. After funding expired three months ago, CHIP and community health centers are only now getting a temporary reprieve. Cuts to chronic disease prevention programs, specifically those funded through the Prevention and Public Health Fund, appear to be the budgetary pay-for most acceptable to Congressional majorities.

Viewed solely from the lens of federal spending, attacking any of these programs is a futile and counterproductive gesture. 2016 expenditures on CHIP ($14.5 billion), CHCs ($5.1 billion), and the entire CDC ($16 billion) are a drop in the bucket when compared to the trillion in federal dollars spent on health care overall. Disrupting these programs won’t meaningfully reduce federal spending, but it will permit chronic conditions to grow in prevalence. This could actually exert upward pressure on Medicare and Medicaid spending.

Viewed from a health system-wide lens, the consequences are even worse. Curtailing these valuable programs will likely drive up employer costs as employees become sicker and less able. Absenteeism already costs employers $225.8 billion a year and a growing number of sicker employees will make that problem worse. Medicare and Medicaid costs will grow as more kids enter adulthood with untreated or undertreated chronic health conditions. And as our public health and prevention programs atrophy, chronic disease, the very thing driving health spending, is free to grow unchecked.

Children’s health insurance programs are sending cancellation notices. Community clinics and public health programs are disrupted. These are not small government outcomes. They are not conservative outcomes. They are just bad outcomes. 

There will be battles to fight over the proper balance of market forces and public action in health care in the years ahead. In the meantime, let’s not allow programs like CHIP, community health centers, or CDC chronic disease prevention to become collateral damage.

John Rother is the president and CEO of the National Coalition on Health Care.