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Breaking News Stock-300x248There are a couple of old sayings that capture where we are with the realities of the Medicare time bomb and the current state of our political will, or lack thereof:

  1. Americans can’t handle the unpleasant truths
  2. Americans will eventually do the right thing after they have tried everything else first

Americans are not sure what to believe these days.  Politicians from both sides of the aisle are so intent on winning the next election cycle that the unvarnished truth plays second fiddle to the necessity of doing and saying whatever is necessary to win.  Voters do not want to hear any bad news – like the government is going to cut their healthcare benefits.

The rapidly approaching Medicare crisis is fairly straight forward. The average American couple pays about $110,000 in premiums through payroll deductions over their lifetime.  The problem is that same average couple will use about $300,000 in benefits before they die.  When you factor in that every eight seconds of every day a new Medicare beneficiary becomes eligible for coverage and our growing belief that we should spend whatever it takes to cheat death – well this is a government train wreck of epic proportions.  The math simply doesn’t work.

Meanwhile, the government’s unfunded obligations – promises our elected officials have already made, including Medicare and veterans benefits, for example — are exploding.  They will pass $2o trillion within 10 years. Within 30 years, they will exceed $50 trillion.

For years Social Security and Medicare were the third rail of American politics.  Historically, politicians who dared touch those programs did not enjoy a long congressional career.  Now, not only are they talking about these two sacred cows, but politicians are using them to beat their opponents to a pulp even though both sides know that major changes will have to be made, unless, of course they can reach bipartisan agreement to alter the basic laws of mathematics. 

While the epidemic of silliness in Washington continues, leading hospital chief executives are taking steps to prepare for the obvious outcome by getting out front in reducing costs, evaluating programs and clinical services, and by using a decision tree incorporating quality, essential community benefit and financial viability.  They know they have a five to eight year window of opportunity to dramatically change their current business model. 

In short, healthcare leaders may not be out front in redesigning America’s system, but they do know what an oncoming, runaway freight train looks like. 

Recently, I was with a hospital CEO who argued that he did not have to take any  radical steps now because his facility had a healthy margin, his medical staff was cooperative and  — and here is the tricky part – he was convinced that, ultimately, Congress would step in to ensure adequate funding because “they can’t let too many hospitals close. We feel we are ready.”    I did not ask when he stopped reading newspapers and watching news/commentary programs but clearly his view of the future is wrapped in a cloak of not wanting to deal with a very real and very unpleasant truth.

Jim Clifton, CEO of Gallup, recently wrote about another facet of the problem, that “most of us would rather the President and our Representatives in Congress don’t cause us any pain.  That means don’t touch my Social Security in any way, don’t do anything to cap the runaway growth in Medicare and Medicaid, and don’t raise my taxes either.   And keep printing money.  We elect our officials to create no discomfort for us, and they deliver.”

Eventually our leaders will do the right thing.  Eventually. 

Hospital CEOs can’t wait and the top leaders know it.