Cutting the Federal Budget To Prevent U.S. Bankruptcy, Part IX: Trimming Health and Human Services

by Jim Grichar (aka Exx-Gman) by Jim Grichar

(Author's note: I ask readers for their indulgence because of my extensive use of the b-lingo – bureaucrat-lingo – and the detail I used in presenting my arguments. I do this to reduce bureaucratic counter-arguments – which I expect to receive – to the absurdity that they invariably are.)

For those who did not read Parts I–VIII of this series, total actual cuts in proposed spending (what I call the "Cut-o-meter") now amount to $380 billion. Those cuts came from Defense, NASA, HUD, the Education Department, the Agriculture Department, Transportation Department, Interior, Commerce, Energy and other agencies.

The Department of Health and Human Services (HHS), even without the Social Security Administration, is a behemoth that staggers the imagination. With a proposed budget of $579.9 billion for fiscal year (fy) 2005, HHS almost approaches the Defense Department budget (after you include all those items that are conveniently parked in other budgets to deceive the public regarding the true costs of defense). The big items in the HHS budget are Medicare and Medicaid which account for about $454 billion and are growing at astronomical rates because of the expansion of programs – like the recent addition of a prescription drug benefit plan for Medicare. More spending on Medicaid – which is even being funneled to illegal aliens – is also making the HHS budget grow even more. The anticipated retirement of baby boomers in the next ten years will bankrupt Medicare. Projections given out by the Bush Administration's Office of Management and Budget show that by fy 2009, HHS's total budget will grow to almost $773 billion, nearly $200 billion more than the fy 2005 budget.

A Bit Here, a Bit There, and Soon You're Talking about Real Cuts!

HHS is the epitome of welfare state "cradle to grave care," meaning that someone in Washington thinks they know better than you how to run your life. And this comes at a staggering cost, not only in financial terms but also in terms of gross infringements on your individual freedom. Taking care of one's own health is an individual responsibility, not the responsibility of the government, whether federal or state.

Given the lobbying efforts of representatives of the poor and senior citizens, it might seem impossible to cut this budget. But the fact is that the growth in this spending will eventually bankrupt the nation, even if other government departments are eliminated or cut to the bone.

One area that needs to be cut and privatized is the Food and Drug Administration (FDA). As I argued in a past article for LRC, multiple private drug testing services would spring up in FDA's absence, leading to a faster approval of drugs and a lower drug price. Eliminating the FDA – a hangover from the early 20th century – would save taxpayers gross outlays of $1.8 billion (the net outlays are nearly $1.5 billion, as FDA charges fees for its drug approval process).

An organization called the Health Resources and Services Administration (HRSA) within HHS proposes to spend almost $6.4 billion in fy 2005 on such things as HIV/AIDS ($2.07 billion), family planning ($0.28 billion – for birth control and abortion – here's where Planned Parenthood gets big subsidies for its abortion clinics), maternal and child health block grants (to states – $0.73 billion), children's medical exams ($0.303 billion), and other programs. Where the federal government gets the authority to spend on such programs is a mystery; it certainly cannot be found anywhere in the Constitution. Eliminate the HRSA.

Health and Human Services proposes to spend a net of $2.8 billion on Indian Health Services in fy 2005 (gross outlays $3.619 billion, with an estimated $0.378 billion collected in fees). Eliminate this program as Indians will be responsible for their own health care. Given the tax-exempt status of their on-reservation businesses, there is no reason to extend welfare to them.

The Centers for Disease Control and Prevention (CDCP) wants to spend nearly $4.5 billion in 2005. In the short term, given the worries over terrorism and many infectious diseases brought here by legal and illegal immigrants, drastically downsizing or abolishing CDCP is unlikely. However, goofy projects such as the one in which CDCP labeled guns as a dangerous health hazard (during the Clinton years) need to be eliminated.

The National Institutes of Health (NIH) is a very large organization that conducts medical research. You name the disease or malady, and it is likely covered under one of the more than 20 separate institutes (e.g., cancer; heart, lung, and blood; aging; alcohol abuse; mental health; etc.). NIH's proposed budget for fy 2005 hits $28 billion. A lot of this goes for research grants. With lower federal spending and lower taxes, citizens would have much more money available to contribute to not-for-profit foundations that would conduct advanced medical research, with more positive results than obtained by grants determined by medical bureaucrats in Washington. As this would be a controversial area to cut, let's chop off $9 billion per year from the current proposal. Further cuts in the future should be made to eliminate NIH.

The Administration for Children and Families is another hangover from the days of welfare, still continued despite the phony welfare reform of the late 1990’s for which the Republicans claim credit. Proposed spending for fy 2005 includes: 1) almost $18.4 billion for "temporary" assistance for needy families; 2) $4.3 billion payments to states for child support enforcement; 3) $2 billion for low-income energy assistance; 4) $0.47 billion for refugee and entrant (huh?) assistance; 5) $2.7 billion for child care entitlements to states; 6) another $2.2 billion in child care block grants to states; 7) $1.8 billion in social service block grants to states; 8) nearly $8.8 billion for child and family service programs; 9) $6.8 billion in payments to states; and, a host of others. Abolish all of this and save $47.8 billion!

Other smaller (can you believe it, HHS has smaller programs) expenditure categories include almost $1.4 billion for aging services, $2.6 billion for managing this monster of a department, $3.3 billion for substance abuse and mental health services, and $0.3 billion for healthcare research and quality. All these should be axed or reduced. Departmental management should be cut in half.

That leaves the big budget busters, Medicaid and Medicare. Medicaid is especially pernicious in that it requires states to pony up matching funds for a business that they too have no business being in. If you wondered why your state wants to raise taxes, look at what it spends on Medicaid. That is one of the categories that has nearly bankrupted California, and it is doing so in other states, particularly because they have to pick up the tab for visits to emergency rooms by illegal aliens. For fy 2005, Medicaid proposes to spend almost $183.5 billion. This needs to be abolished over the next three years. Doing this will free up medical resources, bringing down the cost of treatment to everyone. Let doctors and other health care workers do what they did before the advent of this federal monster, give free or lower cost treatment and take it off their incomes as a charitable deduction. I know that in my area doctors have set up such a program (to which I contribute), and it treats illegal aliens as well as those who cannot afford health insurance. And it gets the whole thing off the taxpayers back!

That still leaves Medicare proposed spending of $270 billion. The previous cuts will give Congress time to fashion a program to let those not already in Medicare opt out and/or abolish it totally. Those wanting to stay in it should accept benefit cuts. And the latest fiasco, the prescription drug benefit plan, needs to be ended in the next few years.

All together, proposed cuts amount to a whopping $255 billion.

And the Cut-o-meter Total is …. $600 billion

Yes folks, we have now reduced spending by about $635 billion over proposed fy 2005 levels and probably more than $600 billion over actual current levels. Being conservative by nature, I only put the $600 billion total into the Cut-o-meter. If the cuts are actually larger, so much the better.

Are we finished yet? Of course not! Stay tuned for more proposals to chop federal programs in our initial round of cuts!

Jim Grichar (aka Exx-Gman) [send him mail], formerly an economist with the federal government, writes to “un-spin” the federal government’s attempt to con the public. He teaches economics part-time at a community college and provides economic consulting services to the private sector.

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