AAOS Now: What components must a long-term fiscal fix address?

Mr. Simpson: You have to do something with the biggest problem of all, which is health care. It has no cost-containment mechanism. The last estimate on what the “doc-fix” would cost was $140 billion in 10 years, and in 2014, when the cost-cutting is scheduled to begin, Congress won’t do it. They’ll be savaged by veterans, doctors, the business community, and everyone else.

In 1981, 10 percent of the federal budget was spent on health care, today it is 25 percent, and in 5 or 10 years it will be 33 percent. So who is fooling whom? This is the biggest driver of destruction of America’s fiscal health, especially since our healthcare costs are twice that of the next developed country, yet our outcomes rank 25th through 50th. Somebody is really getting gypped.

Everybody in America is angry at what Erskine and I proposed because we talk about shared sacrifice—something that hasn’t been done since World War II—and we say that a long-term solution will require a blend of difficult choices. We can’t cut spending to get out of this hole, we can’t tax our way out of this hole, and every economist, except Paul Krugman, says we can’t grow our way of this hole, even with double-digit growth over the next 20 years.

Real reform means getting money out of the system—pulling federal resources and taxpayer money out of the system, going to the ‘Chevy’ plan for insurance instead of the ‘Cadillac’ plan. We have to do something about people who have dual coverage—who are in Medicare and Medicaid. We also have to do something about Medicare Part B premiums—when the guy who works in the kitchen is paying 75 percent of the premium and the beneficiary is the guy driving his Lexus to the Perkins restaurant to get his AARP discount, that is b.s.

AAOS Now: Can healthcare costs be reduced without harming providers?

Mr. Simpson: Any changes to health care are going to hurt everybody. That being said, the word ‘hurt’ means something different to everyone. We’re going to need tort reform and, as a trial lawyer, that is not a pleasant thing for me to say. Doctors are going to have to learn to cut back, providers are going to get hit, and everybody is going to get dinged in this process. There are no sacred cows in health care—that game is over.

AAOS Now: In your opinion, is there a way to cover more Americans and control healthcare costs without limiting the volume of healthcare delivery?

Mr. Simpson: I don’t know. I do know, however, that we’ve got to emphasize quality instead of quantity, and do something with tort reform to eliminate defensive medicine. You can’t say that if you go into medicine you will automatically make more money. Let’s get serious. People often do things for less than altruistic reasons—they need to make a living. As a doctor, you can make money in addition to following the Hippocratic Oath and helping your fellow man.

We will have to do something, however, about the person who goes to the doctor once or twice a week with benign symptoms simply because he or she is lonely. I think that’s got to end; that’s just my personal opinion (so I can be listed as the most evil bastard of all time).

AAOS Now: Do you believe that the Independent Payment Advisory Board will be repealed?

Mr. Simpson: I don’t have any idea, but I know that a lot of people are interested in getting doctors out of the game. If you leave it to laymen, they will not let doctors judge other doctors. That’s what’s happening here. I don’t know if it will work or not, but I know that the doctors don’t like it. It won’t be repealed if the American public thinks that, to protect themselves from the costs of health care, doctors are going to remain in charge.

AAOS Now: What’s your opinion of the sequester? Was it a manufactured crisis?

Mr. Simpson: The sequester was a self-enforcing mechanism that no one in Congress thought would happen. That’s why it was put in—when the ax falls, certainly no one in Congress will be stupid enough to do a mindless across-the-board ax job on discretionary spending. But they did. Good programs are getting hurt and bad ones aren’t getting hurt enough.

AAOS Now: Moving forward toward a fiscal solution, what is the best-case scenario we can expect? What is the worst-case scenario?

Mr. Simpson: The best-case scenario is that thoughtful, mature human beings from both parties put their country—and not their party—first and come together in compromise. That could happen. Congress could wake up, quit the pettiness, and compromise on a solution.

The worst-case scenario is that our lenders tell us that we are obviously addicted to debt and that our Congress can’t function. So they’ll loan us more money, but they will demand more interest. It could come in 2, 5, or 10 years, I don’t know, but it will be a dramatic disruption.

AAOS Now: So will that be the tipping point?

Mr. Simpson: Real solutions will happen when the world markets—the people who have loaned us $17 trillion—decide that we are dysfunctional and don’t like to pay debt. At that point, they’ll want more money for their money; then we’ll see some real stirrings. The guy who goes to the bank to get a 2 percent loan to send his kid to the community college will be told that the interest rate is now 6 percent. How did that happen? Well, the people who loaned the money wanted more interest. Hopefully, the public will send a strong message to their Congressional representatives, asking ‘Where the hell were you when this happened?’

At some point, however, we’ll all have to do deal with the reality of painful cuts. They will involve everyone—public employees, doctors, lawyers, business people, corporations, and if you leave anybody out it won’t work.

Now is not a pleasant time in our country and if I didn’t use humor, I’d give gestures and make comments that would not be appropriate. Humor is the universal solvent against the abrasive elements of life.

Read more about Mr. Simpson’s and Mr. Bowles’ keynote address at the AAOS 2013 Annual Meeting in the AAOS Now Daily Edition, March 23.

Maureen Leahy is assistant managing editor of AAOS Now. She can be reached at leahy@aaos.org