Speaking at the Orthopaedic Political Action Committee (PAC) luncheon, held during the AAOS Annual Meeting in New Orleans, former Sen. Judd Gregg, a national leader in fiscal policy, discussed U.S. debt and outlined what he believes are the current issues facing the federal government.

According to Sen. Gregg, many of the country’s fiscal policies are tied to health policy, and therefore, have an impact on the healthcare community. “The federal government has a very serious problem. It’s spending much more money than it’s taking in. It’s been doing this for a long time and it’s creating a debt structure that is totally unsustainable,” he said. “Debt is our issue, health care is the problem, and, in my opinion, leadership is the solution.”

Sen. Gregg believes the United States is essentially in the same class as other countries, including Iceland, Greece, and Ireland, which have experienced massive debt in recent years. The difference, he says, is that people believe America will fix its debt problem because that’s what America does—it solves problems.

According to Sen. Gregg, however, our country’s debt is unsustainable. He pointed out that the national debt increases about $31,000 per second, which is “more than the average cost of a new car purchased,” or enough to buy food for the average American family for 5 years. The solution, he believes, lies in the overhaul of current entitlement programs and healthcare reform.

“We are seeing a massive demographic shift in this country and that demographic shift is leading to a huge increase in the cost of our entitlement programs,” he said. “We have to reform Medicare, we have to reform Medicaid, and we have to reform our revenue system.”

Rewarding outcomes, not utilization
With respect to healthcare reform, Sen. Gregg supports a system that rewards outcomes rather than utilization. In addition, “if we gave the states more control over Medicaid, I believe we’d get much better administration of Medicaid. The state governors tend to be much better administrators then the federal Congress or the Department of Health and Human Services,” he said.

He also suggested changing the way senior citizens are encouraged to participate in Medicare Part D, and believes that premium subsidies for middle- and high-income individuals need to be reduced.

On the subject of tax reform, Sen. Gregg stated that the Simpson-Bowles plan is the best option he has seen so far. “The Simpson-Bowles plan was basically a direction of fundamental change,” he said.

Additionally, Sen. Gregg supports the creation of a system that encourages people to invest for the best return—not for the best tax deduction. “We need to reduce the number and amount of deductions and exemptions, and we need to bring tax rates down along the lines of Simpson-Bowles,” he said. Although he admitted that major tax reform is not likely before the next election, he did suggest that there is a “distinct possibility that tax reform can happen,” that the country is “well-positioned,” and that the door is open for major tax reform.

According to Sen. Gregg, America is on the cusp of one of the most dramatic economic expansions in its history, and that expansion will be driven by four basic factors.

“First, a change in the energy paradigm. The second thing we have going for us is that we’re still the country with all the great ideas. Third, there is a massive amount of capital sitting on the sidelines that wants to invest in America. And finally, we are still an incredibly entrepreneurial country,” he said.

The role of orthopaedic surgeons
Sen. Gregg noted that orthopaedic surgeons will play an important role in determining the debate’s final outcome.

“You folks are right in the middle of this debate,” he said. “The fact that you are active through your PAC is incredible because you are going to be in the center of this debate for as far as the eye can see. I don’t think we’re going to string this out in one grand bargain or one mini grand bargain; this is just going to be an issue that we will return to again and again and again.

“The only thing that’s holding us back is our fiscal policy,” said Sen. Gregg, “and the only thing holding back our fiscal policy is our willingness to step up and do something substantive in the area of entitlement.”

Sen. Gregg followed his address by taking limited questions from the crowd. Additionally, PAC Chairman Stuart L. Weinstein, MD, congratulated Iowa as the state with the highest PAC participation and Connecticut as the state with the greatest increase in political activists joining the PAC.

A U.S. Senator from 1993 to 2011, Sen. Gregg was both the chairman and the ranking member of the Senate Budget Committee. He also worked on the Simpson-Bowles Commission and helped negotiate the Emergency Economic Stabilization Act of 2008. Before serving time in the Senate, Sen. Gregg was governor of New Hampshire and a U.S. Representative.

Elizabeth Fassbender is the communications specialist in the AAOS office of government relations. She can be reached at fassbender@aaos.org