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A Word from the President: The National Debt: This Time, It Is Different

AAMC President and CEO, Darrell G. Kirch, M.D.

By the time you read this column, Washington may finally be rid of its massive piles of snow, but a much larger problem will remain our growing national debt. Like the "snowpocalypse," the national debt has accumulated in such mind-numbing amounts that, for many, its actual level (now $12.3 trillion) seems to have lost significance. However, as Peter G. Peterson noted in his 2004 book, Running on Empty, "Left uncorrected, this fiscal gap will ultimately force us to make an odious choice, between our obligations to our children and our obligations to our elders. It will permit us to be either a forward-looking society or a humane society but not both."

We may be closer to that day of financial and social reckoning than we think. After all, it was a little more than a year ago that the economic collapse occurred, and we prepared to navigate what I referred to in my November 2008 column as "unchartered waters." In that column, I talked about the growing sense of "real urgency" regarding health care reform, and the feeling of hope that stemmed from electing a new president. Using that November 2008 column as a benchmark, I thought it would be interesting to examine the national debt's impact on academic medicine these last 16 months.

With regard to medical education, in that column I noted the recession's potential impact on state government budgets and what this might mean for our member medical schools that depend in some manner on such funds. In November 2008, more than 33 states were reported to be facing budget shortfalls. Today, more than 41 states are in fiscal crisis.

As I traveled the country last year and spoke with medical school leaders, the extent of this economic distress became evident. Few of these leaders expected state funding in higher education to return to previous levels, and virtually no one speculated that philanthropy could fill the gap created. Today, I increasingly hear deans express the belief that we need to develop a new business model for medical education. They have become convinced that our complex web of crosssubsidies is no longer sustainable and that medical schools must find more cost-effective modes of functioning, especially given the troubled economy.

When I talked about our research mission in November 2008, it was one month following enactment of legislation that included the financial industry "bail out" (which put even greater pressure on scarce federal resources), and three months prior to passage of the American Recovery and Reinvestment Act of 2009 (ARRA) with a provision for $10 billion in two-year funding for the National Institutes of Health (NIH). The funding was a significant boost to the efforts of our institutions, whose extraordinary work utilizing ARRA grants is to be commended (as illustrated by a compendium of those efforts, which can be found at www.aamc.org/recovery).

However, as I wrote 16 months ago, the need for predictable, sustainable growth in NIH funding remains. We do not have any indications from President Obama's proposed FY 2011 budget that we can return to the "growth bursts" that we have enjoyed in the past, e.g., the doubling of the NIH budget. There has also been concern that, with ARRA funding being limited to two years, we would "fall of the funding cliff" in FY 2011. Since dispersal of those funds began at the end of FY 2009 and many researchers may still be using those funds two years later, we may temporarily avert or mitigate that 2011 cliff. However, we still will face a major problem in 2012.

Just as we saw in research, the ARRA may have delayed the economic downturn's full impact on teaching hospitals and health systems. When my November column went to press, several of our teaching hospitals and health systems had already reported changes in patterns of insurance and clinical volume. According to a recent brief by the Center for Studying Health System Change, the recession's early impact on health care safety net providers "has been mixed and less severe at least initially." Funding from the recovery act, the brief notes, may have temporarily buffered losses in state, local, and private funding. But with high rates of unemployment and high numbers of uninsured expected to continue, the center believes the worst may be yet to come.

Perhaps most troubling is the collapse of legislative efforts to engage in health care reform. Though time will tell whether renewed efforts by Congress and the administration are successful, it is imperative that we continue to develop and implement innovative models of financing and delivery within our own academic medical centers.

These are a few of the reasons why Peterson's words as chilling as they were six years ago have taken on greater urgency in 2010 both for our nation as a whole as well as for academic medicine. While we appear to have averted a global depression, our hopes for a quick return to recovery also have proven unrealistic. Over the last 16 months alone, our nation's debt burden grew nearly 15 percent. Given this national fiscal reality, we have no choice but to enter a period of deep examination of the financing of medical education, research, and health care.

But our efforts cannot stop there. The "colossal mismatch" between what Americans want from their nation and what they "expect to give," says Peterson, is a "civic tragedy which arose through a dysfunction of political leadership..." Like the blizzard of 2010, both Washington and the nation must search for a way to "dig ourselves out." Academic medicine, by virtue of its daily work in the public goods of medical education, research, and health care, can help lead the way. If ever there were a time for disruptive innovation in all our missions, it is now. This time, it is different.

Darrell G. Kirch, M.D., AAMC President and CEO