Skip to main content
The Keckley Report

President Biden’s FY2022 Budget: The Numbers Don’t Add Up

By March 28, 2022March 1st, 2023No Comments

Amidst media attention to Russia’s month-long invasion of the Ukraine, the emergence of the new BA-2 Omicron variant and inflation which has sent consumer sentiment to an 11-year low, attention shifts to the 74-page White House Fiscal Year 2022 Budget released today. Prediction: Two of its elements will spark headline coverage:

·        Wealth Tax: A new minimum income tax of 20% on wealthy Americans (20,000 households with above $100 million in annual income) which would be applied to earned income and capital gains which OMB predicts will reduce the federal deficit by $360 billion over 10 years.

·        Defense Spending: The Budget calls for $813.3 billion in national security spending including $773 billion for the Pentagon– an increase of $31 billion, or 4%, from approved spending for the current fiscal year and about $43 billion more than the White House budget office had projected a year ago for fiscal 2023.

Through the years, wealth taxes have been proposed and laws passed to enable government to grab more from those most fortunate. Invariably, promised deficit reduction results fall short and opportunists find loopholes. And funding for defense is a two-edged sword: it’s widely supported by majorities of voters but a flash-point for critics who think the U.S. spends too much. Both of these will be popular targets for talking heads and op-eds in coming days.

Perhaps more substantive are the underlying assumptions for 2022 to 2031 developed by the Office of Management and Budget: they’re critical to evaluating the President’s Budget:

·        Federal receipts will increase from $4.174 trillion in 2022 to $6.643 trillion in 2031—a 59.2% increase with cumulative spending reaching $54.665 trillion.

·        Federal outlays will increase from $6.101 trillion in 2022 to $8.211 in 2031—a 36.3% increase reaching $69.196 trillion.

·        Deficit spending will decrease from $1.837 trillion in 2022 to $1.568 trillion in 2031—a 14.6% decrease.

·        The Gross Domestic Product will increase from $23.500 trillion in 2022 to $33.391 trillion—a 42.1% increase.

And those of us who follow healthcare will dig into these assumptions:

·        Medicare outlays will increase from $715 billion in 2022 to $1.415 trillion in 2031—a 97.9% increase.

·        Medicaid outlays will increase from $518 billion in 2022 to $835 billion in 2031—a 61.2% increase.

·        The US Department of Health and Human Services budget increase from $108.4 billion to $133.7 billion in this budget—a 23.4% increase.

Opinions will vary from left to right about the accuracy of the Budget’s assumptions and the worthwhileness of its outlays but everyone recognizes it will change as special interests weigh in and economic conditions shift.  It’s a start.

My take:

What’s most notable about this Budget is the veracity of its assumptions: it presumes receipts grow faster than outlays (spending) and the deficit shrinks over time. That’s unlikely. While fiscal conservatives call for spending restraint, it doesn’t readily happen. So, as legislative aides pore over language changes and trade groups create war rooms around their pet programs, spending goes up and debt reduction takes a back seat to political expedience.

What’s also notable about this budget is the importance of healthcare in the federal budget: federal funding for Medicare and Medicaid are forecast to grow faster than overall Federal receipts: outlays increase from 20.2% in 2022 to 29.2% in 2031 per OMB’s forecast. That means individuals and employers will face higher taxes to fund health obligations exacerbating discontent about the system’s affordability, aggressive cost-cutting by providers and market opportunism for private investors and insurers offering significant cost-savings for their customers.

Stay tuned as this Budget is discussed by lawmakers and media: it’s sure to generate political grandstanding and finger pointing.  But it’s unlikely to prompt needed national discussion about how our health system is funded and the roles individuals, employers and the government (local, state & federal) should play. And in reality, in its current form, it’s unlikely to pass but it’s no less the start of the federal budget process. Still, in this one, the numbers just don’t add up.


PS Last week marked the 12th anniversary of the Affordable Care Act’s passage (March 23) and this week (March 30) is Doctor’s Day recognized since 1990. Both are important but media coverage is scant as more sensational items like big deals, bad actors, sticker shock, fraud and waste increasingly dominate health industry news coverage. As never before, effectively educating communities, elected officials, and business leaders about the economics of healthcare is a strategic imperative.

President’s Budget, Office of Management and Budget March 26, 2022

Healthcare Consumers

Univ of Michigan Consumer Index drops: In its latest survey, 32% of surveyed adults expect their finances to worsen over the next 12 months–the largest recorded share since the survey started in the mid-1940s. Consumer sentiment sank to 59.4 from 62.8 in March– down from a year-ago reading of 84.9 and marks the most pessimistic sentiment in nearly 11 years. The only two periods to feature bleaker financial sentiments since the survey was first conducted were the recession of the early 1980s and the Great Recession.

“Consumer Sentiment Down Marginally in Late March 2022” Investopedia March 25, 2022

Pew: multigenerational households quadrupled from 1971 to 2021: while the share of the population in such an arrangement more than doubled to 18%. Population growth among people of color is a big reason for the increase, as they are more likely than white Americans to live with extended family, according to Pew. 50% of lower-income adults in such households say the arrangement helps them financially, compared with 36% of middle-income and 24% of upper-income adults. Young adults moving away from home, postponing marriage or getting jobs later in life is a contributing factor.

“Financial Issues Top the List of Reasons U.S. Adults Live in Multigenerational Homes” Pew Research Center March 24, 2022

Medical debt to be taken out of consumer credit reporting: Context: 43 million Americans have an estimated $88 billion in medical debt on their credit files, according to a Consumer Financial Protection Bureau report released earlier this month. Effective July 1, 2022, paid medical collection debt will no longer be included on consumer credit reports. In addition, the time period before unpaid medical collection debt would appear on a consumer’s report will be increased from 6 months to one year, giving consumers more time to work with insurance and/or healthcare providers to address their debt before it is reported on their credit file.

“Equifax, TransUnion and Experian will soon stop counting medical debt in credit reports — now, for the bad news” MarketWatch March 26, 2022


Kidney care attracting combo announced: Per an announcement last Monday, 3 kidney care providers—Fresenius Health Partners, Cricket Health and InterWell Health—plan to merge in a deal valued at $2.4B.  The merger brings together value-based kidney care contracting of Fresenius Health Partners, a division of Fresenius Medical Care North America, InterWell Health’s network of 1,600 nephrologists and startup Cricket Health’s technology-enabled care model and patient engagement platform. Fresenius Medical Care is the world’s largest operator of dialysis centers. The combined company will serve close to 300,000 patients by 2025 and will increase its medical costs under management to $11 billion.

Context: Kidney disease is a health, disability, and workforce issue that costs taxpayers and the economy $130 billion in annual Medicare spending, including $50 billion to manage kidney failure and dialysis care. More than 37 million Americans are living with kidney diseases, which for nearly 800,000 Americans progress to kidney failure. It’s a popular target for private investors i.e., recent announcements by Strive Health, Monogram Health, Somatus et al.

Related: Study: Younger non-white kidney-failure incidence rate higher: Researchers analyzed compared kidney replacement therapies between racial/ethnic groups among patients with incident kidney failure, overall, and by age. Results:

After adjustment, the largest relative disparities were observed for transplantation; among the age group 22-44 and compared to non-Hispanic White patients, the ARRs for non-Hispanic Black and Hispanic patients were 0.21, 95% CI (0.19, 0.23) and 0.47, 95% CI (0.43, 0.51), respectively.

“3 kidney care providers—Fresenius Health Partners, Cricket Health and InterWell Health—plan to merge in deal valued at $2.4B” Fierce Healthcare March 21, 2022

Wilk et al “Racial and Ethnic Disparities in Kidney Replacement Therapies Among Adults With Kidney Failure: An Observational Study of Variation by Patient Age” American Journal of Kidney Diseases February 22, 2022DOI:

Mental Health

Study: anxiety increasing in children: Researchers examined annual data from the National Survey of Children’s Health (2016-2020) of 174,551 children from birth to age 17 years living in non-institution settings.  Findings:

Between 2016 and 2020, there was a 29% increase in anxiety (7.1% to 9.2%) and 27% increase in depression (3.1% to 4.0%). There was an 18% decrease in daily physical activity (24.2% to 19.8%), a 5% decrease in parent or caregiver mental health, and 11% decrease in coping with parenting demands (67.2% to 59.9%).

“Five-Year Trends in US Children’s Health and Well-being, 2016-2020”JAMA Pediatrics March 14, 2022. doi:10.1001/jamapediatrics.2022.0056

KFF Study: mental health need 3-times higher in Medicaid population: Leading up to the pandemic, 8.5 million adults reported moderate to severe symptoms of anxiety and or depression but didn’t get treated in the previous year due to cost or lack of awareness of providers/programs. 54.9 million adults reported at least mild symptoms, with 9.5 million having severe symptoms. The percentage of people on Medicaid reporting moderate to severe symptoms was more than 3 times higher than the percentage on employer-sponsored health coverage.

Related: Last week, Optum (UnitedHealth Group) announced the acquisition of Jacksonville Beach, Florida-based Refresh Mental Health from private equity firm Kelso & Co. Refresh, founded in 2017, operates a network of more than 300 outpatient mental health, substance abuse and eating disorder centers spanning 37 states.

Panchal et al “How Does Use of Mental Health Care Vary by Demographics and Health Insurance Coverage?” Kaiser Family Foundation March 24, 2022

Study: Physician Merit-based Incentive Payment Program (MIPS) disadvantages psychiatrists: The CMS Merit-Based Incentive Payment System (MIPS) is a mandatory, value-based payment program that covers almost all outpatient US clinicians who treat Medicare patients. In 2020, the second payment year for MIPS, up to 5% of clinicians’ Medicare reimbursement was tied to their 2018 performance across 4 measurement domains: quality, promoting interoperability, improvement activities, and cost. As the program is phased in, payment penalties and bonuses increase to up to 9% of clinicians’ Medicare reimbursement by the end of 2022.

Currently, there are 210 MIPS quality measures from which clinicians must select at least 6 to report to the CMS: only 3 of the 25 measures in mental/behavioral health specialty are unique to psychiatric practices.

In this cross-sectional study of 9356 psychiatrists and 196,306 other outpatient physicians participating in the 2020 MIPS, psychiatrists had significantly lower performance scores, were significantly more likely to be assessed a performance penalty, and were less likely to be assessed a bonus than other physicians.

Qi et al “Comparison of Performance of Psychiatrists vs Other Outpatient Physicians in the 2020 US Medicare Merit-Based Incentive Payment System “JAMA Health Forum March 25, 2022;3(3): e220212. doi:10.1001/jamahealthforum.2022.0212

Health Information Technology

Cerner rollout in VA disappoints: The VA Office of Inspector General released a trio of reports this past week with allegations about medication, ticket-process and care-coordination concerns from late January 2021 through June 2021 at the Mann-Grand staff VA Medical Center in Spokane in October 2020. In response, VA Deputy Secretary Donald Remy said the experience in Spokane will not delay its rollout in Walla Walla last week as part of Cerner’s $16 billion, 10-year contract. But U.S. Senator Patty Murray, D-Wash., issued a statement last Thursday asking the U.S. Department of Veterans Affairs to stop the planned go-live of its new Cerner electronic health record system in Walla Walla, Washington.

“VA officials ‘looking forward’ to launch of new medical record system in Walla Walla despite problems in Spokane” Yahoo News March 22, 2022


Study: only 1 in 4 with opioid use disorder get treatment: Researchers analyzed the individual characteristics associated with medication for opioid use disorder (MOUD) receipt among people with opioid use disorder treatment need. Findings:

In this cross-sectional study with a weighted sample of 2,206,169 people with treatment need, approximately 1 in 4 (27.8%) reported past-year MOUD use, including no adolescents and only 13.2% of adults 50 years and older. Use of MOUD was low despite high prevalence of past-year health care or criminal legal system contacts.

Mauro et al “Use of Medication for Opioid Use Disorder Among US Adolescents and Adults With Need for Opioid Treatment, 2019”JAMA Netw Open. 2022;5(3):e223821. doi:10.1001/jamanetworkopen.2022.3821


Covid cases increasing but deaths decreasing: The number of new coronavirus cases globally increased by 7% in the last week, driven largely by rising infections in the Western Pacific, even as reported deaths from COVID-19 fell, the World Health Organization said. There were more than 12 million new weekly cases and just under 33,000 deaths, a 23% decline in mortality, according to the U.N. health agency’s report on the pandemic issued late Tuesday.

Per the CDC, 35% of new cases confirmed cases of the virus in the U.S. are due to the more infectious omicron variant subvariant BA.2.

World Health Organization; US Centers for Disease Control and Prevention

Value-based purchasing

Fowler: ACOs and direct contracting programs will be monitored closely: ”…we’re committed to making sure that (direct contracting entities) this year and ACOs going forward adhere to the requirements of their participation agreements with CMS…in addition to reviewing marketing materials and communications sent to beneficiaries, and investigating beneficiary complaints, we’ll be using more data analytics to monitor use of services over time, and comparing that to a reference population… We plan to continue our audits of contracts that ACOs have with providers and learn more about their downstream arrangements, and identify any concerns. And we’ll monitor for non-compliance with prohibitions against anti-competitive behavior and misuse of beneficiary data.

Q&A with Elizabeth Fowler of the Center for Medicare and Medicaid Innovation: ‘We want to be a good partner to good actors’ Modern Healthcare March 22, 2022


Study: diabetic foot ulcerations incidence lower in Medicaid expansion states: In a cohort study of 115, 071 hospitalizations for diabetic foot ulcerations (DFUs) among racial and ethnic minority adults, early Medicaid expansion was associated with decreased major amputation and hospitalization rates in early-adoption states compared with non-adoption states. Findings:

Hospitalizations increased 3% in early-adopter states and increased 8% in nonadopter states after expansion, a significant difference. Although there was no change in the amputation rate in early-adopter states after expansion, there was a 9% increase in nonadopter states, a significant change. For uninsured adults, the amputation rate decreased 33% in early-adopter states and did not change in nonadopter states after expansion, a significant difference. There was no difference in the change of amputation rate among Medicaid beneficiaries between state types after expansion.

Tan et al “Rates of Diabetes-Related Major Amputations Among Racial and Ethnic Minority Adults Following Medicaid Expansion Under the Patient Protection and Affordable Care Act “JAMA Netw Open March 24, 2022;5(3):e223991. doi:10.1001/jamanetworkopen.2022.3991

Drug Prices

Study: cancer drug prices in US vs. Germany, Switzerland lower after launch: Researchers examined price changes for cancer medicines between 2009 and 2020. Finding: with one exception — the median price for all of the drugs rose 6% in the U.S. 2 years after product launches and 15% by 4 years after a medication became available, despite a growing number of competitive treatments. By contrast, in Germany, 2 years after launch, the monthly median price fell 21% and 26% after 4 years. In Switzerland, monthly median prices fell 2% after 2 years after product launches and 13% after 4 years.

Vokinger et al “Price changes and within-class competition of cancer drugs in the USA and Europe: a comparative analysis” Lancet March 07, 2022DOI:

Private Equity

McKinsey: Private Equity in 2021 bounced back: “Private markets bounced back in 2021. After a year of pandemic-driven turbulence that suppressed fundraising and deal activity, private markets rebounded across the board. Fundraising was up by nearly 20% year over year to reach a record of almost $1.2 trillion; deal makers were busier than ever, deploying more than $3.5 trillion across asset classes; and assets under management (AUM) grew to an all-time high of $9.8 trillion as of July, up from $7.4 trillion the year before. Today, VC and growth equity combined make up 47 percent of PE fundraising, just shy of buyout’s share. PE fundraising ‘winners’ do so by growing their flagships and raising more frequently.”

McKinsey “Private Markets Rally to New Heights” McKinsey Global Private Equity Report March 2022

American Investment Council report:  device, life science investing by private equity significant and increasing: In its new report, “Improving Medical Technologies: Private Equity’s Role in Life Sciences,” AIC calculates that private equity invested $280 billion in 1,800 life sciences and medical device companies in the U.S.. “Despite the economic effects of the pandemic, private equity continued to support life sciences and medical device companies, investing $36 billion and $55 billion, respectively, into each industry.”

American Investment Council