[00:00:00] Welcome to the Health Policy Podcast. I'm Brian Hyde, and today I'm joined by Pete Sepp. Pete is President of the National Taxpayers Union. Pete, it's wonderful to have you on the podcast. For those meeting you for the first time, could you take a moment, just tell us a little bit about yourself. Well, sure. I really appreciate your having me on. National Taxpayers Union is a nonprofit nonpartisan citizen group. We were founded back in 1969 to work for lower fairer, simpler taxes, less wasteful government spending and economic freedom at all levels. Healthcare in America actually encompasses all. Of those things, government spending, taxes and economic freedom. So it is a very important component of our own fiscal policy agenda here at NTU. Well, and it seems like we hear a lot about health policy in Congress and in particular, I believe there, there were a couple of, uh. Pieces of, of health policy that, [00:01:00] that you wished to cover. Um, tell me about, uh, what is at the, the top of your priority list right now and, and why this needs to be, you know, on more people's radar screens. Yeah, sure. Well, we often hear, for example, about social securities financing problems. The fact that the so-called trust fund for the old age of retirement system is not going to be able to pay out all of its obligations very soon. In fact, in 20 32, 6 years from now, we may be facing a benefit cut in social security of about 28%. The hidden problem here is that healthcare systems face an even bigger crisis at the federal and state levels in their financing. The Medicare part, a trust fund that provides hospital insurance. That has only one extra year of life beyond social [00:02:00] securities trust fund. Currently, part A is projected to go broke. In other words, not be able to pay out all of its obligations in 2033. That will necessitate an immediate 11% payment cut in Medicare Part A benefits. That would be really an incredible adjustment for seniors to have to make, for the government, to have to make. And of course there will be a lot of pressure on taxpayers to make up that difference, and instead of cutting benefits, raising taxes. By 11% on the payroll tax that currently funds Medicare. That would be a huge hit to the economy. After we've been going in roughly the right direction with income tax reductions, um, we would suddenly see a big jump in the payroll tax. We also have problems in [00:03:00] Medicaid, even after the one big beautiful Bill act that passed in 2025, kind of slowing the growth rate of federal Medicaid expenditures with a number of reforms. Well, Medicaid's gonna keep growing. Uh, that's kind of the hidden story here, that even with everything that so-called one big, beautiful Bill did last year, Medicaid on the federal level is gonna grow by an average of 4% a year. In the foreseeable future, those are all putting huge pressure on the rest of the federal budget. Healthcare is more than a quarter of federal expenditures right now, and that even assumes that those so-called premium tax credits, the Obamacare subsidies that were in the news at the end of last year. That the more generous ones from the COVID era expired. This is a lot of gloom and doom, [00:04:00] and I hate to bring it, uh, to all of those who subscribe to your podcast, but it's vitally important. We understand that this time the clock really is running down on taxpayers and patients here. Well, and it, it sounds like, yo, well, six years, that is so far away. No, it's, it's really not. And, and for people who maybe aren't even on those roles at this time, um, but will be, you know, in another four to five years, um, this is gonna be a big deal. I'm, I'm looking. That's funny. I'm looking at an op-ed that was, uh, written by one of your colleagues, Al Alexander Cone, about, uh, this one bipartisan bill would cut billions in Medicare waste. And I'd like to just kind of have you walk me through, uh, some of the things that, uh, that Alexander covers in, in this article. Um, clearly there are some reforms that are needed. Um, let's talk about where, where those kind of things have to or have to begin, you know, starting with Congress. Sure, sure. Well, the [00:05:00] centerpiece and, uh, this is just one of many reforms really, that we should be contemplating in this Congress is something called the no unreasonable payments, coding or diagnoses for the elderly or No UP Code CLEVER Acronym act. Uh, this is, uh, Senate Bill 1105. It is. Bipartisan sponsored by Senators Cassidy. Uh, Cassidy being from Louisiana, Merkley being from Oregon, and what this attacks is a problem with, uh, private insurance companies that participate in Medicare Advantage or Medicare Part C. What is currently happening is that insurers receive fixed monthly payments from the government based on the reported. Reported health risks of their enrollees. Well, Medicare Part C Medicare Advantage is supposed to offer a [00:06:00] kind of flexibility that traditional Medicare part A just can't provide. Yeah. But the problem is. By allowing companies to receive these monthly payments based on, again, reported health risks rather than actual health risks, it incentivizes them to overstate patient diagnoses. They can upcode a patient's diagnose. By a home healthcare visit or simply by some doctor reviewing a patient's charts and saying, well, I don't know. This moderate diabetes might actually be severe diabetes. Let's give them that diagnosis, and then suddenly the insurance companies are getting a bigger payment without really examining the patient in person to determine whether they really. Have a severe condition. The [00:07:00] average, uh, problem here, the cost that we're talking about is something like $40 billion more a year due to this upcoding alone to the Medicare system, 40 billion. Just from this problem, we can't afford it. We have got to do something to address it, and this bill does so. Pete, one of the things that strikes me as you describe the, the situation there is that, uh, the taxpayers are the ones who are on the hook for this. Um, but it seems like congress, I, Congress seems awful agreeable with these private insurance companies, you know, to, to take it on, on good faith that, well, you know, the information they're giving us, sure we can still give them the money. Um, it seems like there's an incentive there. Um, not so much for accuracy, but uh, just for. Keeping it going. I wanna use the word scheme, but I feel like that might be a little too harsh. Yeah, it's, it's kind of a cookie cutter approach, and we can't [00:08:00] afford the cookie cutter approach anymore, and we're not out to deprive six seniors of the healthcare they need. We, that's the whole purpose of the Medicare system, parts A, B, C, and D. And so. What the No Up Code Act does is say, okay, we're going to trust medical judgment. We just want a little more verification here. In other words, um, Medicare Advantage Payments being based on just one year of a patient diagnosis. Well, the No UP Code Act would say we want two years of diagnostic data and instead of just reviewing a patient's chart and making a judgment. That their condition gets upgraded to a more costly diagnosis. The patient simply has to see a doctor in person to make sure that the diagnosis is accurate. Those are really simple common sense steps that we can and [00:09:00] should take, not only to help patients. I mean, they'll benefit by seeing a doctor in person rather than having their diagnosis done from a chart. But taxpayers will benefit too. We'll start to get at that $40 billion a year excess cost, and will lengthen the life of the Medicare program as a result. Will this also make sure that the people who actually need help. We'll, we'll have help as opposed to, um, you know, the, I guess the, the insurance companies just, uh, continuing to, hey, we're doing really well under this system. And, and if it happens to help, you know, if some of the insured, that's great, but it, it seems like that's kind of a secondary thought. I think it will because when you require a real life doctor to see the patient in person and make an honest diagnosis, who knows what other kinds of things might come out about the patient that's simply [00:10:00] reading a chart. Or doing a home health visit from someone who's not a doctor would never reveal. I mean, that's the other point of this, is to improve the quality of the care And no UP Code Act can do that. So tell me about, uh, how is the No UP Code Act being received, uh, so far in, in Congress are, are they having an easy time finding, um, co-sponsors or people to help carry this forward? Is there resistance for that matter? Well, of course, those who benefit from the current system are indeed going to resist any changes. And, uh, that would be insurers and, uh, to some degree even hospitals who, uh, are already claim that they are overloaded with, uh, Medicare patients. There are doctor shortages in certain areas, so on and so forth. But there is a rec, a recognition. I think that something has to change in the Medicare system and we've got to [00:11:00] start making the changes now. So we have that window, it's shrinking. Uh, we're down to six years now for Medicare Part A, but even that window will give us time to implement these changes in a gradual and rational manner. So. There is renewed and increased interest in solving this upcoding problem and in this legislation. I think that if Congress decides to do another budget reconciliation process like they did last year, which, uh, passed that one big beautiful bill act. This would be a prime candidate to include in it if the reconciliation process fails, because it's always driven by the party in power, in this case, the Republicans, well, it's got bipartisan pedigree. Maybe it can either hit a ride on another bipartisan bill or it could even go [00:12:00] through Congress on a standalone basis. It's that important that we start doing reforms like these and there are other reforms. Are there other, um, programs that, that likewise are, are facing, um, a kind of a, a financial countdown similar, uh, to, to Medicare? Um, I, I'm just curious, what's the health of some of the other, you know, federally funded, uh, programs? Well, social Security, which I spoke about earlier, is in a similar bind. Now, the advantage we have with Social Security Reform is that we are much more familiar with the levers that can be pulled to extend the life of the program. You can raise the retirement age, you can. Raise the ceiling at which you stop paying payroll taxes so that there's a little more revenue coming in. Um, you can change the formula [00:13:00] for indexing, uh, the annual benefit for inflation right now. They use a form of consumer price index that's, uh, pretty generous. Uh, for taxpayers. Our tax brackets are indexed to something called chained Consumer Price Index. If we did that for social security, we could get a lot of savings, and that would mean no benefit cut. It would just mean perhaps we have a more accurate measurement of benefit increases in the future. With healthcare, there are so many more levers. There's payment systems for hospitals and insurers. There's the type of care the government will cover. Uh, there are veterans programs, senior programs, there's Medicaid. All of these interact in various ways and. It is very difficult to unravel them. That's the real challenge with the [00:14:00] healthcare programs. I also point out, uh, the clock is ticking on something called the Highway Trust Fund. Uh, that is a fund that, uh, gasoline taxes and, uh, a few other taxes are put into to provide, uh, resources for surface transportation, roads, bike paths, what have you. And, uh. That trust fund, unfortunately, will be depleted by 2028. So that's two years. I mean, any way you look at this. And, uh, th this just occurred to me when I read the headline, the US Senators who are standing for election in this cycle in 2026, because they serve six year terms. All of the programs I spoke about will have. Real problems, breakdowns during their terms. The senators we elect in this [00:15:00] November election will be facing all of these crises. So I'm curious, how do we shift, uh, those who are going to be elected, um, how do we shift this into, into a, a high priority for them? I, part of me understands. Yeah. It's easier to kick the can down the road. We'll do a continuing resolution. We'll do something else. We'll push it off for somebody else. It, it sounds like we're, we're approaching a point where pushing it off to the future is no longer going to be an option. That's right, and it's a matter of compassion. Now, as someone who's been with National Taxpayers Union for 37 years, we've been sounding the warning cry year after year on behalf of taxpayers. Well, it's not just a fiscal policy matter anymore. It's a moral imperative. Do we want. Huge cuts in these benefit programs that many seniors, many veterans, um, many folks who are [00:16:00] living paycheck to paycheck won't be able to afford. Do we want tax increases that would be very hard to afford for still other folks? It, it's something that is going to be very personal very quickly, and you're right about the inability to kick the can down the road because we can now see the end of the road. Cliff it. It's no longer something that is well over the horizon. It's a good six years from now, and that's it. It could be less as the economy fluctuates, or the finances of the program might fluctuate. So let's, uh, let's shift and, and we just have a few minutes left here, but talk to me a little bit, uh, if you would, Pete, about what the, the National Taxpayers Union, um, does, how people who with whom this re this message resonates. How they can get involved, uh, to help you guys do what you do. Sure, sure. Well, as I said, we have a 55 [00:17:00] plus year history of involvement in taxpayer issues at the local, state, and federal levels. That includes ballot measures to limit taxes or spending at the state level. Uh, we've had successes in places like Colorado, Missouri. Even Massachusetts in California, if you're interested in the way taxes are administered, not just the levels of tax, but how the IRS treats its citizens. Well, we have a whole program of IRS oversight as well as a public interest litigation arm that tries to set precedents in court that will protect taxpayers. Um, if you're interested in the nitty gritty details of. Budgeting. Uh, we have the Better State Budgets project, uh, as well as the taxpayer's budget office, which get into technical, but vital issues about how lawmakers score various bills that are [00:18:00] moving through Congress or how state budget, uh, predictability can be improved. So we do the pragmatic, we do the technical. We do the 30,000 feet, we go into the weeds when necessary with a team of lobbyists and researchers and litigators who are all working for taxpayers. This is a message that I hope reaches the ears of every person who either is working on or has just finished working on their, their yearly taxes. 'cause they need to know that there's someone who's standing up for 'em. And it sounds like National Taxpayers Union is, is, is all about that. Uh, what is your website? It's NTU, our initials for National Taxpayers Union n nt.org. Again, we are talking with Pete Sepp. He is the president of the National Taxpayers Union. And Pete, thank you for coming on the Health Policy podcast today. My pleasure. Hope to see you again soon.