I had the opportunity last night to attend as a guest John McCain's nomination acceptance speach at the Republican National Convention in St. Paul.  Being a health care wonk, one of the things that I ended up reflecting on is the implications for hospitals and physicians of different election outcomes.

Both Obama and McCain identify health care as a priority for their administrations should they be elected.  Neither favors a single payor solution, though clearly Obama favors a more active role for the government.  Of course, the nature of our political system is that what is discussed during the campaign season may bear little resemblance to what actually happens after the election.

I believe the most important election issue for health care providers is something that isn't being talked about very much: the impending Medicare crisis.  The federal budget for 2008 is estimated at $2.9 trillion.  This represents 21% of the 2007 GDP and is about $400 billion more than will be collected by the federal government (meaning that this $400 billion will be a debt for future generations to repay).  At a budgeted $396.2 billion, Medicare is the third largest item in the federal budget, after Social Security and ($615.3 billion) and National Defense ($580.7 billion).

Even if, unlike me, you are not alarmed by the size of these numbers, you may be alarmed by projections of what Medicare is going to cost with the impending retirements of the baby boomers and continued growth in health care costs: according to the Social Security and Medicare Boards of Trustees, Medicare is expected to increase in cost by an average of 7.8% per year for the foreseeable future, reaching an annual cost of more than $850 billion by 2016.

What this means is that our new president is going to be handed a federal budget that represents more than a fifth of the entire United States economy, underfunded by about 14% (the $400 billion deficit divided into the $2.9 trillion total), with Medicare, the third largest component, projected to more than double in size over the next two presidential terms.

Clearly, whatever the campaign promises now being made, no matter which one of these fine men are elected president, health care is in for some substantial changes.  Providers should expect continued diminishment in Medicare reimbursement.  I believe providers should also expect a continued trend, even amongst the Medicare population, towards higher deductibles, copayments and out-of-pocket patient responsibilities.  Retailing of health care services, expansion of internet- and home-based technologies, expanding consumer information, and greater use of physician extending capabilities should be figuring into providers' strategic plans.

It will be an interesting election, but an even more interesting four years for the health care industry.