March Madness in Congress: Special Interests Pile on Medicare’s ‘Doc Fix’

by John Fund

Perhaps the greatest example of Congress kicking problems down the road is the “doc fix.” Back in 1997, Congress tried to save money by mandating a 20 percent cut in the payments doctors get from treating Medicare patients. Those cuts proved politically unsustainable and economically unrealistic. But Congress hasn’t been willing to find real savings elsewhere. So it has applied a temporary patch blocking the cuts a total of 18 times.

This time, with the latest deadline to avoid the cuts looming at the end of March, congressional leaders promise things will be different.

House Speaker John Boehner and Minority Leader Nancy Pelosi are trying to replace the Medicare payment formula for doctors with a new arrangement that is outside the normal ten-year budget window Congress operates under. Under the deal, both parties would swallow some policies they don’t like in order to get the “doc fix” through.

Republicans would agree to a two-year extension of the Children’s Health Insurance Program (CHIP) at funding levels envisioned in Obamacare, while Democrats would go along with increased payments by Medicare beneficiaries and a requirement that Medigap plans that supplement Medicare carry a co-pay.

The budding Boehner-Pelosi compromise may or not be turn out to be an improvement. What is certain is that attempts are being made to throw a bunch of unrelated add-ons to the bill. These “policy riders” are usually ideas that can’t command a congressional majority, so the only chance lobbyists have of getting them into law are to attach them to “must pass” legislation that faces an imminent deadline.

A classic example is an idea being pushed by United Health Group, the country’s largest insurer. Initially skeptical enough of Obamacare that it held back on providing coverage, United now suddenly wants to cut in front of the line in the race to provide coverage for federal employees and their families.

United has hired a former top aide to Democratic House whip Steny Hoyer to lobby for the creation of a new Regional Preferred Provider Organization (PPO) that would allow it to cherry-pick which federal employees it can provide coverage for and in which states. Pricing on a regional basis would give them a huge advantage over competitors who have to use nationwide costs to price their health-care plans. In addition, a new regional PPO might leave older, poorer, and sicker patient pools to other PPOs, thus making its patient population more valuable.

Why would Boehner and Pelosi agree to go along with this lucrative appendage to their bill? Well, with critics of the bill increasing on both the left (AARP) and right (Heritage Action) of the political spectrum, they may need United’s legion of lobbyists to apply pressure on members of Congress to go along.

All this just demonstrates why Congress should be watched most closely when it faces a deadline and pressure to do “something” on an issue. Everyone agrees that just patching up the “doc fix” almost every year is bad public policy. But so too would be rushing through a replacement loaded with add-ons that — to paraphrase the famous words of Nancy Pelosi — you have to pass before you find out that they are there.

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