Critical Condition

NRO’s health-care blog.

How Is the Senate’s ‘Doc Fix’ Paid For?


The editors of National Review and NRO have consistently called for the repeal of Obamacare, and established Republican politicians claim to be onside. But when push comes to shove, those Republicans have been unwilling to expose the entire political-medical complex to sunshine, which is a prerequisite for repeal.

Witness last Friday’s unanimous passage in the U.S. Senate of a standalone so-called “doc fix” for Medicare Part B. This “doc fix” kicks the can down the road until the end of November.

But, hey, it doesn’t increase the deficit! Big deal.

As I recently wrote, Congress can never really fix the “doc fix” because politicians cannot correct a centralized, Soviet-style method of calculating physicians’ fees. The best that they could do is simply to eliminate it entirely. So, there is no reason for Senate Republicans to crow about their collaboration with the majority to pull the “doc fix” out of the more comprehensive “extenders” bill in a last-ditch attempt to prevent the Centers for Medicare & Medicaid Services from ordering physicians’ reimbursements to be cut by over one fifth starting this week.

First, two thirds ($4.2 billion) of the $6.5 billion increase in physician reimbursements will come out of Medicare payments to hospitals, by forcing them to bundle together all inpatient and outpatient claims incurred within three days of admission. I’m sure that appears somewhat byzantine to most readers — and it should. The Senate proposes simply to take money allocated from one Soviet-style, price-fixed part of the health sector and transfer it to another. The hospitals will soon be lobbying for their “fix,” as this new policy sinks its teeth into them.

Second, the balance of the money comes from a hike in corporate-tax revenues — the effect of a change in pension-fund accounting that will allow corporations to reduce their contributions and therefore have more taxable income. (This, of course, ignores the fact that corporate pensions are hardly ship-shape, and even the Pension Benefit Guaranty Corporation’s solvency is questionable, as George P. Shultz and John B. Shoven discuss in a book I reviewed a while back.)

Senate Republicans are correct that their most recent in a series of never-ending short-term “doc fixes” doesn’t increase the deficit, but that’s only because of a tax hike and a raid on hospitals. It doesn’t reduce the role of government in medicine, and it’s hardly a good warm-up for the main event of repealing Obamacare.


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