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Critical Condition

NRO’s health-care blog.

On Deficits and Doctors



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Late last week, Senate Budget Committee Chairman Kent Conrad told his fellow Democratic colleagues that he wouldn’t play along with their transparent scheme to offload $247 billion — the amount needed to pay for the so-called Medicare “doc fix” over ten years — from Obamacare onto another piece of budget-busting legislation. For that bit of independent thinking, Senator Conrad is getting his own personal meeting today with the president of the United States in the Oval Office.

Why would the president drop everything to have a last minute, one-on-one meeting with a single Democratic senator? Because he will do anything to get a bill done this year, and Democratic strategists have told him that running the “doc fix” as a standalone measure is key to passing a governmental takeover of American health-care, which is their goal. They may be right.

Some kind of “doc fix” provision has been enacted every year since 2002 to override the current Medicare physician-payment rule, known as the “sustainable growth rate,” or SGR, formula. Ironically, the SGR is a prime example of how the kind of health-care central planning at the heart of Obamacare will inevitably run amok. Medicare administrators have been trying for two decades to use bureaucratically-devised payment schemes like the SGR to keep total physician spending in line with overall growth of the economy. But Medicare’s payment regulations can only control prices, not volume. So as use of services has gone up, the SGR formula has called for large, annual reductions in the per service fees Medicare pays to physicians. In recent years, Congress has regularly overridden the SGR formula on an ad hoc basis to avoid the 10 to 20 percent cuts in payment rates that would otherwise have occurred. Under current law, application of the SGR formula would result in a 21 percent reduction in physician fees in 2010.

Everyone knows that won’t happen because neither party supports such deep cuts in physician fees. The only question is how it will get fixed.

House Democrats, sensing an opportunity, offered to include a full SGR repeal in their health-care plan if the American Medical Association (AMA) were to endorse the bill. Tens of thousands of U.S. physicians are adamantly opposed to government-run health-care and would never have agreed to compromise their principles for short-term financial gain. But the AMA bureaucracy is another matter entirely. They worked overtime to get their leadership to accede to the deal.

Then came the president’s September speech to a joint session of Congress, during which he pledged to hold the line on the health-care plan at “only” $900 billion over a decade. The House bill overshoots that mark by about $300 billion at last count, and that’s before Democratic leaders engage in a round of aggressive vote-buying.

And, so, faced with a budget constraint, enterprising Democrats settled on a solution. Instead of one budget-busting bill, why not two? The plan now is to try to pass a full SGR repeal, at a cost of $247 billion over a decade, separate from the health-care bill, thus allowing more spending all around.

The only problem is that even some Senate Democrats find this scheme too shameless by half to support. Sen. Evan Bayh said last week that he agreed with Senator Conrad that a physician-fee fix should not add to the nation’s already skyrocketing debt.

Indeed, despite the setting, there’s no reason today’s meeting should have changed Senator Conrad’s mind. The facts are on his side.

On Friday, the Treasury Department announced that the federal government ran a $1.42 trillion budget deficit in 2009, or about 10 percent of GDP. That’s the largest nominal budget deficit in history, and the largest as a percentage of GDP since World War II. From 1789 to 2008, the federal government borrowed about $5.8 trillion. In just two years, 2009 and 2010, the government will borrow nearly $3 trillion more. Further, the Congressional Budget Office (CBO) expects the federal government’s debt to exceed $14 trillion by 2019, and that’s before the full force of the baby boom retirement has hit the government’s books. The Obama administration’s budget plan would make this very daunting budgetary outlook much worse.

In this environment, the last thing our nation needs is another piece of legislation — after all of the bailouts and buyouts of 2009 — to dump $250 billion more onto the pile of debt that will be passed on to the next generation of taxpayers. Doctors’ fees in 2010 will not get cut. That’s a certainty. It only costs about $11 billion to fix the problem next year.

Indeed, this really shouldn’t be a close call for any politician claiming to be a fiscal conservative. The Democratic plan would add $250 billion to the federal budget deficit over a decade, thus allowing an even more expansive entitlement in Obamacare. That should be enough to draw unified Republican opposition. And if Senator Conrad and a few of his colleagues don’t buckle, there should be more than enough votes to defeat this blatant attempt to force taxpayers to pay yet again for plans hatched entirely for political reasons.



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