Politics & Policy

A Costly Doc Fix

Proposals to change Medicare physician reimbursement would boost the deficit by billions.

The House of Representatives recently passed H.R. 4012, a bill to permanently change the way physicians are paid through the Medicare program, by a vote of 238–181.

The Congressional Budget Office (CBO) estimates that the changes would cost $138 billion over the first ten years. The House bill pays for the Medicare changes by placing a five-year delay on the heinous Obamacare individual mandate that forces every American to have health insurance, netting $169.5 billion.

#ad#Any reprieve that Americans can get from Obamacare is a good thing. However, permanent repeal of the mandate to pay for a permanent change in Medicare would make more fiscal sense. The House bill would add to our mounting debt and Medicare’s insolvency starting in 2020, when the mandate delay expires. One estimate puts the price tag at $140 billion over ten years, starting in 2020.

The Senate may consider S. 2000, their version of the doc fix, with a CBO cost estimate of $177 billion. In contrast to the House, senators may consider and pass their bill with absolutely no offsets. Or they may deal in “funny money” by claiming that it is paid for with “war savings” that were not going to be spent anyway. Apparently, adding to a $17 trillion debt and to the insolvency of Medicare does not concern Senate majority leader Harry Reid (R., Nev.). It should.

As Robert Moffit, Heritage’s senior fellow in health policy, notes in a March 14 Issue Brief, “If Congress were to repeal the SGR [Medicare Sustainable Growth Rate formula] with little or no offsets, such flagrant irresponsibility would generate enormous deficits over time.” The Committee for a Responsible Federal Budget (CRFB), headed by Maya MacGuineas and supported by a bipartisan board, concurs. They assessed both the House and Senate SGR-repeal bills and released a statement that “strongly warns against passing any of these packages, which all fail the basic test of fiscal responsibility.”

The temporary “patch” keeping the 24 percent cut from happening will soon expire. If the Senate passes S. 2000 with no or fake offsets, the House and Senate versions would go to conference behind closed doors, where outside interests and members’ desire to “get something done” would create a hotbox of pressure to cave on responsible offsets. As it is, the House’s bill offers only a temporary offset.

Congress would be wise to extend the patch and, as CRFB says, use the opportunity to “pursue more structural Medicare reforms instead of tinkering on the margins.”

In Washington, there is a lot of lip service given to cutting spending and getting control of mounting deficits. “The SGR bill is a big test of congressional seriousness on debt, deficits, and fiscal responsibility,” warns Robert Moffit. “Watch closely.”

— Laura Trueman is director of strategic operations at The Heritage Foundation.

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