The Corner

Politics & Policy

Yes, This is a Very Good, Reformist, Permanent Doc Fix

Every so often, maybe in the fourth blue moon of every coon’s age, (and maybe only when also aided by some fairy dust), Congress actually works in a bipartisan way to improve public policy. Despite a wee bit of caterwauling from some usually sensible sources, that’s what Congress will be doing (the House votes on Thursday) if it passes long-term reforms aimed at negating the need for the annual accounting gimmick known as the “doc fix.”

A mid-1990s budget law required Medicare payments to doctors to be cut (eventually) by a total of 20 percent. Those cuts were so punitive as to be counterproductive, with the likely result being a mass exodus of doctors from serving Medicare patients at all. So, 17 times since 2003, Congress has passed the doc fix, which is shorthand for bypassing the payment cuts and instead allowing doctor-reimbursement rates to remain competitive.

This of course requires more money from the Treasury, so each fix lasts only a year (or so), because otherwise the added spending for the fix in subsequent years (without concomitant cuts in other federal spending) would blow a hole in every ten-year budget. Congress usually uses various accounting sleights-of-hand to pretend to pay for each one-year fix, and then comes back the next year and does it again.

For years, “good government” groups have pleaded for Congress to stop the charade, eliminate the absurdly punitive reimbursement-rate cut, and find a permanent way to achieve the desired savings through other reforms. Congress is finally acting. The bill up for consideration on Thursday would implement a number of Medicare reforms of the sort conservatives long have championed. Some of those reforms bring market forces into play. Others tighten eligibility rules to achieve savings, and others are likely to catch and block some attempts at Medicare fraud.

Nonetheless, a few (but only a few) conservative stalwarts are yelling bloody murder. They say this permanent doc fix somehow will add to long-term debt.

They are wrong. It will do so only if one uses the sort of green-eyeshade accounting conservatives usually loathe, the sort that ignores real-world economics. The only way the proposed legislation would add to long-term debt is if one assumes that the same Congress that 17 times in twelve years has passed temporary doc fixes would somehow suddenly stop doing so, and thus allow the punitive reimbursement cuts and the subsequent exodus of hordes of doctors from the Medicare system.

Political reality makes that a false baseline. The real-world baseline would assume that without this week’s legislation, Congress will keep on using its expensive, temporary bandages, year after year after year.

The choice is not between a baseline of 20 percent reimbursement cuts or this reform bill; the choice is between expensive stop-gap measures and this bill, which finally pays for itself with real savings, even at a little short-term cost to the Treasury.

Somehow, alas, the rumor is out that the bill contains special-interest add-ons that will make it hideously more expensive. Our colleague John Fund, who is both wise and right 99 percent of the time, is one of those who have warned of this possibility in a post here at NRO last week. He specifically mentioned United Health Group’s lobbying for the creation of a “Regional Preferred Provider Organization,” which would have allowed it to “cherry-pick which federal employees it can provide coverage for and in which states,” giving the group an unfair competitive advantage.

Fortunately for the bill, that information is now dead on arrival. “The provision is not in the bill,” according to Michael Steel, Speaker Boehner’s spokesman, on Monday evening.

A host of conservatives, eminently trusted on economics/budgetary issues, recognize that this bill represents real (even if only incremental) long-term reform of just the right sort. Among those endorsing it are Colin Hanna of Let Freedom Ring, Grover Norquist of Americans for Tax Reform, former Republican Congressional Budget Office director Douglas Holtz-Eakin, and Galen Institute president Grace-Marie Turner, along with supportive statements from the National Taxpayers Union, the Wall Street Journal editorialists, and the National Association of Manufacturers.

Everybody involved, from Speaker Boehner to all the involved committee chairs in the House and their counterparts in the senate, should be credited for this very worthwhile, successful effort. This set of Medicare reforms is good medicine. Congress should ignore the naysayers and worry-warts, and pass it forthwith.


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