Apr 13 2015
The good news from Washington is that bipartisanship has temporarily broken out in Congress. The bad news is it will cost American taxpayers an extra $141 billion over the next 10 years.
The issue in question is a bill — just passed by the House of Representatives — to permanently repeal a budget-enforcement rule within the Medicare program. This so-called “sustainable growth rate” (SGR) mechanism was created in 1997 to check runaway health care spending. It calls for annual adjustments — historically cuts — to the amounts physicians are reimbursed for treating Medicare patients.
But since 2003, the politicians who created SGR have not actually allowed those scheduled cuts to occur. Instead, every so often, Congress passes legislation — nicknamed “doc fix” bills — to temporarily prevent the reimbursement cuts from kicking in.
As you can imagine, this process is a headache for many doctors and seniors, whose livelihoods and access to care hang in the balance. Less importantly, it’s become a headache for Congress, which has to offset new “doc fix” spending with cuts elsewhere in the budget.
Surprisingly, though, SGR has been pretty good for taxpayers. To avoid the cuts to doctors’ pay, Congress has found other savings to offset almost 98 percent of the time of extending Medicare reimbursement levels. So even though SGR has failed to achieve its stated goal, it has nonetheless imposed a bit of needed discipline on the overall federal budget.
So, any worthwhile proposal to replace SGR should be an improvement on the flawed — but nevertheless effective — status quo. The bill passed by the House and due this week in the Senate fails that test for three big reasons.
First, it doubles down on exactly the kind of top-down bureaucratic meddling that always promises to lower costs, but usually has the opposite effect. Under the new law, doctors would face more regulations, not less, and seniors seeking individualized treatment will have nowhere to turn.
Second, according to the Congressional Budget Office, the bill would increase federal spending by about $210 billion over the next 10 years. Only about $70 billion of that new spending is offset, though, meaning the proposal punches a $141 billion hole in the federal deficit over the next decade.
Third, all that new spending comes right after the Senate just passed a 10-year balanced budget that specifically doesn’t account for these additional costs. That is, the very first bill we’re taking up after passing the first balanced budget under President Obama would unbalance it.
Proponents of the deal counter that the cost estimates are wrong and that the savings from this new system will accumulate in future decades. Maybe. But that’s exactly what was promised about SGR back in 1997. And indeed, a report issued Friday by Medicare’s actuaries warns that this new proposal could face exactly the same fate down the road.
The current “doc fix” runs out next Wednesday. That’s when the physician reimbursements drop by 21 percent. We can’t let that happen. Unfortunately, there isn’t time now to fully re-open the bill and rewrite it with better policy.
Therefore, when the Senate takes up this flawed bill next week, I am going to offer an amendment that simply requires Congress to pay for that $141 billion under its normal “Pay As You Go” budget rules. That would come out to about $7.3 billion this year, a fraction of 1 percent of total spending. My amendment would not change or delay anything else in the bill — doctors and seniors won’t notice any difference. It would just require Congress to budget for the costs like we promised we would.
This permanent “doc fix” bill is a testament to an old Washington warning: “If you’re not at the table, you’re on the menu.”
The deal was cut behind closed doors by Democratic and Republican politicians and various special-interest lobbyists. They all got what they wanted. Unfortunately, one group wasn’t “at the table” — hardworking taxpayers. So they ended up “on the menu.”
That’s how a feel-good, bipartisan compromise comes in with a $141 billion price tag.
With the Wednesday deadline bearing down on us, it’s too late to give taxpayers their rightful place at the table. My amendment will at least make sure we don’t stick them with the bill.