Doctor pay, and its cost, are part of health reform

Monday, October 19, 2009

IN THE WORLD according to Senate Majority Leader Harry M. Reid (D-Nev.), setting Medicare payment levels for doctors has nothing to do with health reform. Really. "Correcting the Medicare doctors' payment discrepancy is a budgetary problem -- health insurance reform tackles a serious regulatory problem," Reid's office said in a statement. "That's why we need to fix the Medicare doctors' payments first, outside of health reform."

Where to start with this? First off, $247 billion -- the 10-year cost of the fix -- is one whopper of a "discrepancy." Dealing with that "discrepancy" amounts to more than one-quarter of the cost of health reform. President Obama has vowed that health reform will not add a single dime to the deficit -- but he is seemingly unfazed about adding more than a quarter-trillion dollars to the deficit by changing the Medicare reimbursement formula without finding a way to pay for it.

Second, Mr. Reid's attempt to distinguish the budgetary and regulatory issues is nonsensical. The health reform measure includes all sorts of changes in the ways that various providers are compensated. True, the problem with inadequate Medicare payments is something of a preexisting condition to health reform, but that does not make it unrelated. The so-called doc fix is being rushed to the Senate floor this week in advance of health reform not because it has nothing to do with health reform but because it has everything to do with it. The political imperative is twofold: to make certain that Republicans don't use the physician payment issue to bring down the larger bill and to placate the American Medical Association.

This latest maneuver only heightens the fiscal irresponsibility of what already was a fiscal sleight of hand. The measure passed by the Senate Finance Committee patched the problem for one year, at a cost just shy of $11 billion. The argument was that the rest of the problem could be dealt with -- and, at least in theory, paid for -- later. Now, Mr. Reid proposes not to pay for any of it, not even $11 billion, but simply to write a $247 billion IOU.

The Medicare payment formula is one of a number of fiscal time bombs that will need defusing soon: the alternative minimum tax, the Bush tax cuts, the estate tax, other expiring tax provisions. These are costs -- huge costs -- that the administration would, for the most part, prefer to assume away; it wants to exempt itself from the responsibility of having to come up with a way to ensure that dealing with them does not add to the deficit.

This is an enormous problem, practically and politically. It requires a comprehensive solution -- one that probably cannot be achieved within the existing political framework but that will require some kind of bipartisan commission to craft. A president who says that he is serious about dealing with the dire fiscal picture cannot credibly begin by charging this one to the national credit card, with no concern for the later generations who will have to pay the bill.

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