A $300 billion deception

Sunday, November 15, 2009

HAVING PASSED a health reform bill that is, at least theoretically, paid for, the House of Representatives is poised this week to blow a quarter-trillion-dollar hole in the federal budget involving, you guessed it, health care. This is the so-called doc fix, to prevent scheduled cuts in Medicare reimbursements to physicians from taking effect.

Say you are a member of Congress who agrees that the cuts should be rescinded -- that physician payments shouldn't be reduced, that is -- but also believes that the payments should not add to the national debt? Under the rule governing the House debate, you won't be allowed to suggest any offsetting savings. Either you go for the doc fix and add massively to the deficit, or you torpedo the fix and wreak havoc in the Medicare program, with a 21 percent cut set to take effect Jan 1. Nice choice. It puts those who believe in both fiscal responsibility and averting these draconian cuts in an impossible situation.

By the way, don't be fooled by the incredible shrinking "cost" of the fix. The official Congressional Budget Office estimate used to be $245 billion over 10 years. Now it's $210 billion. In fact, the real hit to the budget will be closer to $300 billion. The lower CBO numbers stem primarily from the administration's move to change the rules about which physician payments are subject to the cuts. The administration proposed a regulation to exempt drugs administered in doctor's offices, such as chemotherapy, from the spending ceiling. That has the effect of making the cost of the fix look smaller, but it doesn't change the ultimate drain on the treasury: Medicare will end up paying out the same amount of money.

All of this is, to some degree, Medicare kabuki to placate the American Medical Association. The Senate doesn't have the votes to pass a permanent fix without paying for it -- though, of course, it also doesn't have the votes actually to pay for it. So while the House might pass the unpaid-for fix, it will likely die there. The result will be another year-long, or possible two-year, patch slapped on this mess. Finding the money to pay for the fix and, more to the point, cobbling together the political coalition to support it, is difficult. Which is why Congress and the administration have joined hands in the pretense that the doc fix has nothing whatsoever to do with health reform.

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