Medicare 'doc fix' doesn't fix much
As you listen to House Democrats and Republicans sing kumbaya 聽over their聽m, keep one thing in mind: The doc fix doesn鈥檛 fix much, and what it does repair likely will add hundreds of billions of dollars to the debt in coming years.
The bill聽would accomplish one big thing: It would repeal聽a Medicare payment formula that聽was supposed to聽cut physician compensation, but which Congress has blocked聽every year since 2003.聽This fantastical payment method would result in an impossible 21 percent聽cut for Medicare docs this year, a threat that is driving congressional action.
But beyond repealing that formula, the House鈥檚 doc fix is an amalgam of temporary solutions to a host of health policy issues, special interest subsidies, and a promise of better health care for seniors鈥攂ut not for at least five years. It may improve the way Medicare reimburses docs for the services they provide, but it won鈥檛 fix the problem.
Equally troubling, the House bill聽would add $141 billion to the deficit over the next 10 years,聽聽the official Congressional Budget Office score, and $500 billion by 2035,聽聽the Committee for a Responsive Federal Budget.
And, in reality, it could end up costing much more because it is filled with fiscal gimmicks. It front-loads benefits but delays many offsets for five years or more鈥攁 design that will give future Congresses the opportunity to abandon efforts to trim Medicare costs. Which is exactly what lawmakers did when they kept postponing payment cuts under the current formula.
Here are a few of the problems, and why the plan would likely end up being far more costly than advertised.
Physician payments. Under the House bill, Medicare payments to docs would rise by 0.5% in each of the next four years鈥攁 rate that is likely to be well below inflation. Then, payments would be frozen for the next six years. After that, physicians聽would get modest annual increases again. Want to bet on that structure holding up?
After 2019, docs聽would receive financial incentives to participate in two alternative payment systems that would tie their compensation to performance. Potentially, this could improve the quality of care for seniors. That, in turn, could reduce their acute health episodes and hospitalizations and might even save Medicare money.
But building such a system, and getting both the quality metrics and the payment incentives right, is enormously complicated. And the cost implications for Medicare would be highly uncertain.
Children鈥檚 Health Insurance Program. The bill includes an unrelated provision to extend the CHIP program (which benefits low income kids) through 2017 only. But CHIP is a valuable program that has strong support among both Republicans and Democrats, and Congress is unlikely to allow it to expire after two years.
In effect, Congress is starting to treat CHIP as a kind of tax extender for kids. Budget scoring is more complicated, because CHIP is assumed to continue under the CBO baseline. But lawmakers are聽making a permanent program look temporary 聽in an effort to downplay its costs.
Medicare premiums. The House bill would increase Medicare Part B and Part D (drug benefit) premiums for high-income seniors and make permanent a program that subsidizes Part B premiums for some people with low incomes. The premium hikes would begin in 2018, and more beneficiaries would be hit with income-tested premiums starting in 2020.
President Obama supports raising premiums for high-income seniors, but many advocacy groups do not. Their fear: 聽Although premiums are already-income tested, expanding that design would make Medicare look more like a welfare program and lose support from middle-income voters. Will these premium hikes really happen in 2018, when there is a new president and a new Congress? Hard to say.
The doc fix is an important bill that would repeal and remove from the budget聽Medicare cost controls聽Congress never really supported.聽By changing financial incentives, it holds the promise of improving the quality of care for seniors, though achieving those goals will be extremely difficult.
But it won't聽fix the long-term problem of how Medicare聽compensates doctors and is unlikely to聽control future program costs. And by relying on a host of fiscal gimmicks and future promises, it will almost surely add far more to the nation's debt than advertised.聽
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