Spring is almost here: time for the annual Washington ritual known as the “doc fix.” In 1997, Congress tried to limit Medicare spending by linking the growth of physician reimbursements to that of the overall economy. This “sustainable growth rate” worked fine so long as economic growth outpaced medical costs; then the 2001 recession hit, and doctors howled at the prospect of cuts. Congress enacted a temporary repeal — the first of 17 such short-term doc fixes, the cumulative cost of which now exceeds $150 billion. The current doc fix expires March 31, at which point a mandatory 21 percent cut in payments to physicians would kick in.
Spring is almost here: time for the annual Washington ritual known as the “doc fix.” In 1997, Congress tried to limit Medicare spending by linking the growth of physician reimbursements to that of the overall economy. This “sustainable growth rate” worked fine so long as economic growth outpaced medical costs; then the 2001 recession hit, and doctors howled at the prospect of cuts. Congress enacted a temporary repeal — the first of 17 such short-term doc fixes, the cumulative cost of which now exceeds $150 billion. The current doc fix expires March 31, at which point a mandatory 21 percent cut in payments to physicians would kick in.
Congress isn’t going to let that happen, which raises two questions: What will it do, and what should it do? The path of least resistance would be the well-trod one, passing yet another short-term patch. Yet there is increasing, bipartisan discussion of, at long last, a permanent solution. The basic idea would be to keep reimbursement rates at current levels while reforming the fee-for-service payment system, so doctors could stay within the spending limitations while maintaining current levels of care and, crucially, keeping their practices solvent. The Congressional Budget Office pegs the 10-year cost at $174.5 billion. Of that, $37 billion would pay for systemic reforms; the remainder would represent an increase in projected spending over what would occur if the SGR were actually enforced.
The big question is whether lawmakers would pay for such a plan through offsetting spending reductions or revenue increases, as they have paid for all previous short-term doc fixes. Indeed, though the sustainable growth rate never achieved its stated goal of reducing physician payments, early on it did force equivalent Medicare savings, achieved through small but real programmatic changes. Alas, there is growing sentiment in both parties to depart from this fiscally responsible precedent and pay for only the $37 billion in systemic reforms. The rationale is that any Medicare forecast based on enforcement of the SGR was always phony anyway, so adding to the deficit by replacing it isn’t a real increase, either — and even a sort of victory for truth in budgeting.
Congress should resist this temptation; succumbing to it would set back the cause of long-term fiscal reform. To repeat, the sustainable growth rate has not quite worked as intended, but at least its failure never turned into a source of higher deficits. Instead, both parties should treat this as a chance to impose more structural changes, over and above the $37 billion worth contemplated. The Committee for a Responsible Federal Budget has identified $215 billion worth of medical program savings that could help pay for a long-term doc fix without altering eligibility or other fundamentals in either Medicare and Medicaid.
For all the polarization and partisanship of a dysfunctional Congress, Republicans and Democrats have proven many times that they are still capable of agreeing to spend more on entitlements and pay for it through borrowing. They should miss this opportunity to prove that yet again.
— Washington Post