A deal passed by the House of Representatives today with large margins from both parties would put an end to decades of last-minute patches to the Medicare payment system, a procedure that has happened so many times it gained its own nickname, the “Doc Fix.” Many are looking at the agreement, struck by House Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA), as a return to the way Congress used to do business.
To some critics of the deal, though, that’s precisely the problem.
As has been the case countless times in the past, Congress could only find a way to take this big bipartisan step by not paying for it. The deal would add $141 billion to the federal debt in the first decade, with costs rising even much more sharply in the years outside that 10-year budget window.
This has budget watchdogs and critics of federal spending up in arms.
“Members may have solved a parochial political problem with today’s vote but they have exacerbated the nation’s policy problems,” said Heritage Action Chief Executive Officer Michael A. Needham. “This deal increases spending in the near-term for promises of woefully inadequate long-term reductions — it sends a signal that deficit spending is back in style. Liberals and lobbyists are hoping this is a pattern of things to come and conservatives in the House must ensure it is not.”
Heritage, one of the most conservative organizations in Washington, had named the House vote on the Doc Fix a “key vote,” meaning that it would be added to the group’s scorecard measuring how closely lawmakers toe what Heritage considers to be the conservative line. Even so, the bill passed the House 392-37, with Boehner losing 33 Republicans and Pelosi losing only 4 Democrats.
The deal, which the Senate could move on before it leaves town on Friday, solves a problem that has lingered since Congress passed the Balanced Budget Act of 1997. That law introduced the “Sustainable Growth Rate” program that was meant to adjust payments to doctors in order to rein in Medicare costs. The calculation was flawed, however, and Congress has routinely passed legislation waiving its implementation in order to avoid huge cuts to compensation for physicians and other care providers.
In eliminating the need for regular “fixes,” the new bill partially offsets the cost by creating a means test for Medicare that will require wealthier patients to shoulder a larger percentage of the cost of their insurance. Older Americans earning more than $133,000 would pay 65 percent of the cost of their premiums. They currently pay 50 percent. The bill would also change coverage offered by Medigap insurance programs, blocking them from paying the deductible costs for Medicare Part B, which now stand at $147 a year.
Until now, though, almost all of those Doc Fix bills have been paid for. The fact that this one is effectively put on the national credit card is not making budget watchdogs happy.
In arguing against the bill, the Committee for a Responsible Federal Budget extrapolated future costs from a Congressional Budget Office score of the bill over the first 10 years and concluded that the bill would add more than $500 billion to the debt over the next two decades. “With Medicare's costs already growing unsustainably, supporters should think twice about growing them further,” CRFB wrote.
One of the arguments in favor of the bill is that doing the fix this way is less expensive than piecemeal annual fixes, assuming they are also paid for with borrowed money. CRFB said that idea was less than convincing. “If the best argument for this bill is that ‘it could have been worse,’ that argument should be of little comfort to those concerned about the long-term growth of Medicare and the national debt,” the group said.
“As we explained recently, lowering the bar to measure this bill against a scenario that assumes unpaid-for doc fixes is inconsistent with standard budget rules, historical precedent, and even other descriptions of the bill,” the group wrote in a release. “It is also a circular argument that suggests we shouldn't count the costs of adding to the debt because some future Congress is likely to do so anyway.”
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