Health Care Budget Focuses on ‘Doc Fix’
Policy + Politics

Health Care Budget Focuses on ‘Doc Fix’


The health care proposals in President Obama’s 2012 budget plan released Monday largely focus on paying to restore the scheduled 25 percent cut in the Medicare physician payments – the so-called “doc fix” – by enacting a number of minor cuts in Medicare and Medicaid payments and increasing taxes on health care providers. The proposal eschewed the large-scale changes to Medicare and Medicaid that the president’s fiscal commission called for last fall.

The Medicare “doc fix” will cost more than $62 billion through 2013. The Obama budget offsets those costs over the next ten years, leaving unaddressed the $315 billion that the physician payments would cost between 2014 and 2021. Over the next ten years, the Health and Human Services Department would:

  • reduce the threshold for taxing Medicaid providers in 2015 ($18.37 billion);
  • crack down on high prescribers and utilizers of prescription drugs in Medicaid through better tracking ($3.45 billion);
  • recover erroneous payments made to insurers participating in the Medicare Advantage program ($6.16 billion);
  • limit Medicaid reimbursement of durable medical equipment to Medicare rates ($6.4 billion);
  • speed generic biologics to market by limiting the exclusivity period for brand name manufacturers ($2.34 billion); and
  • prohibit brand and generic drug companies from delaying the availability of new generic drugs through so-called “pay for delay” deals ($8.79 billion).

Despite the president’s pledge during his State of the Union address last month to further reduce Medicare and Medicaid, the budget proposal essentially uses a laundry list of cost-control measures spread out over ten years to pay for holding physician pay steady over the next several years. These minor cuts are in addition to the changes in the Affordable Care Act, which will save approximately $500 billion over the next ten years through reduction in extra subsidies paid to Medicare Advantage plans, reductions in the rate of growth in provider payments, and efforts to make the Medicare program more efficient and to reduce waste, fraud and abuse.

Obama did not adopt any of his bipartisan fiscal commission’s recommendations for health care, including forcing more low-income individuals into Medicaid managed care, increasing Medicaid co-pays, accelerating already-planned cuts to Medicare Advantage and home health care programs, and creating a cap on Medicaid and Medicare growth that would force Congress and the president to increase premiums or co-pays or raise the Medicare eligibility age if the system encounters cost overruns over the next five years.

To read more of The Fiscal Times’ complete coverage of the Obama 2012 Budget, click here