Keeping Up AppearancesOctober 19, 2009 - by Donny Shaw
If you watched President Obama’s health care speech to Congress, you probably remember his promise that he would "not sign a plan that adds one dime to our deficits — either now or in the future. Period.”
Well, Congress has been trying to come up with a health care bill that meets Obama’s budget neutrality goal and they seem to have found a formula to accomplish it. In fact, of the five health care bills that have been passed out of congressional committees at this point, the version that most pundits agree looks the most like what is probably going to become law — the Senate Finance Committee version — has actually been scored by the Congressional Budget Office to produce $81 billion in savings over the next ten years.
But the only reason Congress has been able to meet (or come anywhere close to) Obama’s goal of budget neutrality for health care reform is that they are planning to shunt a big chunk of the actual costs into a separate bill. That bill, the Medicare Physicians Fairness Act of 2009, is scheduled for a vote in the Senate this week.
It’s a gimmick that exploits the Congressional Budget Office’s budget scoring conventions in order to show savings where none exist. When the CBO scores legislation, they only consider the legislation in question and how it corresponds with the law as it is currently written. The Senate is taking advantage of this by, on the one hand, writing a health care reform bill that assumes the government would implement pay cuts to doctors under Medicare while, on the other hand, pushing forward on a separate bill that would restrict these pay cuts from ever actually happening. The House has picked up this trick too. They have now taken their plan to restrict the pay cuts out of the health care bills that passed through the three House committees earlier this year and — voila! — their budget scores have suddenly gone down from $1.2 trillion to right around $900 billion.
It has been estimated by CBO that the bill to restrict the cuts form taking effect — the one getting voted on this week — would actually add $245 billion to the federal deficit over the next 10 years.
Here’s some background. In 1997, under the Clinton Administration, Congress created a mechanism known as the “Sustainable Growth Gate” (SGR) for Medicare payment rates. It’s a formula that seeks to keep Medicare costs from growing out of control. From what I’ve read, the SGR is fairly complicated, but the basic idea is that it figures out the average amount doctors pay for a Medicare patient and then bends the payment rate down accordingly to meet budgeting goals each year. In the first few years it was in effect, the economy was growing and the SGR never kicked in. But since 2002, the SGR has called for cuts to Medicare reimbursments for doctors. In 2002, Congress let the cuts go through, but every year since then they have voted to block the cuts recommended by the SGR, and Medicare rates have grown out of hand. This year, for example, doctors are scheduled to face a 21 percent cut under the SGR.
The SGR is unpopular and it probably should be fixed. Just about everyone in Congress — Republicans and Democrats — agrees on that. That’s why they vote year after year, no matter which party is power, to override the SGR and block the cuts to doctors. But why should it be done in a separate bill from the rest of health care reform? Democrats are going to have a hard time coming up with a good reason. The Washington Post took the Democrats to task on this today in their lead editorial.
At a press conference last week, Republican Senate Leader Sen. Mitch McConnell [R, KY] called the bill “a way to conceal the true cost of broader health-overhaul legislation.” He added that Republicans will seek to amend it so that its $247 billion increase in Medicare spending would be fully offset, possibly by using unspent money from the stimulus bill.
In their scoring of the Finance Committee health care bill, which keeps the SGR in place, the CBO themselves said that keeping the SGR is essential for the bill’s deficit and revenue projections:
The mechanism governing Medicare’s payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments. …The long-term budgetary impact [of the Finance Committee proposal] could be quite different if those provisions were ultimately changed or not fully implemented.
But here we are, one week later and one week before Democrats hope to bring their health care bill to the Senate floor, repealing the mechanism that CBO said was essential for making sure health care reform is budget neutral. But it’s a totally separate bill, so it’s, like, all good. Right?