Thomas Donlan uses his latest Barron’s editorial commentary to recap the history of the Medicare “doc fix,” then explains how that measure fits into the larger scheme of government budget problems.
At last the annual doc fix, as it came to be called on Capitol Hill, has grown too large to ignore. Senators and representatives of both parties, who agree on very little, do agree that they would like to enact a permanent doc fix, giving up on the sustainable-growth-rate idea and making a few face-saving tweaks instead.
Unfortunately for the spirit of compromise, the Congressional Budget Office estimates that the fix would cost $138 billion over 10 years. According to the delicate budget rules governing such things, 10 years’ worth of money for a long-term doc fix must be raised by a tax increase (anathema to the House Republican majority) or by specific cuts in other accounts (anathema to recipients of such federal largesse and their congressional friends in both parties).
Doing nothing means imposing a 24% cut on every payment to physicians after March 31, so the lawmakers are busy this month trying to decide which virgin should be thrown into the volcano to appease the angry budget gods. There is no shortage of appropriate sacrifices, but selection poses a problem.
Candidates include a trim on Medicare payments to hospitals and nursing homes, an increase on premiums and fees levied on better-off Medicare beneficiaries, and a measure further favoring generic drugs over brand-name pharmaceuticals. The federal government is so deeply involved in health care that it can do nothing for one group of health-care providers without injuring another group. The search for funding has increased the number of angry people debating the issue, which decreases the chance of finding a simple solution.
As Dr. Samuel Johnson observed, the prospect of being hanged in a fortnight does wonders for the power of concentration. Even though the politicians have three weeks to their deadline, the pressure is building.
Medicare politics hold up a mirror to the budget that President Barack Obama submitted to Congress last week. In the budget we view the same problems government-wide.
Federal spending affects everything, so a proposal to cut or tax anything creates opponents everywhere else. Proponents of a bigger defense budget must face opposition from supporters of more generous health benefits, who may imagine that a peace dividend is the answer to their desires.
