On March 25, the U.S. House of Representatives voted for a fiscally irresponsible so–called Medicare “doc fix” that will add $141 billion to the deficit over the next ten years, according to the Congressional Budget Office (CBO). The U.S. Senate will likely vote on the bill later today, and the same lobbyists who dragged Obamacare into the end zone in 2010 are hoping for another win. This one will be even better, because it will be bipartisan.
Nobody denies the way Medicare pays doctors today is flawed. Every year, Congress has to increase the scheduled amount of money because if it did not, fees would drop by about one fifth. Many doctors would stop seeing Medicare beneficiaries.
There are two major differences between this so-called “fix” and previous ones. The first one is real: Previous increases have been offset by cuts to other government spending, and this one is not. The second one is fiction: That this doc fix is a permanent solution to the fee problem.
That fiction was debunked last week in a report published by Medicare’s Chief Actuary. First, the Chief Actuary has a significantly higher estimate of the gross cost of increasing physicians’ fees over the next 10 years than the CBO did. As shown in Table 1, the differences are trivial for the first few years, but they grow with time. Over the entire 11-year period, the Chief Actuary estimates the increase in payments will be $205 billion, $29 billion more than CBO’s estimate.
And it gets worse: Even this “fix” is no fix at all, but as unrealistic and broken as the current fee schedule. Medicare’s Trustees do not believe the current fee schedule is credible, so they estimate a “projected baseline” which they calculate by taking an average of the last 10 years of actual increases Congress adds on to the fee schedule, and using that to project a realistic estimate of future Medicare physician spending.
