If there’s one issue in Congress where taxpayers have been held over a barrel for years, it’s the annual patch to Medicare’s sustainable growth rate formula (SGR), universally known as “doc fix.”
More than a decade ago, Congress decided it would be a good idea to cut the rate at which Medicare reimburses doctors for services. While this spending cut would be welcome, it’s been delayed again and again and again. In fact, Congress has prevented this spending cut from moving forward a ridiculous seventeen times since 2002. Most of the time, Congress simply moves the effective date of the cuts forward a year, and then does so again the next year. “Doc fix” routinely attracts supermajorities (even of conservatives) in each chamber of Congress.
This is more than just harmless legislative inefficiency. Because CBO must assume that doc fix will happen on time, Congress has used the toothless threat of the provider cuts to mask other spending. According to Medicare's own trustees, SGR is a budget gimmick that hides the true cost of entitlements and their impact on the economy. The very fact of SGR's existence forces government actuaries to report that Medicare is a much healthier long-term program than it actually is. As a result, the urgency to reform Medicare is far less than if the accounting was more honest.
It’s a rigged con game that leaves taxpayers footing the bill for even higher spending after the annual “doc fix shakedown.” Because everyone in Congress knows that doc fix is a train that’s moving down the tracks and will not be stopped, lobbyists line up to attach their favorite earmarks and deals to the annual legislation. Doc fix is like a ship that attracts barnacles that hop along for the ride.
Thankfully, Congress seems to be in a mood to get rid of the annual doc fix con job once and for all. Legislation being considered by the House Energy and Commerce Committee, House Ways and Means Committee, and Senate Finance Committee would call off the never-gonna-happen spending cut once and for all. There are still many details to be worked out (including spending cut offsets), but the process moving forward is an important one for taxpayers.
In return for more certainty, doctors would be reimbursed based on quality of care rather than the current ATM-like “fee for service” method. The current reimbursement method pays doctors more simply for doing more tests and services, whether they are useful to the patient or not. Doctors instead should be incented to provide higher quality and coordinated care to patients and rewarded when costs are kept down. Instead of paying for “volume” the system should pay for “value.”
Some will tell you that this permanent solution would appear to spend more money, but that’s based on a fantasyland baseline where Congress would ever let the planned spending cuts happen. Congress has never let these spending cuts happen in any of the last dozen years, and it never will. If we can concede that simple reality and take taxpayers out of the mugging zone every December, we’ll all be better off. Congress is either going to spend the money in costly annual doc fixes which result in other spending and budget gimmicks, or they’re going to remove the whole phony setup once and for all.
We vote for getting this issue settled so taxpayers can focus on cutting spending rather than being cowed into annual bailouts for doctors. It’s better for taxpayers and for patients.