"Doc Fix" Shows (AGAIN) Why the House's Health Reform Bill Is Better Than the Senate's

by Tim Foley

categories: Doctors and Nurses, Enemies of Reform, Medicare and Medicaid, Obama and Congress

Published October 21, 2009 @ 11:03AM PT

The last House committee to work on comprehensive health reform finished at the end of July. The last Senate committee (Sen. Max Baucus's Senate Finance Committee) finished last week. But the House has not been idle. News comes today that an initial score from the Congressional Budget Office says the House has refined its bill to only cost $871 billion over 10 years. Of course that is likely to get overshadowed by the train wreck in the Senate concerning Medicare's "Doc Fix." So many commentators are focused on the political clumsiness of pushing a separate bill in the Senate to fix the Medicare Sustainable Growth Rate (SGR) that they may miss what this Three Stooges-esque vignette tells us about the policy strength of these House and Senate bills.

Simply put, the House has its act together. The Senate's got a lot of work to do.

The SGR was an attempt to curb skyrocketing costs in Medicare which has not only failed, it's become the second-worst accounting trick in the federal budget over the past decade (the worst being leaving the costs of the wars in Iraq and Afghanistan out of the budget every year of the Bush Administration so the deficit wouldn't look so big.) A brainchild of the Gingrich Congress and an amendment to the 1997 Balanced Budget Act, the SGR is a formula intended to prevent physician compensation for Medicare from rising above the rate of growth in GDP each year. If physician fees were threatening to go higher, all doctors' fees across the board in Medicare would be cut to keep them within that limit. Not inherently a bad idea, but it has a huge flaw -- in most years, medical costs rise at several times the rate of growth in GDP whether you're talking public coverage or private insurance. The net result is that SGR would guarantee a major cut to Medicare nearly every year, at least until we get an explosive economic growth like we had in the 1990s. And we're not talking obvious waste like Medicare Advantage subsidies for HMOs or those motorized scooters you see in ads on cable TV -- we're talking doctors' fees. You know, the whole point of having health coverage.

So every year, Congress passes a one-year moratorium on the SGR. Every year, all Democrats in the Senate vote for it. Every year, almost all Republicans vote against the moratorium and for the cuts to take place (including every single one of the conservatives who are making "how dare we cut Medicare in any way, shape or form!" their rallying cry for defeating reform. Gotta love that blatant disregard for consistency.) Every year, doctors' fees in Medicare continue to rise at roughly the same "way, way over inflation" rate they do for private insurance, meaning if the cuts took place this year, it'd yield a 21% cut across the board. But every year, the cut never actually happens. It's like a bad sitcom whose punchline you can see coming from miles away. It's absurd. And it needs to be fixed.

Enter health care reform -- an obvious spot to fix it.

The House bill (HR 3200) does just that. It wipes the slate clean on the SGR, and establishes a new system based on medical inflation (a much saner system -- honestly, Medicare physician fees shouldn't be rising faster than physician fees for private insurance, and generally they haven't). The cost of that fix is about $245 billion, and it was factored into the House bill's original budget of $1 trillion. We haven't seen the details from the CBO, but presumably the so-called "Doc Fix" for Medicare is still in there. But for stepping up and being fiscally responsible, the House bill got mercilessly pummeled throughout the summer. Speaker Pelosi wanted the surplus from another bill (which came to about +$261 billion) to be applied to HR 3200. The CBO didn't want to play it that way, and their formal score said that HR 3200 would add $245 billion to the deficit. That led to a Wild Rumpus where conservatives inveighed against the House bill, including some commenters on this blog, for adding to the deficit -- even though the net result of the two bills would actually be a small surplus. (By the way, I'm not holding my breath for those same folks to embrace the revised House bill now that the CBO says it fixes SGR and reduces the deficit.)

Sadly, the Senate Finance Committee bill, which will be the basis of the Senate bill for all things Medicare, does not fix SGR. All it does is put the same old "stupid accounting trick" of a one year moratorium on it, and then budgets for it to take effect every year thereafter. Which, of course, it won't. But that means the $829 billion total for the Finance bill is also fudged. When Sen. Debbie Stabenow of Michigan proposed S. 1776, a standalone bill that would permanently fix SGR in much the same way that the House bill would, at a similar $247 billion price tag, and Majority Leader Harry Reid fast-tracked it to be considered this week, you couldn't help but notice that they included absolutely no way to pay for it. That's the main reason why this bill seems doomed to failure, since moderate Democrats, including the always peripatetic Kent Conrad, are livid at the thought of more deficit spending, particularly on health care. But even Kent Conrad knows this cut will never take place. It's a political fight over an imaginary number, rather than stepping up and finding a way to fix the problem. Of course, as part of a Senate bill that includes a convoluted "free rider" provision instead of a useful employer mandate, a feeble "co-op" provision instead of a cost-saving public option, fewer subsidies for families to buy insurance, weaker benefits packages, etc. etc.

In summary, when faced with the choice of an $755 billion bill that used the same accounting tricks to hide SGR or a $1 trillion bill that would actually fix the problem, the House bill stepped up to fix the problem, even if it meant getting pummeled. When faced with an $829 billion bill with an accounting trick or a $1.1 trillion bill that would actually fix the problem, the Senate tried to have their accounting trick and eat it too by trying -- and likely failing -- to ram home a standalone bill that undermined their credibility on fiscal responsibility. Once again, we have Senators more concerned with solving the political problems of the United States Senate than solving the real health care problems of the United States.

Riddle me this. Supporters and detractors of the House bill like to refer to it as being "more liberal" than the Senate. When did we change the definition of "liberal" to mean "actually works?"

Update: 4:08 pm ET -- S. 1776 failed to achieve its cloture vote in the Senate, 47-53, meaning the bill won't go forward.

(Photo credit: http://www.flickr.com/photos/speakerpelosi/ / CC BY 2.0)