03 November 2009

Responsible Governing is Hard

As has been noted on this blog, the new House health care reform bill does not contain a fix for the Sustainable Growth Rate problem.  To recap, the SGR is a formula enacted as a part of the 1997 Medicare reforms which was intended to ensure that spending on physician services did not grow faster than GDP.  Unfortunately, the number of medicare beneficiaries did increase, as did their age and complexity, and the SGR quickly mandated progressively deep cuts in physician reimbursement.  Each year, Congress averted or mitigated those cuts, kicking the can down the road to next year.  When the spending cuts have been averted, generally they have been deficit financed -- no effort was made to find any offset or increased revenue to pay for the physician reimbursement fix.  As a result of a decade's worth of inaction, in 2010, physicians face a potential 21% cut in reimbursement.

It's important to note that when the CBO calculates the long-term deficit, it is obligated to assume that Congress will allow the cuts to go through as scheduled, even though that has never happened and politically is incredibly unlikely to come to pass.  So the current deficit projections are something of an elaborate fiction, including the expiration of tax cuts which will never expire and spending cuts which will never be allowed to take place.  The White House Budget Office has more discretion; the Bush administration used to do the same thing with regard to deficit projections, pretending the deficit was smaller than it really was; Obama's Budget Office did away with these tricks, assumed that the cuts would be blocked, and gave a more honest, larger projection of the federal deficit.

The initial plan was just to repeal the SGR, and that was part of HR 3200, the initial House health reform bill, and a key point in securing the support of the AMA.  The problem with that was that there was political pressure to keep the cost of health care reform under $100 Billion per year, a somewhat arbitrary but symbolically important figure, and the cost of repealing the SGR problem amounts to $250 Billion over ten years, or $25 Billion per year.  So it was dropped from the final bills, and Congress is planning on addressing the SGR in a separate piece of legislation.

Enter HR 3961, The Medicare Physician Payment Reform Act of 2009.  According to its summary[PDF]:
[This] legislation will repeal a 21 percent fee reduction scheduled for January 2010 and replace it with a stable system that ends the cycle of threats of ever-larger fee cuts followed by short-term patches. Permanent reform of physician payments in Medicare will guarantee that Medicare beneficiaries continue to enjoy the excellent access to care that they do today. It will also follow the President’s lead by ending a budget gimmick that artificially reduces the deficit by assuming physician payments will be cut by 40 percent over the next several years even though Congress has consistently intervened to prevent those cuts from occurring.
Sounds great, right?  And even better, they're being fiscally responsible, making statutory the "Pay-Go" principle:
The Medicare Physician Payment Reform legislation will be considered in the House under a procedure which will add the text of H.R. 2920, the Statutory PAYGO Act of 2009, as passed by the House on July 22nd before being sent to the Senate. The “pay as you go” principle of budget discipline requires Congress to find a way to pay for any new spending, outside of an economic crisis.
Wow.  These Democrats in Congress are the most responsible, principled, courageous lawmakers ever.  So, let's read on and see where they found the money to offset the SGR fix.  A new tax on soda pop?  Cuts to the F-22 program?  I can't wait to find out!
A previous Congress established the policy for paying Medicare doctors, so the update for 2010 is not a new policy to be paid for. The Statutory PAYGO Act would apply this principle to all new tax and spending policies, and would allow Congress to exclude the impact of continuing policies currently in place, including Medicare payments to physicians. The Medicare Physician Payment Reform Act would not increase total payments to physicians above what they are today and therefore, would not be subject to the paygo requirement.

So, let me get this straight, in the very same bill, indeed in the very same paragraph of your press release, you are going to:
a) Champion the fiscally conservative Pay-as-you-go principal that you are encoding into law, and
b) Define $250 Billion in previously-unaccounted-for spending as "not new" and allow it to accrue to the deficit.

Wow.  That's chutzpah, on the Bushian level.  It's also criminally reckless and dishonest.

I feel some sympathy for these guys -- they're facing withering criticism over $90 Billion in new annual spending for health care (while a $680 Billion defense appropriation passes with barely a peep), and they are desperate to find cover to minimize the apparent costs.  It even makes sense to split the SGR fix off into another vehicle, since it's not truly part of the health insurance & delivery reforms proposed -- it's a repair for a mistake Congress made in 1997.  I also understand that if they were to honestly account for the cost, it might well sink the whole effort.  But geez, try a little subtlety!  If you're going to lie to us, at least make the deception plausible.  Better yet, don't even try to look responsible, just kick the can down another 12 months (like the Senate apparently plans to) and come up with a fiscally responsible fix then.  (The risk of that, I assume, would be to lose the support of the AMA for the health reform in general.)

The take-home here is that there is generally little to no political advantage in fiscally responsible policy-making, and there is significant downside risk.  It's true of all parties, to some degree, and it's painful to see the Democrats falling into the same short-sighted trap which has created the huge general budget crisis that we are facing in the coming years.


  1. From the CBO:

    "The bill would put into effect (or leave in effect) a number of procedures that might be difficult to maintain over a long period of time. It would leave in place the 21 percent reduction in the payment rates for physicians currently scheduled for 2010. At the same time, the bill includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care). Based on the extrapolation described above, CBO expects that Medicare spending under the bill would increase at an average annual rate of roughly 6 percent during the next two decades—well below the roughly 8 percent annual growth rate of the past two decades, despite a growing number of Medicare beneficiaries as the baby-boom generation retires."

    Shadowfax, why are you surprised or disappointed when liars lie?

    Did you expect different. Not only did they not "fix" the SGR 21% (to fudge the numbers) but they assumed a 6% medical inflation rate with no basis other than they say so.

    I think you need an intervention from your addiction to politcal words (not actions).

  2. Read your comment in the "Post". Makes me wish I was a slacker in med school and did a 3 yr residency so i can do shift work with no continuity of care. BTW just about any doctor (or nurse for that matter) can diagnose an MI with an EKG and enzymes. Can you resect a brain tumor or nail a femur? Do you work 12 hr days EVERYDAY of the week (seeing 50 patients/day) and take 7 TRAUMA calls a month. Yeah.....specialists are way overpaid. I would seriously argue when looking at total hours worked, ER docs make more per hour than most specialists. Maybe you're overpaid. Think about it.

  3. Nail a femur? Are you kidding me? You talk like you expect me to be impressed that someone has procedures that they do which I don't. I've been in the OR, I know how it's done. The mystery is gone and while I respect those that have gone that route, I don't think it's actually any "harder" than what the rest of the trench docs out there are doing. Surgery, in general, stopped impressing me a long time ago.

    You sound kinda bitter. Regretting your career choice? Anyhoo, ER is very well paid in some states, not so well in others. YMMV.

    BTW, it's easy to say who *does* have the MI. The real money is for figuring out the ones who are *about* to have the MI & not sending them home (out of the dozens of chest pain patients we discharge daily). Oh, and I can diagnose the impending MI, the kid with croup, the funny ectopic, and the hand-foot-mouth disease, too, all while managing a septic octogenarian. It's funny how many exceptional specialty docs who come to the ER and go into gridlock amid the varied & simultaneous demands. Yeah, it takes a discrete skill set, and slackers in med school tend not to match in EM.

    Yeah, I'd be bummed if *my* pay went down. I've got a mortgage like the rest of us. If it were only ER docs subject to a pay cut, I'd think it was unfair. If it were part of an overall rebalancing of medical compensation, though, I'd find it hard to argue that it was unjust.