The Washington Post editorial board has long considered itself the “adult in the room” on fiscal matters, all but endorsing the Simpson-Bowles plan and other trendy fiscal proposals, as well allying itself with respectable centrist groups like the Committee for a Responsible Federal Budget (CRFB) in calling out Congress for engaging in a number of budget gimmicks to hide its spending appetite.
However, a major recent flip-flop from the paper’s editorial writers should turn heads and spark action in Congress.
The issue at hand is a budget gimmick used by states regarding Medicaid provider taxes. In truth, this gimmick could more accurately be referred to as straight-up fraud (were the federal government not complicit in it).
Status: Congress periodically overrides a 1997 law that attempts to contain the cost of Medicare payments to doctors. It prevents the cuts from going into effect with legislation called the “doc fix.” This year, Medicare payments to physicians will be reduced 21 percent if no doc fix passes by March 31st. While Congress normally passes short-term fixes that are paid for, Speaker John Boehner and Minority Leader Nancy Pelosi are attempting to pass a massive package that could increase the debt by more than $400 billion over two decades, according to an estimate by the nonpartisan Committee for a Responsible Federal Budget (CRFB).
Isn’t SGR just a budget fiction?
No. SGR would impose real, immediate cuts in Medicare if Congress doesn’t act. These are real cuts that are scheduled to go into effect under current law.
How has the SGR been dealt with in the past? What do these “doc fixes” usually look like?
Because SGR was originally intended to bring Medicare costs to a sustainable level, Congress has almost always tried to maintain that spirit by coupling the doc fix with real cuts and reforms elsewhere in the healthcare system, usually through the Medicare program. In fact, the SGR has led to real health care reforms over the years, totaling $165 billion since 2002. An analysis done by the Center for a Responsible Federal Budget (CRFB) indicates that 98 percent of doc fixes have been offset with cuts elsewhere.
But aren’t these doc fix “offsets” usually gimmicks?
No. The same study mentioned above from CRFB estimates that only a fraction of the overall doc fix offsets could be classified as gimmicks. Past doc fixes have contained small, but important structural reforms to Medicare as well as reductions in other areas of federal spending.
Why is SGR so important?
In 2009, conservatives and Republicans were united in their demand that any repeal of Medicare’s SGR be fully offset…
John Boehner (R-OH): Irresponsible ‘Doc Fix’ Proves Democrats “Cannot Help Themselves” (November 19, 2009)
”This irresponsible ‘doc fix’ proves once again that out-of-touch Washington Democrats simply cannot help themselves when it comes to piling debt on our kids and grandkids. Democrats continue to add tens of billions of dollars to the deficit while promising to eventually end their unprecedented spending binge.”
John Boehner (R-OH): Congressional Record (November 19, 2009)
That’s the real issue here, the fact that there is no pay-for here. There is no offsetting other types of spending. There are no increases in revenue somewhere to cover this. It’s just going to be dumped onto the backs of our kids and grandkids. The American people want us to relearn fiscal responsibility. My colleagues on my side of the aisle over the course of this year have stood up, I believe, for fiscal responsibility. And if we’re going to get our economy going again, we’d better get our fiscal house in order as well.
Joe Barton (R-TX): Congressional Record (November 19, 2009)
Mr. Speaker, the only fix that’s in this bill before us is “the fix is in.” … It is a wave the magic wand, erase the accumulated deficit of the last 10 years or so in the SGR formula, and let’s kick the can on down the road.
Ed Whitfield (R-KY): Congressional Record (November 19, 2009)
As I have said, both parties have a lot of blame for the debt that we’re in, and the American people want us to be responsible. We have a $12 trillion debt today. Within 10 years, it’s supposed to be $23 trillion. At some point, we have to meet our obligation, meet our responsibility and try to pay for some of these programs. All of us support the purpose of this legislation, but there must be a way that we can do it and have it paid for. So for that reason, I would have great difficulty voting for this legislation without it being clearly paid for.
Conservative and nonpartisan voices say Congress should fully offset the repeal of SGR…
Heritage Foundation’s Bob Moffit:
“Funding a fix is crucial. Last year, the Medicare actuaries estimated that the 75-year cost of an unfunded Medicare doc fix would add another to $2.3 trillion to the already enormous unfunded liabilities of the Medicare program.
“Now, the alarming news. According to Politico Pro, staff level negotiations in the House of Representatives are focused on paying for a relatively small portion of the doc fix, saddling taxpayers with tens of billions of dollars — in extra obligations. Worse, the report advises, the negotiators plan to rationalize not finding offsets by arguing that the SGR was just a “budgetary gimmick” anyway. Such a combination of cynicism and fiscal irresponsibility, if it came to pass, would be breathtaking.”
Committee for a Responsible Federal Budget:
“In total, now, lawmakers have offset 132 out of 135 months of doc fixes since 2004 with equivalent savings, or 98 percent of the time. Even disregarding the few times small gimmicks were used, policymakers still paid for these delays 94 percent of the time – with almost all of those savings coming from health care programs.
“Although the SGR clearly has not functioned as intended, it has served as an action forcing mechanism to prompt targeted health reforms in place of its prescribed blunt, across-the-board cuts.
Committee for a Responsible Federal Budget (2):
“Lawmakers should go further than the current discussions and pay for the entire package, not just a small portion.”
Washington Post Editorial:
“[S]uccumbing to [this deal] would set back the cause of long-term fiscal reform. To repeat, the sustainable growth rate has not quite worked as intended, but at least its failure never turned into a source of higher deficits. Instead, both parties should treat this as a chance to impose more structural changes, over and above the $37 billion worth contemplated. The Committee for a Responsible Federal Budget has identified $215 billion worth of medical program savings that could help pay for a long-term doc fix without altering eligibility or other fundamentals in either Medicare and Medicaid.
“For all the polarization and partisanship of a dysfunctional Congress, Republicans and Democrats have proven many times that they are still capable of agreeing to spend more on entitlements and pay for it through borrowing. They should miss this opportunity to prove that yet again.”