Fast Facts: Medicare Doc Fix

The Medicare “Doc Fix”

Status: Congress periodically overrides a 1997 law that attempts to contain the cost of Medicare payments to doctors.  Congress 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.

Background: When a physician treats a patient on Medicare, the government pays for the services he performs.  In 1997, Congress became concerned with the growing cost of these payments to physicians.  In response, lawmakers included in the Balanced Budget Act a restriction on growth in Medicare payments to doctors.  This cap is called the “Sustainable Growth Rate” (SGR).  The increase in payments could not be larger than the overall growth of the economy.

Since 2003, Congress has passed 17 bills stopping these payment cuts from going into effect.  If Medicare payments are cut too much, physicians may stop accepting Medicare patients.  This creates a major incentive for Congress not to allow the cuts to go into effect.  However imperfect, the SGR acts as a needed brake on exploding Medicare costs.  When it overrides the SGR, Congress normally offsets the cost with spending reductions in other areas.  The bipartisan Committee for a Responsible Federal Budget states that “since 2004, 98 percent of doc fixes have been paid for. And although these doc fixes have cost about $175 billion, the pay-fors have generated roughly $165 billion worth of savings.”

Bipartisan Irresponsibility:  According to Politico, the bill in the House being negotiated between John Boehner and Nancy Pelosi would include roughly $200 billion in increased entitlement spending, with only $70 billion offset with spending entitlement cuts elsewhere.  The bill would eliminate the SGR and replace it with a new payment system.  Another program, CHIP, is also reauthorized for two more years at “the elevated payment rates approved under Obamacare.”  CHIP provides health insurance for children and families with incomes above the poverty line.                                                                             

The deal would be only partially paid for with “structural” changes to Medicare spending.  The specifics of the plan are unclear.  However, reforms are likely to include a reduction in Medicare benefits for the wealthy (an approach known as “means-testing”) and a reform of Medicare supplemental insurance offerings (known as Medigap).  Both reforms are of uncertain size and impact.  What is known is that the up-front savings of the plan are minimal.  Historical patterns of Congressional policymaking suggest that a spending-now, cuts-later approach is ineffective at reducing spending.

House Republicans are trading the repeal of a massive leverage point with a long history of reducing government spending for limited structural reforms.  The extension of CHIP is a major priority of the Left, despite the fact that the program is largely irrelevant within the context of the current healthcare safety net, which currently includes Obamacare and an enhanced Medicaid program.

Long-Term Solutions: Reform is needed to ensure seniors have access to care as well as ensure that Medicare operates in a fiscally sustainable way.  The Heritage Foundation argues that “[a]ny permanent Medicare “doc fix” must be financed with permanent Medicare savings.”  The changes to the SGR must also balance in size and scope with structural changes to Medicare.  A large change to the SGR with only small changes to Medicare is fiscally irresponsible.

While the House proposal does contain reforms, the changes it suggests are hugely disproportionate to the changes it makes to the SGR.  The elimination of the SGR should be paired with major changes to Medicare.  After all, beyond the program’s 10-year costs, SGR actually has a long-term structural impact of $2.3 trillion. The proposal’s $200 billion price tag, bipartisan backing and the fact that the House plan’s savings only begin at the end of the 10-year budget window indicate strongly that its changes to Medicare are minor.

Please Share Your Thoughts

22 thoughts on “Fast Facts: Medicare Doc Fix

  1. Keep cutting the payments Doctors receive for treating Medicare patients, and what happens next? MORE doctors deciding that they just won’t accept Medicare any longer, and the old folks can just curl up and die. You know “go home and take a pill” like Obama said.

    • And those on disability won’t get treated either. It’s socialism at it’s best: ultimate misery for all; except the greedy powerful elitists in power!
      Elections have consequences. Some people have to learn history the “hard” way; by “experiencing” failed policies themselves rather than learn from others experience from the past. Unfortunately, they’re taking the rest of us with them.

      • When I studied acupuncture in China, a lady from England had been waiting 5 years for a knee replacement. She came to China to get it done and for a very small cost. Yep, socialism and communism remind me of Hitler and Aryanisn! We have allowed this so it is to We, the People, to take back our Republic and soon.

    • Don’t forget that anyone over 76 will NOT get even adequate care because they are considered old and not worth it and that is part of Obamacare’s multi-thousands of pages! Rebellion is in the air!

    • Selfish voters did it. Voting & believing they can get something for nothing! When immorality is rampant, nations destroy themselves. We don’t teach morals, values, christian morality in school any longer. Now, they teach these things are bad and evil things are good. Socialist dems turned everything upside down. THIS is the result. Elections have consequences.
      Representative government works….but only when voters vote for honest moral leaders and hold them accountable. The people failed themselves.

      • Rhonda, the United States Tax Code is more than 77,000 Pages! 70, 80, maybe 90% of politicians are lawyers. And the Dominate liberal Establishment Mass media is just another wing of the democratic party! Your right, Immorality is Rampant! I have no faith in john boehner or mitch mcconnell. Colorado has proven that The People need to vote on more Issues! I’ll say it again, Representative government and the media, has FAILED U.S.

      • “We don’ teach morals, values…in school any longer.”
        I didn’t learn my personal principles in school. They were taught (and enforced) primarily by my Mom and Dad and reenforced by my Grandparents and Aunts and Uncles.
        Part of the problem is what is being taught, both overtly and covertly in schools today, and the lack of guidance in the home.

  2. Homeopathic Medicine is a good option! Breastfeeding babies is the foundation of affordable health care, but homeopathy is next. Save 1/3-12!

  3. 2 comments: 1.) At 77 and still in excellent health, I am ready to say good-bye to Satan’s domain and take-up residence with my eternal family in heaven. 2.) Ready or not, those who are not part of God’s family and pass these laws will have to live by them if they make my age… and then will have eternity with those who are not in Heaven.
    Think, are you ready for eternity. It will be here for you sooner than you imagine.

  4. Access to “care” does not mean quality or effective “care”. Medicaid has not been enhanced, just extended, to include more typically poor-quality minimal medical services. Why? Because physicians are not taught or focus on Health. They are taught normality (average to include the central ~96% of common) versus advanced abnormality/disease. Why is the US medical system so expensive? Because in so many ways it focuses (after the fact) on symptoms of disease, after advanced, along with many common public fear(s). Thus humans have created a disease/fear focused system which in so many ways financially rewards disease while powerfully financially disincentivizing services which are effective in promoting, restoring health and productivity. But this reality sounds bad, analogous to calling death insurance what it is. Thus the medical disease system is called “Health Care”, which sounds/sells better, instead of “Severe Enough Absence of Health”. Similarly, Life Insurance sounds better than Death Insurance. All these black-is-white, white-is-black word games make living more expensive and destroy human quality of life.

    • I agree and that is why I became a Chinese Medicine doctor where we focus on the whole person and whole body to balance the body, rid it of inflammation, and help the person to actually get better health. Yes, there are times when a Western doctor or drug is necessary, but not at the rate we see when the fastest option is a prescription or surgery because no much is unknown in Western medicine that has been known for thousands of years in Chinese Medicine and we are seeing more and more people seeking out Chinese Medicine for that very reason – reasonable, effective, not invasive, and insurance companies are more and more accepting it for these very reasons. I do think doctors are not getting adequate payment for their services and that means more doctors leaving their profession and more and more hospitals and ERs closing down due to costs that cannot be afforded and D.C. is the problem. They forget they are OUR employees and think they rule the roost. Well, like anything else in life, they are going to learn a very hard lesson and sooner than later. We hired you and we will fire you and no rich donors can stop us!

      • At the same time, as an engineer, many areas (including medicine) I am well aware; yet also wary of marketing magical sounding terms, such as “inflammation”, as reflecting great wisdom instead of referring to the immune system & white blood cells (all under mind/brain control in ways beyond good current understanding). Yes, the most effective doctors are powerfully penalized for educating and empowering their clients by not playing the usual disease game for money. It is not just D.C. that is the problem. More powerfully, it is the media who sell and the public who choose opposite of reality, avoid responsibility for their own life choices and want someone to provide expensive services for partial symptom treatment, while avoiding the costs of their choices. The government politicians have not Forgotten that they supposedly work for us. Why? Because they have not worked for the public for many decades (Promotion of gov takeover of medical services started under Theodore Roosevelt). They work for those in big organizations and media who fund their elections for power while promoting lies-for-power to the public. For the media, con-artists selling con-games to fellow con-artists.

  5. A Country Founded by Geniuses but Run by Idiots!

    If you can get arrested for hunting or fishing without a license, but

    not for entering and remaining in the country illegally — you might

    live in a nation that was founded by geniuses but is run by idiots.

    If you have to get your parents’ permission to go on a field trip or

    to take an aspirin in school, but not to get an abortion — you might

    live in a nation that was founded by geniuses but is run by idiots.

    If you MUST show your identification to board an airplane, cash a

    check, buy liquor, or check out a library book and rent a video, but not

    to vote for who runs the government — you might live in a nation that

    was founded by geniuses but is run by idiots.

    If the government wants to prevent stable, law-abiding citizens from

    owning gun magazines that hold more than ten rounds, but gives twenty

    F-16 fighter jets to the crazy new leaders in Egypt — you might live in a

    nation that was founded by geniuses but is run by idiots.

    If, in the nation’s largest city, you can buy two 16-ounce sodas, but

    not one 24-ounce soda, because 24-ounces of a sugary drink might make

    you fat — you might live in a nation that was founded by geniuses but is

    run by idiots.

    If an 80-year-old woman or a three-year-old girl who is confined to a

    wheelchair can be strip-searched by the TSA at the airport, but a woman

    in a burka or a hijab is only subject to having her neck and head

    searched — you might live in a nation that was founded by geniuses but

    is run by idiots.

    If your government believes that the best way to eradicate trillions

    of dollars of debt is to spend trillions more — you might live in a

    nation that was founded by geniuses but is run by idiots.

    If a seven-year-old boy can be thrown out of school for saying his

    teacher is “cute,” but hosting a sexual exploration or diversity class

    in grade school is perfectly acceptable — you might live in a nation

    that was founded by geniuses but is run by idiots.

    If hard work and success are met with higher taxes and more

    government regulation and intrusion, while not working is rewarded with

    Food Stamps, WIC checks, Medicaid benefits, subsidized housing, and free

    cell phones — you might live in a nation that was founded by geniuses

    but is run by idiots.

    If the government’s plan for getting people back to work is to

    provide incentives for not working, by granting 99 weeks of unemployment

    checks, without any requirement to prove that gainful employment was

    diligently sought, but couldn’t be found — you might live in a nation

    that was founded by geniuses but is run by idiots.

    If you pay your mortgage faithfully, denying yourself the newest

    big-screen TV, while your neighbor buys iPhones, time shares, a

    wall-sized do-it-all plasma screen TV and new cars, and the government

    forgives his debt when he defaults on his mortgage — you might live in a

    nation that was founded by geniuses but is run by idiots.

    If being stripped of your Constitutional right to defend yourself

    makes you more “safe” according to the government — you might live in a

    nation that was founded by geniuses but is run by idiots.

    If the media panders to your openly socialist leader while the IRS targets groups with dissenting views— you might live in a nation that was founded by geniuses but is run by idiots.

    If your government ‘cracks down’ on legal gun sales to law abiding citizens while secretly supplying illegal guns to Mexican drug cartels— you might live in a nation that was founded by geniuses but is run by idiots.

    If your local government (Chicago) outlawed gun ownership for ‘the safety of its citizens’ and now boasts the worst murder rate in the country — you might live in a nation that was founded by geniuses but is run by idiots.

    What a country!

    How about we give God a reason to continue blessing America?

    This was borrowed from another blog, author unknown, please spread it far and wide!

  6. John Boehner is a stooge for Pelosi and McConnell is a stooge for Reid why do we elect these fools time after time as they lie and remain stooges for Marxists?

  7. An SGR cap for doctors and one limited by the ‘growth of the economy’ and not tied to price index does not appear to be a feasible solution as medical processes and techniques are constantly changing and the practitioner must be able to keep up with them all. Also SGR would not take into account litigation costs/insurance. Given the short notice, stay with the SGR, until the SCOTUS ruling. We can debate this in ’16 with issues like healthcareTort reform. The sad fact is Medicare is being gutted like the SS lockbox was emptied.
    So where will that 21% cut in Medicare payments go – to CHIP and/or to
    Obamacare subsidies -which doubles the benefits for the Dem voters? Add
    the means-testing savings and we have a big-time re-distribution of
    income taking place with GOP support. Also it makes a hash of our tax
    system as all those affected by means-testing rules suffer a double
    whammy -they are in the highest tax bracket and their Medicare
    contributions are then made unavailable to them. How about exempting
    incomes above a certain level from the Medicare system and set them on
    their own re: health care expenses in retirement.
    Finally, this should not be a political solution.The ‘Democrat-Lights (Sen Paul’s
    words) must be made to work under a very harsh light.

  8. I say just cut the salaries and benefits of those politicians who vote for the added spending to help offset the doc fix !!

    • I concur. Actually, we need to create a government where it is no longer a retirement program. Change the laws that no one be allowed to remain in office for no more than six years total. That’s in both houses. No retirement benefits or medical benefits after leaving office. That is one of the costs that we endure, considering we are paying those no longer in office all these benefits. Congress should have never been given the right to give themselves raises, let along allowed to make politics a career move! Actually, I suggest that no first termer be given reitirement of any kind! Also, that the States take back control of the paying of the Senate and Congressional members for their state and that the people choose whether or not to give raises to their representatives, depending on their actual doing the job they were sent there for…for the People…not the corporations!

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