Doc Fix: Another Massive Budget Gimmick

Dec 11, 2013

Today, as part of the Ryan-Murray budget deal, the House will be voting on the "Pathway to SGR Reform Act of 2013," which extends a number of expiring Medicare provisions, but its main purpose is to prevent the 24% reimbursement cut for physicians serving Medicare patients scheduled to occur next year.

These so-called "doc fixes" have been commonplace in Congress since 2003, when the provider cuts from the Balanced Budget Act of1997 first prompted Congress to act to prevent payment cuts for doctors (for more on the Sustainable Growth Rate, aka the SGR, see this Backgrounder from the Heritage Foundation). However, these temporary measures are usually fully paid for using legitimate savings elsewhere in the Medicare program.

Unfortunately, today's doc fix bill does not continue the trend of fully offset SGR patches.

As part of offsetting the bill's $7.3 billion cost, Congress is employing a cynical budget gimmick that does nothing other than shift more of the savings derived from the accompanying Ryan-Murray budget deal into the budget window for the SGR bill. Because the Medicare sequestration that is extended in the Ryan-Murray budget deal occurs on a calendar years basis, some of its savings will actually occur in Fiscal Year 2024. However, CBO cost estimates only go out 10 years, and thus its score for the SGR patch cuts off in FY2023. Section 1205 of the SGR patch would, however, shift $2.1 billion of FY2024 savings into FY2023 and reduce FY2024's savings by an equal amount. While showing paper savings of $2.1 billion in the 10-year CBO report (which shows the amendment as a whole achieving net deficit reduction of $300 million), the provision does not save taxpayers a single dime. The bill thus falls well short of being fully offset, and would in fact increase the deficit by $1.8 billion.

Congress should reform the SGR as part of fundamental Medicare reform, but in the meantime, temporary SGR patches like the one being considered today should be fully offset with real taxpayer-saving reforms elsewhere in the Medicare program. Today's bill is not fully offset, and for that reason, conservatives should oppose it and demand a new, fully offset doc fix bill be brought before Congress.