CBO Says Doc Fix To Cost More Than Expected


It lives!

A long-planned adjustment to Medicare reimbursement rates will probably cost more than expected, according to the CBO:

On Friday, the Congressional Budget Office said that just freezing current Medicare payment rates to doctors would likely cost nearly $276 billion through 2020, a 33 percent increase from legislation that would "accomplish that goal introduced late last year by Sen. Debbie Stabenow, D-Mich., estimated to cost $207 billion at the time" according to CongressDaily. "Aides on both sides of the aisle attributed the cost increase to assumptions of an improved economy, which tends to add more to the cost of health services, as well as demographic changes that foresee increased numbers of retirees in 2020 over the previous year."

Democrats would like to pass a "doc fix" bill to stave off the cuts for perhaps as long as five years—at a cost of almost $89 billion—but scheduled cuts are slated to take effect June 1 if nothing is done. "The American Medical Association is continuing to lobby hard for a permanent fix, despite the cost."

The rate change, which would block a big cut in reimbursements called for by the sustainable growth rate formula that governs Medicare payment rates, appeared in an early draft of the health care bill, but was later removed to help trim down the bill's cost and it keep its score deficit neutral. Since then, Democrats have passed a series of temporary fixes, each blocking the rate change for just a few months. But doctors are insistent that a longer-term—and preferably (from their point of view) permanent—solution be implemented. Right now, though, both of the options that are being discussed are unappealing: A five-year "fix" simply kicks the problem down the road, and a permanent fix is likely to be expensive and unfunded.

This is a key part of the reason that opponents of the health care bill were critical of the way the doc fix was handled: As Reihan Salam argued last week, "any new legislation takes place in a wider context." With the doc fix, though, that context was missing. We passed a "deficit neutral" bill, but only by ignoring a major, ongoing problem in the system. Now, with all the new revenue and reshuffling going to fund a new entitlement, there's no money to pay for fixing the problems that already existed. And in the long run, that's likely to mean a lot more overall fiscal damage. "Fiscal responsibility" this is not.

My column on deceptive accounting in the health care bill is here. More on the doc fix here and here.

NEXT: The Would-Be Health Care Terrorist

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  1. I am Jack’s complete lack of surprise.

    1. I am Jack’s growing rage.

  2. So should we just continue the VAT discussion here, or what?

  3. Doctors = rent-seeking guild.
    Open immigration of physicians and a gradual end to professional licensure would be a nice “doc fix”.

    1. I dunno, I kinda like professional licensure. It’s not like every profession has the same issues — PEs are licensed, but not nearly as much of syndicate. It just takes the political will to make sure the licensing process serves the common interest rather than the special interest.

  4. I am holding firm to my guestimate of a two terabuck plus* cost for Obamacare through 2020.

    *With an emphasis on the ‘plus’.

    1. This is one of those things that will keep getting estimated up, and up, and up, and up.

      1. I’m getting out my pom poms.

      2. The tragedy is that it will continue to go up, up and up, but it will never go away.

      3. Only *two* trillion +? Optimist.

        1. A pessimist knows things can’t be worse, but an optimist knows they can.

  5. What’s hilarious is either the duped or duping Jonathan Chait and Ezra Klein claiming the “doc fix” wasn’t somehow separate and this was all a grand lie of the teabaggers. My guess is that this is a knowing fraud in service of their alleged high ideals.

    1. my guess is duping, hard to believe anyone reasonably on the ball would honestly think paying the healthcare costs of 45 million people would actually save money

      the goal is to kill off the private medical sector and have government controlled, unionized, healthcare like in Canada


    Is there any union/guild/lobby that won’t get its turn at the sty? Anyone Obama will turn away? Jeebus, it’s pathetic.

    1. There’s an infinite amount of money and resources to be had, so why not pay off everyone with it?

    2. Um… I think he’d turn US away…

    3. Well, I’m thinking the libertarians ought to form a union or guild.

  7. No big surprise there now is there?


  8. This perennial “than expected” crap has got to stop. How about something like the following scheme? Every congresscreature who voted for the bill has its elected term diminished IAW the bad estimate. If your project overruns by a factor of two, you’re out. If you estimated it would take twice as much as it does, you’re out.

    1. I have a cunning plan inspired by this comment: Give each representative and senator a limited number of votes per term or, perhaps, per year of each term.

      1. Nice try, PL, but then *every* bill would be megapage monstrosities. Gotta tighten up the plan.

        1. A vote quota and a one-topic-per-bill restriction?

          1. Not a bad idea. They’d spend all their time trying to decide which bill to bring up next and not get anything done.

            1. Very well, let us introduce Rich-Pro Libertate into the House.

              1. Wouldn’t that be Pro-Rich-Slut?

                1. Fair enough: Pro-Rich-Slut it is!

                  1. Thirded! I’m emailing my congresscreatures right n…oh, never mind!

          2. A vote quota and a one-topic-per-bill restriction?

            Wouldn’t work. They’ll make the argument that everything’s connected, and people will buy it. Salt ban affects health care, which affects life spans, which affects social security, etc.

            1. Okay, then we should institute the constitutional office of Censor, who judges. And removes on a friggin’ whim.

          3. No, it has to be a word restriction. I’m thinking 2k per bill, 20 votes per year. Actually, I’m fine with letting them vote more than once on a single bill if it’s important to them.

    2. Better yet, every penny over the projected cost is divided between the congresscritters who voted for it, and they have to pay for it with their own money.

      1. Seriously, I want to start a contest in Congress. Every 2-year term, every Critter, either house, gets to choose one law or program to be canceled. If they can convince enough others, they get 1% of whatever the program costs every year, in cash, up to $1 Million. Most expensive one of the term gets double payout.

  9. The Dems are now using the constantly impending 21% cut in Medicare payments to docs as a Sword of Damocles to keep the medical community in line. As long as the cut is 30 – 90 days away, the AMA is Congress’s bitch, and they know it.

  10. I thought the “cost curve was going to bend”. Can we please have a show on national TV where every liberal douchbag who ever trolled on any blog acting thoughtful and claiming that “obamacare is going to bend the cost curve and save us money and must be enacted” apologizes and ritually disembowels themselves?

  11. The fact that dems and Obama argued during the reform debate that adding 30 million people to Medicare “government mandated competitive health insurance markets” would somehow either bend, lower or push downward the overall costs of healthcare was pretty laughable on its face.

    But now that they’ve passed it we’ll finally get to see just how MUCH it’s going to cost everyone.

  12. Fucking eh. Who is surprised by this? Huh? HUH?

    In the days before the vote when the Chosen One and his minions kept insisting this abomination wouldn’t increase the deficit, why didn’t EVERYBODY in the whole room start shouting “YOU LIE”.

    1. I have it on the authority of at least ten liberal internet trolls that this thing was going to save us from bankruptcy. You mean they are wrong? I am shocked.

      1. You gotta pay the troll toll to get into the boy’s hole.

  13. Why can’t we just stop paying doctors so much? This doesn’t seem like a problem that needs fixing.

    1. Yep. Doctors could just stop treating patients once they earned their annual income quota.

      (In case you think I jest, that is EXACTLY what has happened in Canada – doctors have been told that they will only be compensated for X number of visits. Fortunately for many Canadians, the ‘greedy’ doctors are considerably more caring than the bureaucrats who made the rule.

  14. On the positive side, teh anointed one has shown his hand in the first year, so for the rest of his term everyone knows exactly what to expect. Anyone who gets fooled from here on out, does so on purpose.

  15. Why is there NO CONCERN for business as usual extreme hikes in the corrupt medical insurance industry??

    WASHINGTON ? Consumers are facing budget-busting increases in medical insurance premiums, Health and Human Services Secretary Kathleen Sebelius said Thursday, releasing a report the Obama administration hopes will tap public outrage and help revive its stalled health care overhaul.

    People buying their own insurance in at least six states have been facing pressure from insurers to raise rates by as much 56 percent, the report said. Officials said the problem is likely to be more widespread, but data from individual insurers in different states is difficult to obtain.

    “We think it shines a light on the urgency for health reform,” Sebelius told reporters.

    The Democratic health care bills would lower costs for many consumers by offering government subsidies to most of those buying their own coverage. Premiums would remain high, but insurers would face greater government scrutiny when they try to raise rates.

    Proposed premium increases of as much as 39 percent by WellPoint’s Anthem Blue Cross in California set off a wave of criticism and forced the company last week to announce a postponement. President Barack Obama seized on Anthem as Exhibit A to make his case for sweeping change before a bipartisan White House health summit next week. California officials said more than 700,000 households face increases averaging 25 percent overall and as high as 39 percent for some.

    In a briefing for reporters, WellPoint executives blamed their rate increases on rising medical costs and a pool of customers that is gradually becoming older and sicker, as younger, healthier people drop coverage. They insisted that their competitors are raising rates in much the same way.

    “We understand this is a hardship,” said Brian Sassi, president and CEO of WellPoint’s consumer-business unit. “This is not something that voluntarily we choose to do.”

    The HHS report found that the Anthem numbers are in line with increases sought by insurers in other states ? at a time of robust profit growth for the companies and a lack of competition in most states.

    For example, Anthem in Maine was denied an 18.5 percent increase last year and is now requesting that state regulators approve a 23 percent rise. Maine is home to Sens. Olympia Snowe and Susan Collins, Republican moderates whose support Obama would like to have for his health care legislation.
    Story continues below

    Michigan’s Blue Cross Blue Shield plan requested approval for premium increases of 56 percent in 2009. And in the state of Washington, rates for some individual health plans increased by up to 40 percent until regulators cracked down.

    Other states cited in the report were Connecticut, Oregon and Rhode Island.

    The premium increases affect the most vulnerable part of the health insurance market, policies marketed individually to customers buying their own plans. According to the Census Bureau, only about 9 percent of Americans purchase coverage directly, while nearly 60 percent are covered under employer plans. Family premiums for those with workplace coverage rose 5 percent last year, even as inflation fell 1 percent, but nowhere near the rates seen in the individual market.

    The health care legislation pending in Congress aims mainly to address the insurance problems of individuals and small businesses. While requiring most Americans to carry coverage, it would provide subsidies to make premiums more affordable. It would also create a new kind of insurance supermarket for individuals and small businesses, offering a range of competitive plans comparable to what federal employees have.

    Yet it would not be a free ride. A Congressional Budget Office analysis last year found that the Senate Democrats’ bill would raise the average premium per person in the individual market by 10 percent to 13 percent, mainly because insurers would have to sell more comprehensive coverage. The government would pick up much of the tab, however. The majority of the people purchasing their own coverage would be eligible for assistance averaging two-thirds of the cost of their premiums.

    1. Why is there NO CONCERN for business as usual extreme hikes in the corrupt medical insurance industry??

      The standard issue answer for this is that “I would rather have the insurance and have to pay a lot for it than not have the insurance at any price.” But wasn’t the point of this bill that it was going to make insurance affordable for everyone and guarantee coverage?

  16. Just so we all know what’s going on…


    If you’ve been watching the Senate Finance Committee’s markup sessions, maybe you’ve noticed a woman sitting behind Committee Chairman Max Baucus. Her name is Liz Fowler.

    Fowler used to work for WellPoint, the largest health insurer in the country. She was its vice president of public policy. Baucus’ office failed to mention this in the press release announcing her appointment as senior counsel in February 2008, even though it went on at length about her expertise in “health care policy.”

    Now she’s working for the very committee with the most power to give her old company and the entire industry exactly what they want ? higher profits ? and no competition from alternative non-profit coverage that could lower costs and premiums.

    A veteran of the revolving door, Fowler had a previous stint working for Senator Baucus ? before her time at WellPoint. But wait, there’s more. The person who was Baucus top health advisor before he brought back Liz Fowler? Her name is Michelle Easton. And why did she leave the staff of the committee? To go to work ? surprise ? at a firm representing the same company for which Liz Fowler worked ? WellPoint. As a lobbyist.

    You can’t tell the players without a scorecard in the old Washington shell game. Lobbyist out, lobbyist in. It’s why they always win. They’ve been plowing this ground for years, but with the broad legislative agenda of the Obama White House ? health care, energy, financial reform, the Employee Free Choice Act and more ? the soil has never been so fertile.

    The health care industry alone has six lobbyists for every member of Congress and more than 500 of them are former Congressional staff members, according to the Public Accountability Initiative’s LittleSis database.

    Just to be certain Congress sticks with the program, the industry has been showering megabucks all over Capitol Hill. From the beginning, they wanted to make sure that whatever bill comes out of the Finance Committee puts for-profit insurance companies first — by forcing the uninsured to buy medical policies from them. Money not only talks, it writes the prescriptions.

    In just the last few months, the health care industry has spent $380 million on lobbying, advertising and campaign contributions. And — don’t bother holding onto your socks — a million and a half of it went to Finance Committee Chairman Baucus, the man who said he saw “a lot to like” in the two public option amendments proposed by Senators Rockefeller and Schumer, but voted no anyway.

    The people in favor of a public alternative can’t scrape up the millions of dollars Baucus has received from the health sector during his political career. In fact, over the last two decades, the current members of the entire finance committee have collected nearly $50 million from the health sector, a long-term investment that’s now paying off like a busted slot machine.

  17. Look, you all better just accept that we’re in charge now. If you try hard, you may even come to enjoy it. You know, the same way that guys who get repeatedly raped in prison sometimes come to enjoy it.

  18. Also, you’re all just a bunch of Bushitler supporters in disguise. Admit it! YOU LIKED BUSH AND YOU ONLY HATE OBAMA BECAUSE’S HE’S BLACK!!! I see through your lies, you wicked, wicked, devils!

  19. Why does this surprise anybody. It is a huge love triangle between big business, big government and big labor. It is all about rent seeking and government sponsored monopolies. When will people realize that big begets big, without one you cannot have the other. It is a totally symbiotic relationship between all three. Think of it as what it is: a war on entrepreneurship and individualism. Ultimately, it is about controlling our ability to access life, liberty and the pursuit of happiness.

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