Doc Fix Deal

Bipartisan budget buster

In April, President Barack Obama signed a repeal of the Sustainable Growth Rate (SGR), the payment formula that for more than a decade had called for large reductions in Medicare's physician reimbursements. Those reductions had always been overridden in a recurring congressional ritual that came to be known as the "doc fix."

Members of both parties had long sought a permanent doc fix, and over the last two years had even agreed on the outlines of a replacement. But negotiations had always broken down when the two sides failed to settle on a way to offset the budgetary impact of permanently ending the large Medicare payment cuts that the existing SGR formula called for.

There turned out to be a simple bipartisan solution: Don't figure out how to pay for it at all. The repeal, passed with large majorities from both parties in both the House and the Senate, offset a little less than a third of its estimated $200 billion price tag. The Congressional Budget Office estimated that it would add $141 billion to the deficit over 10 years.

The deal's conservative defenders argue that in the long run, it will curtail entitlement costs by imposing additional means-testing on some parts of Medicare. But at best, those savings will only pay off over decades. And one estimate by the Committee for a Responsible Federal Budget, a nonpartisan organization focused on deficit reduction, found that, because the new law puts physicians on track to receive regular raises in Medicare payments, ending the doc fix will actually add some $500 billion to the deficit over the long term.