The Doc Fix Is In

The doc fix is back (yet again). And whaddaya know, it's gumming up the new health care law.

During the health care debate, critics (including me) charged that the health care law's cost estimates weren't believable in part because they didn't include any attempt to address the way that Medicare's physician reimbursement formula called for large and growing payment cuts—now about 25 percent. Those planned cuts had been systematically overridden by Congress throughout most of the decade and replaced with a number of small reimbursement hikes funded through deficit spending. (This year alone Congress has passed five temporary delays in the rate cuts.) So the law's cost estimates assumed that the lower payment rates would take effect and ignored the (potentially very high) cost of paying to keep the rates from dropping.

Democrats argued that the doc fix was a separate issue, unrelated to the new law and therefore unnecessary to include in the bill or the cost estimates. But that was pretty hard to believe: Reports indicated that Harry Reid had used the doc fix to buy support for the health care overhaul from the American Medical Association, and an early draft had included a fix. The cost proved to be too much.

And as of this week, it's even harder to buy the line that the doc fix is somehow unrelated to the new health care law: Senate leadership has reportedly reached a deal to delay the called-for cuts and pay for a one year extension of Medicare's payment rates. And they're paying for it by taking money out of the health insurance subsidies included in the health care overhaul:

In 2014, some consumers will be able to buy health insurance through exchanges, web portals similar to Orbitz or Expedia. Low- and middle-income consumers will be eligible for tax subsidies to help pay for their coverage. The deal announced Tuesday would change how much money consumers would have to repay if they misreport their income or their income grows mid-year.

Under the health care reform law, if a person gets more of a tax subsidy than they're eligible for, they would have to repay no more than $250. Families would have to repay no more than $450. The deal on the table would raise those caps to between $600 and $3,500, depending on income.

The changes would free up about $19.2 billion to cover the one-year Medicare patch, according to Congressional aides familiar with the Congressional Budget Office estimates. It would impact about 200,000 people. 

Another Politico report indicates there may be some pushback from liberals unhappy with the idea of cutting into ObamaCare's insurance subsidies. The problem at this point is that they need to find a way to pay for the $19 billion cost of the extension. But there just aren't that many plausible ways to raise revenue left at this point; most of the "pay-fors" with any heft went to pay for ObamaCare.  

More on the doc fix and the health care overhaul here.