A claim that has been popping up in some news circles over the past day is that the doc fix -- which freezes Medicare payments to physicians, instead of allowing them to be cut by 27 percent starting in March -- has become more expensive in light of CBO's new budget and economic outlook.
For example, an article in the National Journal states:
Permanent repeal of the flawed Medicare payment formula known as the sustainable growth rate just got a lot more expensive. According to the Congressional Budget Office, which released its new Budget and Economic Outlook report on Tuesday morning, a 10-year repeal of the growth-rate formula that froze doctors' rates at current levels would cost $316 billion, compared with $290 billion when CBO last calculated the rate in November.
It is true that the most recent estimate of the ten-year cost of the doc fix puts it at $316 billion and the previous estimate was $290 billion. Technically, Congress would have to come up with more savings to offset the cost. However, just citing the ten-year number ignores one fact: the ten-year windows are different.
One change that the new year ushers in is a shift in the ten-year budget window that CBO uses to evaluate costs. The most recent estimate evaluates the cost of the doc fix from 2013-2022, while the previous estimate from November uses 2012-2021. For a few reasons -- health care cost growth and the design of the SGR formula -- the doc fix costs much more in 2022 than it does in 2012, so shifting the budget window forward by a year automatically increases the doc fix's cost.
|CBO Doc Fix Cost Estimates (billions)|
*Estimate is adjusted for the doc fix that was passed in December
As this table shows, using a comparable budget window (2013-2021), the cost estimate for the doc fix has actually gone down by about $9 billion. As we mentioned above, the doc fix costs significantly more in 2022 than 2012, so using 2013-2022 instead of 2012-2021 as the ten-year projection period increases the estimate's cost by almost $40 billion by itself.
So is the doc fix actually more expensive in the new CBO estimate? While it's true that it is more expensive in the 2013-2022 period than in the 2012-2021 period, over a comparable period the new estimate actually shows a cheaper doc fix.