More on Leaky Roofs

This week, the Center on Budget and Policy Priorities (CBPP) released a short piece disputing the claim that the cost of the so-called “Doc-Fix” – which corrects the Sustainable Growth Rate (SGR) formula -- should be part of the health reform law.

CBPP contends that “the cost of fixing the SGR formula is entirely unrelated to health reform and would exist with or without the new law.”

It is true that the SGR would have had to be dealt with regardless of whether health reform had passed since, absent a Doc Fix, physician payments would be cut by 21 percent this year. And in fact, there is actually an interaction that makes some potential fixes to the SGR slightly cheaper now than they were prior to the passage of health reform.

Yet while the costs of fixing the SGR would exist regardless of the passage of health reform, the potential offsets have diminished substantially.

Health reform has taken away all the low- and medium-hanging fruits which could have (and have in the past) been used to pay for doc fixes. The fact that Congress paid for the bill by cutting pretty much all the remaining excess subsidies to Medicare Advantage (which has been used previously as a doc fix offset), raising premiums, tapping the entire Medicare improvement fund, and substantially slowing the growth of all non-physician provider payments suggests that there isn’t a whole lot of money left to pay for fixing SGR.

The recent comprehensive health care reform laws established health exchanges, implemented a subsidy program, expanded Medicaid, created a reinsurance system, closed the Medicare donut hole, established new public health initiatives, increased payments to physicians in Medicaid, offered new grants to the states and territories, created a long-term care insurance program, and increased spending on a number of Medicare and Medicaid payments schemes. It is hard to believe that, among such an extensive list of policy changes, policy makers could not have included a permanent fix to the SGR.

In a previous blog, we likened the doc fix to a leaky roof. We’ve temporarily covered the leak with fresh tarps, year after year. Sometimes we bought them with our credit card, but more often than not we relied on our home improvement funds. But now our credit cards are nearly maxed out, and we’ve spent all our home improvement funds to remodel the house. So where will we find the money to fix the roof?