The Medicare Doc Fix Needs fixed
April 7, 2015
On March 26, an overwhelming bipartisan majority voted for H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), by 392-37. This bill is the so-called Medicare "doc fix," a prize that has been chased for many years but never caught by politicians eager to break out of the fiscal discipline a previous Congress had imposed on them.
The Senate reconvenes on April 13, and will have the opportunity to fix the bill. There are a number of options to include good public policy into the doc fix. NCPA senior fellow John R. Graham suggests three recommendations.
- Medicare's increases to physicians' payments above the amount indicated by the SGR have always been short-term patches, rather than a long-term fix. The first one passed in 2003, and they have never lasted more than a year. If the doc fix were similarly limited to a two-year extension, instead of perpetually locking in spending, the gross cost of the change would drop from $175 billion to about $26 billion - easily paid for within the bill as written.
- Find offsets to pay for the $145 billion of unfunded spending in MACRA. Previous doc fixes have been funded with reforms that increased Medicare's efficiency, adding up to $165 billion in savings over the years, and slowing the rate of growth of Medicare spending.
- Include MACRA spending in the PAYGO scorecard (as described in a forthcoming proposal by Paul Winfree of The Heritage Foundation). MACRA explicitly excludes its spending from the provisions of the 2010 law that requires the President to sequester enough funding to ensure budget neutrality if new legislation increases the deficit. An advantage of this approach is that it requires the simple change of removing one short section of MACRA, which means the Senate can do so quickly.
The pressure to simply pass the House bill as written will be intense. Doing so would significantly harm both the federal budget and the chances of real Medicare reform.
Source: John R. Graham, "Fixing the Medicare Doc Fix Fiasco," National Center for Policy Analysis, April 6, 2015.
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