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Will Congress really stick with Medicare payment cuts?
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The only health reform bill that has passed through a committee in Congress, so far, is the Baucus Bill, and part of the reason for that is that it supposedly would cut the deficit over the next 10 years. Who told us this? The Congressional Budget Office (CBO), which has to take what the bill says at face value.
The bill has scheduled payment cuts in Medicare of 25%, but the bill could say it would cut Medicare payments by 95%, and they would have to accept it, even if everyone knew that it was a bogus political assumption. Senate Democrats are already moving to prevent a scheduled payment cut to doctors next year. This is unlikely to be the last time it ever happens.
Robert Robb, from RealClearPolitics.com points out that the Baucus bill states that while payments to physicians would be scheduled to fall by 25%, but this appears to be just a gimmick:
In a similar exercise in the past, Congress showed paper savings by cutting Medicare physician payments by 25 percent. Baucus' bill restores this cut in 2010, because he knows that without restoration, doctors will quit taking Medicare patients. And then seniors will beat their representatives senseless.
The cut, however, returns fully in 2011 under his bill and remains in effect through the remainder of the decade.
Other health care reform bills have been more honest and reflected higher Medicare physician payments throughout the period. That's one of the reasons why Baucus is able to show a smaller overall cost. What he acknowledges is necessary in 2010, he pretends will be unnecessary for the rest of the decade.
Congress, understandably, doesn't like to cut Medicare. They get immense pressure from the health care industry, recipients of Medicare, and it just isn't popular with anyone other than deficit hawks. Every time there are supposed to be cuts, or are cuts, Congress reverses them, usually with wide bipartisan support. Even the U.S. Chamber of Commerce, not exactly a bastion of liberal thinking, has endorsed restoring Medicare funding in the past.
Medicare isn't called the 'Third rail of American politics' for nothing. The truth is that there will be much less concern about how health care reform affects the deficit after it becomes law than there is right now. After all, Medicare has a multi-trillion dollar deficit, but that doesn't stop it from growing year after year.
The argument could be made that Congress might really be ready to stand up to seniors over the next decade and make the tough choices necessary to solve entitlement funding problems. That's possible, in the same sense that the Cubs could theoretically win the World Series each of the next 10 seasons, but it would be irresponsible to operate on that assumption.
There is every reason to believe Congress will quickly restore any cuts that are made. What happens if there are no Medicare payment cuts? Well, the Baucus Bill would probably go from a deficit-cutting bill to a deficit-expanding bill. That doesn't mean it would not be worthwhile, but it would be much more difficult, if not impossible, to pass if that was publicly acknowledged.
