Time for truth in Medicare accounting


March 17, 2015 11:02AM

This piece originally ran in the Chattanooga Times Free Press. If Congress doesn’t act by the end of this month, there will be a major health care crisis. Topping the to-do list is addressing urgent problems with Medicare, the most costly federal program and the largest driver of national debt. Failure to act in the next two weeks would have harsh ramifications for seniors and caregivers in Tennessee.

The first step is to address accounting gimmicks that hide Medicare’s true cost and its effect on federal debt in the years ahead. The program operates under a phony spending baseline that conceals its true cost. How did this come about?

In 1997, Congress instituted a new spending formula, the Sustainable Growth Rate. It would institute physician reimbursement rate cuts in order to ensure that Medicare spending did not exceed the rate of economic growth. Noble goal, except that’s not what happened. In 2003, the first time Medicare cuts were scheduled to take place under SGR, lawmakers balked and delayed the scheduled reduction in physician payments. In the 11 years since, Congress has delayed these scheduled payment cuts a whopping 17 times. This maneuver is referred to as the “doc fix.”

The worst-kept secret on Capitol Hill is that Congress will always, just in the nick of time, pass a doc fix to prevent these payment reductions. This charade results in a multitude of problems. The Congressional Budget Office is forced to operate under the assumption that Congress will comply with SGR, even though the last 11 years have shown that to be pure fantasy. CBO treats passage of a doc fix as a spending increase. But it’s not, in reality, because Congress always passes a temporary reprieve. Everyone in Washington knows this.

The solution is to end this game, start being honest with ourselves, pass a permanent doc fix and move on to reforms necessary to ensure the nation’s fiscal health and Medicare’s sustainability. For Tennessee, failure to pass a permanent doc fix would reduce seniors’ access to care. Tennessee has 15 practicing physicians per 1,000 Medicare beneficiaries, which is below the national average.

If Congress does not act, the result will be a 24 percent across-the-board pay cut for caregivers treating Medicare patients. With 47 percent of Tennessee’s physicians over the age of 50, the age at which surveys show many physicians begin to consider cutting back on patient care, scheduled provider cuts would only exacerbate Tennessee’s problems with access to care.

A temporary doc fix breeds corruption and legislative chicanery, producing a gold mine for lobbyists and political fundraisers. Around and around we go every year under the temporary doc fix charade. Worse, the constant need to pass an emergency, temporary doc fix distracts from much-needed Medicare reforms. If Congress continues to ignore the unsustainable trajectory of Medicare spending, the result will be harm to seniors and a federal budget drowning in red ink.

Fixing what’s wrong with Medicare is the top health and budgetary issue facing the country. As former Congressional Budget Director Doug Holtz-Eakin warns, “By 2020, as baby boomers continue to age into Medicare at the rate of more than 10,000 a day, Medicare’s cumulative $6.2 trillion in cash flow deficits will constitute 35 percent of the nation’s total debt accumulation.”

It’s time for Congress members to stop kicking the can down the road, institute truth in accounting by passing a permanent doc fix, roll up their collective sleeves and get to work on the real reforms that will save Medicare and put the nation on a sound fiscal path.

Lindsay Boyd is the director of policy at the Beacon Center of Tennessee. Patrick Gleason is director of state affairs at Americans for Tax Reform and a senior fellow at the Beacon Center.