Is the “Doc Fix” Bill Fiscally Sustainable?
Last month, in writing about how the president’s budget would forestall changes to entitlements for several years, I said that while the budget “would include some modest changes to Medicare benefits, the overall document postpones most of the fiscal pain until after President Barack Obama leaves office.” The same might be true of bipartisan Medicare legislation that addresses physician payments.
House leaders filed “doc fix” legislation Thursday afternoon, but they have not yet released the legislative language surrounding the parts of the bill that would be paid for. A summary circulating among lobbyists in Washington suggests as one of the “pay-fors” a Medicare Advantage timing shift—a budget gimmick that would shift plan payments into a future fiscal year, masking overall Medicare spending levels.
The document also discusses more substantive changes to the Medicare program: Federal Part B and Part D subsidies would be reduced for individuals with incomes greater than $133,000. And first-dollar coverage for new beneficiaries purchasing supplemental coverage—which studies have shown encourages seniors to over-consume care–would be limited.
These changes may start to address Medicare’s structural shortfalls, but they seem relatively paltry next to some of the Obama administration’s budget proposals. The president’s plan proposed increasing the Medicare Part B deductible and introducing home health co-payments—actions that could reduce incentives for over-consumption of care and crack down on fraud, a particular problem in the home health program. But while the president’s proposed changes would not take effect until 2019, the House proposal would delay them one additional year, until 2020.
Demographics will define our fiscal future for the generation to come. The Congressional Budget Office noted this year that Social Security, health programs, and interest payments represent 84% of the increase in federal spending over the coming decade, largely because an average of 10,000 baby boomers will retire every day. Yet the House legislation could end up exempting from any structural reforms the more than 16 million individuals forecast to join Medicare by 2020.
Unsustainable trends will, at some point, give out. As I wrote last month, putting dessert before spinach by kicking tough choices to future political leaders might lead to short-term political gains but could also produce long-term fiscal and political pain. And when the fiscal reckoning occurs, voters are not likely to look kindly on those who created the problems.
This post was originally published at the Wall Street Journal Think Tank blog.