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GOP's New Plan: Pay Cuts For Doctors If Obamacare Isn't Chopped

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AP Photo / J. Scott Applewhite

The strategy is unlikely to succeed and could backfire on Republicans. Delaying the individual mandate is a nonstarter for the Democratic-led Senate and White House. By demanding a largely partisan unraveling of Obamacare in exchange for must-pass bipartisan legislation, they risk being blamed by seniors and the health care industry if the doctor pay cuts go into effect. When Republicans insisted on such an approach for federal funding last fall, the government shut down and they took most of the blame.

"This bill represents a new low, even for House Republicans," fumed Drew Hammill, a spokesman for House Minority Leader Nancy Pelosi (D-CA), who decried the plan as "irresponsible and dangerous" and promised it'd be a "legislative dead-end."

But Republican leaders believe they have an ace up their sleeve. Many of them expect Obama to delay the individual mandate unilaterally before the first penalties come due (as he has delayed other provisions of the law). So they argue that this proposal puts Democrats in a tough position, particularly given the unpopularity of the federal requirement to buy insurance. A full "doc fix" could be funded by putting it off for several years, an aide said.

"Is President Obama willing to block a doc fix because he disagrees with a mandate delay he himself is likely to implement?" said a House GOP leadership aide. "Democrats are in a tighter position than [they'd] have you believe."

The House voted last week to delay the individual mandate for one year. It was the GOP-led chamber's 50th vote to repeal or dismantle Obamacare. The doc fix is a lose-lose dilemma because it requires offsets simply to maintain the status quo, and imposing cuts to influential industry players like hospitals or drug companies is problematic in an election year. It's plausible that Republicans won't insist on the mandate delay if their bill stalls, and may be willing to look elsewhere for offsets to patch the cuts.

"It gives them an easy off ramp to a patch while still saying they tried," said a health industry lobbyist and former congressional Republican aide.

A bit of background: in 1997, Congress enacted a formula to limit Medicare reimbursement rates to physicians, known as the Sustainable Growth Rate (SGR). Starting in 2002, it began imposing significant cuts to doctor payments. Congress responded by routinely passing short-term patches to stave off the cuts (and instead giving doctors pay raises), usually by cutting health care spending elsewhere. There is virtually unanimous agreement in Congress that the cuts shouldn't go into effect, but the formula remains in place because replacing it with a bipartisan alternative would cost a whopping $138 billion over a decade.

Rep. Mike Conaway (R-TX) said Thursday that the House bill will "replace the flawed SGR formula" and be "completely paid-for." A one-year mandate delay would save the federal government $9 billion, according to the Congressional Budget Office, and repealing it would save $282 billion over a decade. Conway said that "the specifics of the pay-for have not yet been finalized."

The full doc fix includes five years of higher reimbursements to physicians and instructs the Center for Medicare and Medicaid Services to come up with alternative payment systems, a GOP leadership aide explained. After the five years are up, doctors can choose to stay on their current payment plan or select an alternative one.

In recent months, there has been some hope that Congress will finally replace SGR with a more viable formula because the price tag has fallen dramatically from $300 billion, where it was in recent years. The American Medical Association, an influential physicians group, has been aggressively lobbying Congress for a permanent fix. But finding $138 billion in savings that can pass a Congress this divided remains a tall order, especially by the end of this month. Many believe short-term patches are inevitable for the foreseeable future.

The Republicans' latest strategy is actually a step away from bipartisan negotiations for a fix.

House Minority Whip Steny Hoyer (D-MD) warned that the Senate would reject a bill that chops the individual mandate, and said the GOP's approach makes it harder to fix the SGR problem in time. "Obviously there hasn't been agreement [to roll back the mandate] in the past," he said, "and if we use that as a pay-for, it seems to me it puts at risk meeting the March 31 deadline."

This article has been updated.

About The Author

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Sahil Kapur is TPM's senior congressional reporter and Supreme Court correspondent. His articles have been published in the Huffington Post, The Guardian and The New Republic. Email him at sahil@talkingpointsmemo.com and follow him on Twitter at @sahilkapur.