How To Easily End The ‘Doc Fix’ Problem — And Why House GOP Is Opposed

One of the items Congress extended for two months in the December payroll tax package is current Medicare payment rates to physicians, averting a steep 27.4 percent cut. Although a yearlong “doc fix” is seen as likeliest when lawmakers return to town this week and begin negotiating pay-fors, even that would merely be punting an issue in need of a permanent fix.

Over the last few months there’s been serious talk in Congress of buying out the “doc fix” issue once and for all with war savings from troop withdrawals in Iraq and Afghanistan, estimated at over half a trillion dollars.

The idea has been championed by Senate Majority Leader Harry Reid (D-NV), House Minority Leader Nancy Pelosi (D-CA), Senate Minority Whip Jon Kyl (R-AZ) and multiple other key senators including John Kerry (D-MA), Debbie Stabenow (D-MI) and Tom Harkin (D-IA).

But even though this plan could remove for free the $300-billion-and-growing albatross from the nation’s neck, it faces fierce resistance from House Republicans. In fact, some of the vocal opponents are doctors in the caucus, whom Leadership tends to give the first bite at the apple on health issues.That’s largely because House Republicans view the necessity of finding doc fix pay-fors as leverage to cut government spending.

“I absolutely would not be in favor of offsetting Overseas Contingency Operations money [for a doc fix] when it was going to end anyway,” said Rep. Phil Gingrey (R-GA), a physician, when I asked him about the idea.

And why?

“That is funny money. That spending was going to go away anyway. That does not reduce the size of government,” Gingrey explained. “So you grow it on the one hand and then you rob Peter to pay Paul but Peter doesn’t have any money. It’s just a Ponzi scheme and the American people are sick of that.”

Gingrey is far from alone: multiple House GOP aides say the war savings offset is anathema to the caucus for that reason.

“We aren’t going to spend that money anyway,” agreed Rep. Michael Burgess (TX), the chairman of the GOP health care caucus. “I don’t know if that’s legitimate.”

Sen. Mark Kirk (R-IL), who’s also not a fan, joked that it would be like counting all the trillions the US has not spent since World War II as budgetary savings.

Some background: the “doc fix” issue arose from a law passed in 1997 that included triggered cuts to Medicare physician payments, which experts today believe will destabilize the health care system. Like a growing fire, the cost of repealing the formula has risen dramatically. Congress has been running away from the fire for 9 years, routinely delaying the purchase of a hose to put it out, so to speak.

The war savings offset requires a bit of budget trickery because that money is not expected to be spent post-drawdown. But as Kyl explains it, it’d be akin to canceling out $300 billion we’re never going to save with $300 billion we’re never going to spend. In other words, he argues, the funny money cuts both ways.

But look closer and you’ll see why House Republicans don’t want to give up this issue: doc fixes are typically funded with health spending cuts elsewhere in the budget, so the issue offers them a rare opportunity to go after Medicare and the Affordable Care Act, two programs they want to tell their 2012 constituents they helped contain.

As it happens, the House GOP’s two-year doc fix, along with its payroll tax cut and unemployment insurance extensions, were paid for in part by charging upper-middle-class people more for Medicare and chopping the health care reform law’s exchange subsidy and prevention funds.

Democrats rejected those pay-fors, without proposing non-war savings alternatives, and so the doc fix fire has continued to grow. The House-Senate conference committee has until the end of February to hammer out longer-term extensions, and they’re expected to aim for a one-year fix, although GOP sources tell TPM they want at least a two-year patch. Expect Republicans to push the Medicare and health reform cuts again.

One way or another, Congress will eventually need to put out the doc fix fire, and once it gets around to it, Republicans have every intention of using the occasion to take a bite out of the health care and other government programs they’ve long wanted to shrink.