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The “Doc Fix” and Its Budget Gimmickry Is Not a Clever New Democratic Idea

October 21st, 2009 . by economistmom

An editorial in today’s Wall Street Journal suggests that the Obama Administration and the Democrats in Congress have come up with a new and clever way to deceive the American public about the costs of government (emphasis added):

Later this week, or maybe next, Senate Democrats plan to vote on a stand-alone bill that strips a formula that automatically cuts Medicare physician payments out of “comprehensive” health reform. Rather than include the pricey $247 billion plan known on Capitol Hill as the “doc fix” as part of ObamaCare, they’ll instead make this a separate contribution to the deficit, without compensating tax increases or spending cuts…

This doctor maneuver is such a cleverly dishonest solution to their many contradictory promises that we’re surprised Democrats didn’t think of it sooner.

You might be saying, well, yeah–that’s the Wall Street Journal editorial page, so of course they wouldn’t miss a chance to accuse the Democrats of behaving badly.  More surprising is that the Washington Post’s Dana Milbank also talks about it like it’s a new creation of the Democrats:

Senate Democrats wanted to protect doctors from scheduled cuts in Medicare payments over the next 10 years, but there was a problem: Doing so would add a quarter of a trillion dollars to the federal deficit, making mincemeat of Obama’s promise. So Democrats hatched a novel scheme: They would pass the legislation separately, so the $250 billion cost wouldn’t be part of the main reform “plan,” thereby allowing the president to claim that that bill wouldn’t increase the deficit.

Republicans, who had been losing traction in their effort to fight a health-care overhaul, could hardly believe the gift the majority had given them.

But Ezra Klein sees the fallacy in this view that the “doc fix” is some kind of new gimmickry that Democrats just came up with; he very appropriately labels it a “proud bipartisan tradition.”  In fact, Monday’s Washington Post editorial reminded us of all the ways in which the costs of federal policy have been understated to the American public over the past decade, by passing major pieces of legislation that on paper are scheduled to end yet in practice never do.  The Bush tax cuts are the largest ongoing example of such “gimmickry”–passed with a sunset at the end of 2010 and officially scored under the assumption that the alternative minimum tax (AMT) would grow dramatically over time to help offset the costs of the Bush tax cuts.  But after the Bush tax cuts were passed, the AMT was never allowed to grow–just like (also during the Bush Administration and Republican control of Congress) the “doc fix” was never allowed to reduce physician reimbursement rates and hence Medicare costs–despite what current law said should happen.  So the clever idea to hide the permanent costs of spending or tax cuts by making them temporary, and then later extending them while refusing to pay for the costs of extending them (because policymakers can pretend that deficit financing is “free”), is something government policymakers have been practicing in a bipartisan manner for awhile, but which in my opinion they really “mastered” during the Bush Administration and under Republican control of Congress.

The Obama Administration and the Democratically-controlled Congress could have chosen to do things differently now that they’re in charge, but only some Democrats are showing some of that courage to change.  (Steny Hoyer and Kent Conrad are currently at the top of my “courageous Democrats” list; more on that soon.)  This particular episode of the “doc fix” and refusing to pay for it as part of health care reform is indeed a largely Democratic performance, but it’s only of one particular scene off an old and familiar (and mostly Republican-contrived) script of an entire very long and costly play.

5 Responses to “The “Doc Fix” and Its Budget Gimmickry Is Not a Clever New Democratic Idea”

  1. comment number 1 by: Brooks

    Well the “Doc fix” is a “No go”, at least for now. But is it possible that the WSJ is giving some Congressional Democrats too much credit? http://online.wsj.com/article/SB10001424052748704597704574487622368301370.html

    Sure, nixing the “fix” is better than going forward with it, but all it means is that it will, at least unless/until the issue is revisited (perhaps very soon), continue to be patched annually. I guess the bar for applause for fiscal responsibility is lower than [insert folksy, Dan Ratheresque analogy here...ok, I'll go with...] the limbo bar when Kim Jong Il wins.

  2. comment number 2 by: Jorge Costales

    Even assuming that the ‘doc fix’ is part of a ‘proud bipartisan tradition,’ supposedly solving the fix by pushing the SGR problem forward 10 years — as opposed to a yearly punt — and doing it outside of the Democrats comprehensive reform legislation qualifies as an original [and cynical] solution in my book.

    Just curious, but … If the need to replace Bush and Republicans was partly due to their tactics, why do those tactics now become the acceptable baseline behavior?

  3. comment number 3 by: P.G. Garber

    There seem to be 3 possible solutions:

    1. Cut payments to doctors, which undoubtedly would increase the doctor flight from Medicare, that already is under way. Bad for health care.

    2. Raise taxes, which would remove money from taxpayers and from the economy. Bad for taxpayers and bad for the economy.

    3. Increase federal support, which would increase the supply of money and the supply of doctors. It also would increase the deficit, which seems to be curing the recession.

    Which solution is best?

  4. comment number 4 by: murf

    In your opinion they “mastered” budget gimmickry during the Bush Administration? Take off the blinders. History goes further back than 8 years. There is sufficient blame to go around (as you correctly point out), but the game neither started, nor was “mastered” during the Bush years. It was merely continued.

  5. comment number 5 by: SteveinCH

    Could I just say one more time.

    This type of gimmickry is bad. It doesn’t matter who does it. It is bad. If you agree with that statement, the question of who’s worse or who started it ought to be irrelevant.