Scarborough: "[T]hey bought off the doctors' lobby by hiding about a $750 billion payoff to the doctors' lobby interests"

From the October 21 edition of MSNBC's Morning Joe:

SCARBOROUGH: Very important also, though, realizing that the White House did something very quietly yesterday that The Wall Street Journal and others are talking about this morning. They basically bought off the doctors' lobby. And they bought off the doctors' lobby by hiding about a $750 billion payoff to the doctors' lobby interests.

In fact, the doctor pay fix would reportedly cost around $250 billion over 10 years

WSJ: Price of the measure is "$247 billion over 10 years." The Journal article reported that “Medicare's reimbursement schedule calls for a 21% drop in payments to doctors beginning in January. Top Democrats are proposing to upend that arrangement and instead freeze doctor payments at this year's level for the next decade.” The article further stated that the cost of the proposal to phase out the Sustainable Growth Rate formula for doctor payments is "$247 billion over 10 years." [The Wall Street Journal, 10/21/09]

$250 billion cost calculated from baseline that assumes Congress would allow cuts when it hasn't in the past

CBO in 2006: “Legislation has overridden the formula's results in each of the past four years.” In a 2006 brief on “The Sustainable Growth Rate Formula for Setting Medicare's Physician Payment Rates,” the Congressional Budget Office (CBO) noted that the formula used to set annual physician reimbursement rates “unless overridden by legislation, will reduce fees by about 4 percent or 5 percent annually for at least the next several years.” CBO went on to note, “Legislation has overridden the formula's results in each of the past four years, and the prospect of future, year-after-year rate reductions raises the question of whether the SGR formula is a viable mechanism -- and if not, what alternatives might be appropriate.”

CBO analysis of Senate Finance Committee bill: Doctor pay formula “has frequently been modified ... to avoid reductions in those payments.” CBO stated that its projections of the cost of the Senate Finance Committee bill “assume that the proposals are enacted and remain unchanged throughout the next two decades, which is often not the case for major legislation. For example, the sustainable growth rate (SGR) mechanism governing Medicare's payments to physicians has frequently been modified (either through legislation or administrative action) to avoid reductions in those payments.” CBO added that without a fix for the doctor payment formula, under the Senate Finance Committee's health care reform proposal the formula would require a reduction in doctor payment rates “by about 25 percent for 2011 and then remain at current-law levels (that is, as specified under the SGR) for subsequent years.”

TNR's Jonathan Chait: "[A]dmitting the obvious fact that the reimbursement cuts will never happen would, officially speaking, cost $247 billion over ten years." Chait wrote on The New Republic's The Treatment blog:

More than a decade ago, Congress tried to control Medicare costs by restricting payments to doctors. But the reimbursement cut has proven unpopular. So every year, Congress appropriates more money to fill the hole and keep the doctors happy. Yet the pay cut remains on the books. So, admitting the obvious fact that the reimbursement cuts will never happen would, officially speaking, cost $247 billion over ten years.

Everybody agrees that it's a sham. Since the Democrats are trying to reform, and trim, how much Medicare spends, they planned to wipe the slate clean and just admit the obvious reality that the $247 billion is going to get spent.

Conservatives are attacking this as proof that health care reform is based on fraudulent accounting. See -- they're spending money they don't pay for! National Review calls this “offloading $247 billion in Obamacare costs onto a separate, standalone, unfinanced piece of legislation.” But it's not “Obamacare costs.” It's money that would get spent whether or not health reform happens. It would be fair to make this charge if Obama were using these illusury savings to cover the cost of the new spending in his health care reform, but he isn't. [The New Republic, 10/19/09]

Wash. Post's Ezra Klein: “It would be easier” for Democrats to “put the problem off for one more year, and one more Congress.” Klein wrote on his WashingtonPost.com blog that in overriding the scheduled cuts nearly every year since 2003 without providing a permanent fix for the formula, Congress avoided the cuts and allowed the deficit to be “estimated as if Congress was going to allow a 30 percent cut in doctor's reimbursements sometime in the future, saving hundreds of billions of dollars. That was never going to happen, of course, but it made Bush's budgets look better”:

The “Sustainable Growth Rate” in Medicare was passed by a Republican Congress in 1997 that wanted to ensure Medicare's costs didn't rapidly outpace economic growth. In 1997, that seemed like a plausible thing to do: Health-care costs grew by 4.7 percent that year, and the GDP also grew by 4.7 percent. The linkage seemed natural.

The problem was that the 90s were an aberrant period of low health-care cost growth and high GDP growth. In 2002, for instance, health-care spending grew by 8 percent while the GDP grew by 1.8 percent. The formula embedded in the Medicare Sustainable Growth Rate would have triggered huge cuts to doctors, and broad outrage among seniors. And thus began the era of “temporary” fixes to Medicare payment. The SGR law stayed on the books, but Congress began routinely invalidating its scheduled cuts to doctor payments.

The first was passed in 2003, when Republicans controlled the House, the Senate, and the White House. The next came in 2005. Then there was one in 2006. The next year, Democrats took control of the Congress. They passed fixes in 2007 and 2008. The neat trick of this is that it also made the deficit look smaller than it was, as it kept getting estimated as if Congress was going to allow a 30 percent cut in doctor's reimbursements sometime in the future, saving hundreds of billions of dollars. That was never going to happen, of course, but it made Bush's budgets look better.

Now it's 2009, and rather than passing a temporary fix to the program, Democrats are trying to rewrite the program's formula so it reflects the actual behavior of Congress. [Post columnist Dana] Milbank calls this “novel,” and I guess it is. But not in the way that he implies. Passing bills to “delay” doctor's cuts is a proud, bipartisan tradition in this town. Pretending that it's some Democratic innovation is simply wrong. The only thing that's novel is that the Democrats are trying to solve this problem all at once, and facing down a huge price tag to do so. It would be easier for them to stick with recent congressional practice and pass a small bill putting the problem off for one more year, and one more Congress, as the very Republicans who are criticizing them now did in 2003, 2005 and 2006. [WashingtonPost.com, 10/21/09]

Transcript

From the October 21 edition of MSNBC's Morning Joe:

SCARBOROUGH: Well, let me add another question to you. What's more loathsome, people on Wall Street, insurance companies, or the federal government? And I'm talking with the American people, Mike. If you really believe that the American people have more confidence in federal bureaucrats to run their health care insurance than insurance companies, I think we're going to have an opportunity to play that debate out next year.

Very important also, though, realizing that the White House did something very quietly yesterday that The Wall Street Journal and others are talking about this morning. They basically bought off the doctors' lobby. And they bought off the doctors' lobby by hiding about a $750 billion payoff to the doctors' lobby interests.

There are actually Republicans that are now going to consider voting for cloture in the Senate. This is getting down into the weeds, but long story short, there are Republicans that may now help Barack Obama get to 60 on this bill. If that happens, it is a big step forward for the White House and devastating for people that actually don't want the federal government to have a more active role in their health care.