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A proud bipartisan tradition of budget gimmickry

This is an extremely strange paragraph from Dana Milbank:

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.

"Novel scheme?" 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. 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.

By Ezra Klein  |  October 21, 2009; 11:20 AM ET
Categories:  Health Economics  
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Thanks for this. It's disturbing that Milbank doesn't seem to have done any due diligence on the history of this particular provision, and instead seems content to regurgitate the right-wing spin du jour that this some novel bit of Democratic chicanery.

Posted by: steveandshelley | October 21, 2009 11:43 AM | Report abuse

Why only 90s as aberrant period? Why it cannot be again 2010s onward in different direction? What would Congress do if it finds it cannot control the costs? Are we back to the same debate then?

Posted by: umesh409 | October 21, 2009 11:46 AM | Report abuse

So the words that Milbank uses to describe it are worthy of an entire "the Republicans did it too!" blog post, but the fact that the Democrats did in fact make this change separately for the sole purpose of making the reform bill appear "deficit-neutral", that's not important enough to address.

Like wisewon said yesterday, you work for the WaPo, not the DNC.

Posted by: ab13 | October 21, 2009 11:46 AM | Report abuse

One problem with 10-year fixes is that it's impossible to know the future cost curve. If the $247 million for 10 years turns out in three or four years not to be enough, Congress will increase the amount, as it does annually now. Or, it could turn out to be too high if cost-cutting approaches like comparative effectiveness are successful in a few years. If the MedPAC Commission were ever given authority to set these reimbursement rates in real time, i.e., annually, based on the most recent cost trends, it would be a great improvement. Meanwhile, there is a concern that in a 10-year deal, as is this one with the AMA and the one that the White House made with PHARMA, taxpayers are not only initially overcharged, but know that if the costs turn out to be greater than anticipated, they will be charged even more.

Posted by: wdarmes | October 21, 2009 11:57 AM | Report abuse

who is really doing the people's work, the repiglicans who pass a short term fix to a problem or the dems who bite the bullet and propose a longer term fix. Clearly there needs to be reform of the doctor payment schedule tied to patient outcomes and an integrated approach to delivering services. But until that happens, this need to be addressed. It is not a part of the public option debate as it currently stands and is not really relevant to HCR as it is addressing an existing program, not starting or reforming an existing one. Plus, it is the repiglicans that are fighting tooth and nail against the comparative effectiveness research provisions of HCR that would actually help keep doctor's fees down by curbing ineffective treatments. So repiglicans whine about what the dems are doing to fix an existing problem while opposing a more systemic fix to the same problem.

Posted by: srw3 | October 21, 2009 12:00 PM | Report abuse

Dana Milbank is an embarassment to the profession of "journalism". He's little more than a Transcriber at this point. It's a very poor reflection on the WaPo, but I don't think management cares at this point.


Posted by: toshiaki | October 21, 2009 12:17 PM | Report abuse

"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."

No it wouldn't. The AMA's support of the health care reform bill is solely contingent on the permanent fix. That's the whole point.

Posted by: wisewon | October 21, 2009 12:20 PM | Report abuse

Actually thinking beyond the talking points is something Milbank is incapable of. He's gotta bring the snark, that's his schtick.

Posted by: senkiri | October 21, 2009 12:30 PM | Report abuse

Milbank's useless. He is determined to make his writing lively and snarky, and thus tries to inject it into everything, from legislative minutiae to the First Lady visiting a farmer's market. It's irritating. People frequent politics blogs for a reason, and that reason is that they do snark better. What blogs don't tend to do as well is front-line investigative journalism, the type of thing that is well suited to salaried professionals with a deep Rolodex and the interest in digging some dirt. I don't want to see newspapers dying out, but they're going to have to focus on what they're good at instead of trying to compete with other people doing something else better. /end rant

Posted by: Jenn2 | October 21, 2009 12:35 PM | Report abuse

I don't think the doc fix is part of the backroom deals, otherwise it would have been in the Baucus plan. I saw details of the purported AMA deal at one point but I can't find the link. What I recall mainly was that it stipulated no public option could pay less than Medicare+5%.

My feeling is the fix should be addressed as part of the HCR bill, in order to keep the AMA at the table.

Posted by: bmull | October 21, 2009 12:54 PM | Report abuse

People are wrong to bash Milbank here. Before they do that, they need to keep aside their prejudices and unabashed support for HCR.

If Dems thought this fix of $240Billion for 10 years was important, I ask again and again; was it included in the Budget? Despite what 'wisewon' said yesterday; all I know is Senate passed $11B for this year only. I am still not convinced that Perter Orszag included full 10 year fix cost of $240B in a budget of one single year or ever proposed to spread over next 10 budgets.

Next, if this does not come into the budget, being part of Health Care Reform; with what straight face are you saying that this should NOT be part of the overall framework HCR is trying? It is exactly the same dis-ingenuity as like Bush when for years he never included the cost of Iraq War in overall War on Terror cost for budgetary purposes.

Folks - try selling 'snake oil' to someone else. Once bitten by Bush; we are not stupid enough to accept it again. We don't care for your politics that - 'oh but Bush was Republican and we are Democrats'. Who cares for your Liberal credentials if you are making the same mistake?

Finally, one serious thing 'wisewon' has been pointing for quite some time now - support of AMA is contingent upon having this fix of $240 over ten years. And then you still want to 'lie' to us that Obama is advocating budget neutral HCR? What a baloney!

Dan Milbank and WaPo Editorial are correct. Ezra is still not getting and lot of Liberals commenting on this blog in support of $240B over 10 years outside HCR are plain and simple wrong. Get off the back...

Posted by: umesh409 | October 21, 2009 12:57 PM | Report abuse

UMesh409: it's one thing to advocate honest accounting. I, too, support honest accounting. But supporting honest accounting, or honest anything, is completely inconsistent with supporting Dana Milbank. Milbank does not have a conservative agenda or a liberal agenda. He's just the Post's version of Stephen Colbert, saying stuff because it's funny or interesting. He's not a journalist.

Posted by: tomveiltomveil | October 21, 2009 1:05 PM | Report abuse

If Dems thought this fix of $240Billion for 10 years was important, I ask again and again; was it included in the Budget?

It certainly wouldn't be included in the CBO projections, since it hasn't been passed yet. As for the OMB numbers, I don't know. If a permanent SGR fix is passed, then then it will be included in future projections.

Next, if this does not come into the budget, being part of Health Care Reform; with what straight face are you saying that this should NOT be part of the overall framework HCR is trying?

If it's reform of anything, it's not health care reform, it's budgeting reform.

I followed the health care debate pretty closely during the 2008 campaign, and I don't remember anything about fixing the SGR. As Ezra mentions, waivers to the SGR were passed in 2003, 2005, 2006, 2007, and 2008. Continuing the practice isn't health care *reform* for the obvious reason that it is a case of preserving the status quo. As the term was used in the 2008 campaign, health care reform was about making health insurance available to more people at reasonable prices. The primary purpose of the health care reform bill is to implement the sort of reform discussed during the 2008 campaign. There is no logical reason to attach the SGR fix to the health care reform bill.

There may be a political reason: if the SGR is attached to the health care reform bill, that makes it harder for the AMA to oppose the bill. This is the type of consideration that leads bills to include all sorts of provisions unrelated to the primary purpose of the bill. But if Congress can pass a clean bill, it should do so.

Posted by: KennethAlmquist | October 21, 2009 8:35 PM | Report abuse

i learned something new today. thanks ezra!

Posted by: schaffermommy | October 21, 2009 9:16 PM | Report abuse

For Milbank to be WaPo's version of Steven Colbert he would actually have to become marginally more intelligent and notably funnier.

Posted by: DonWhiteside | October 22, 2009 1:33 PM | Report abuse

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