Democrats deliberately used scheduled future reimbursement rate cuts for Medicare and Medicaid to score their ObamaCare bill with the CBO, even though Democrats pledged to rescind the planned 21% cut in reimbursement rates in order to secure the AMA’s endorsement for their health-care overhaul. When Rep. Paul Ryan asked the CBO to add the planned “doctor fix” that rescinded the cuts and changed the reimbursement rates on which they scored the original bill, the CBO’s socre shows that ObamaCare will expand the deficit rather than reduce it. Now Jon Ward at the Daily Caller reports that Democrats may have to sneak another “doctor fix” that will add tens of billions more to that deficit spending in ObamaCare:
The federal government already has the “Doc Fix,” an annual shortfall of about $20 billion that must be paid to maintain current payment rates to physicians under Medicare.
Now, it looks like President Obama’s health-care bill created another funding cliff, costing an additional $5.5 billion or so each year.
Critics say the costs were hidden from view in the $940 billion health-care bill to lower the price tag by about $30 billion, and also as a way to gain the support of doctors and hospitals without angering governors. …
The health bill says that the federal government will pay the extra cost of paying higher rates for Medicaid patients. But only for two years: 2013 and 2014.
The cost for those two years of federal spending is $8 billion, according to the Congressional Budget Office.
So in 2015, the federal government will either step in and pay the extra charges, as they’ve done with the Doc Fix, or they will force states to take on the extra costs.
Keith Hennessey first blew the whistle on this shell game almost two weeks ago. With an avalanche of reports of unintended (or intended) consequences landing in media reports over the past week, this is a good time to review why the ObamaCare bill has them — and why it won’t work.
First, the problem here results from a confusion of cost controls with price controls. The scheduled reimbursement cuts made the same error. Only in the most superficial manner does cutting reimbursements control costs. The prices paid by the government go down, which allows the government to claim some sort of control over costs, but that’s not what actually happens in the market. The artificially low price forces providers to reduce services or to refuse to participate in the market altogether, if they lose money while providing the service. Rather than make medical care less costly, it makes medical care more scarce — resulting in artificially increasing ancillary costs like longer wait times and poorer service.
Both the “doctor fix” and this portion of the ObamaCare bill intend to address the problems created by price fixing simply by resetting the fixed prices. But that has cost ramifications, especially in Medicaid, where states bear a significant part of the burden. All this did was shift costs for two years from the states to the federal government, and then leave an unfunded mandate for the states to bear after that grace period expires. That allowed Democrats to hide the total cost of the bill by forcing it onto the states. Taxpayers therefore didn’t get the complete cost picture of ObamaCare, as the CBO only scored federal costs. They’ll have to pay higher taxes on the state level to fund this gimmick.
Either Congress has to write another “doctor fix” to get states off the hook and the governors off their backs, or they have to let the states go bankrupt after 2015 with this new unfunded mandate. States already suing over the individual mandate may want to figure out how to push back against federal encroachment on this point, but realistically speaking, that train left the station a long time ago. Either way, the Medicaid reimbursement catch-22 shows the dishonest approach Democrats took in scoring this bill, and why imposing more price fixing on a system already badly damaged by earlier price fixing will doom ObamaCare to failure.
Join the conversation as a VIP Member