Why Is Congress Spending $160 Billion to Get Nowhere?

Congress spends billions every year failing to clean up its own mess.

American Action Forum President and former Congressional Budget Office Director Douglas Holtz-Eakin testifies before the Congressional Joint Economic Committee in the Dirksen Senate Office Building on Capitol Hill March 14, 2013 in Washington, DC. The bipartisan committee took testimony from a panel of economists during the hearing, titled 'Flirting With Disaster: Solving the Federal Debt Crisis,' (Photo by Chip Somodevilla/Getty Images)
National Journal
Sam Baker
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Sam Baker
Jan. 8, 2014, 4 p.m.

Let’s say you are a per­son with a nor­mal un­der­stand­ing of math, and your rent is $1,000 per month. The sens­ible thing to do would be to budget $1,000 each month for rent, right?

But what if, in­stead of be­ing a nor­mal per­son, you were Con­gress? Then, you would budget $800, and at the first of every month you would scramble to cut $200 in oth­er ex­penses so you could pay the rent.

This, in a nut­shell, is what Con­gress does with Medi­care’s pay­ments to doc­tors.

Con­gress it­self passed a law that makes auto­mat­ic cuts in doc­tors’ pay­ments — but then it blocks those cuts whenev­er they’re sup­posed to kick in.

Rather than simply ac­know­ledging that it’s go­ing to keep spend­ing the same amount it has been spend­ing, Con­gress has thrown away more than $160 bil­lion through stop­gap meas­ures that delay the cuts for weeks or months at a time.

It’s a con­stant and haphaz­ard scramble that of­ten makes real cuts to hos­pit­als and oth­er health care pro­viders, simply to pre­serve the status quo for doc­tors. And it has made the un­der­ly­ing prob­lem worse. The auto­mat­ic cut gets big­ger every time it’s blocked, and now, after a dec­ade of delays, it’s more than 20 per­cent — a lot more than doc­tors could ab­sorb.

“This is a prob­lem of their own mak­ing,” said Douglas Holtz-Eakin, a con­ser­vat­ive eco­nom­ist and former Con­gres­sion­al Budget Of­fice dir­ect­or. “You end up in these ri­dicu­lous corners.”

The end­less cycle of tem­por­ary “doc fixes” has no sup­port­ers. It’s a hassle for law­makers and leaves a sword con­stantly dangling over doc­tors. Oth­er health care in­dus­tries hate it be­cause they end up tak­ing last-minute cuts so doc­tors don’t have to. It even messes up our ba­sic un­der­stand­ing of the fed­er­al budget, by mak­ing spend­ing look lower than it ac­tu­ally is.

And yet, the cycle con­tin­ues.

The easi­est op­tion for end­ing it would be as simple as budget­ing the right amount for rent each month: Write a new budget and be more hon­est about what you’re ac­tu­ally go­ing to spend. Con­gress spends about $20 bil­lion on every year­long doc fix, but it’s not in­creas­ing doc­tors’ pay­ments by $20 bil­lion. It’s es­sen­tially a pen­alty for writ­ing a budget that as­sumed un­real­ist­ic sav­ings.

So why not just wipe it off the books? Simply erase the sched­uled cut, leave doc­tors’ pay­ments un­changed — and don’t off­set it as if it’s were an ac­tu­al in­crease in Medi­care spend­ing?

That idea has been floated be­fore, and plenty of people in the med­ic­al com­munity sup­port it. But it’s just not con­sidered feas­ible in the cur­rent polit­ic­al cli­mate, be­cause it would cre­ate at least the ap­pear­ance of high­er spend­ing.

“I’m not enough of a stat­ist­i­cian to un­der­stand why that can’t be done. Ap­par­ently, with­in their meth­od­o­logy, they’re un­able to do that,” said Ar­d­is Hov­en, the pres­id­ent of the Amer­ic­an Med­ic­al As­so­ci­ation.

(For a while, CBO re­leased both a baseline tied to the let­ter of the law and a sep­ar­ate baseline that re­flec­ted what Con­gress was ac­tu­ally go­ing to spend. And the Obama ad­min­is­tra­tion has built a doc fix in­to its budget pro­pos­als, rather than claim­ing ima­gin­ary sav­ings from a cut that will nev­er hap­pen.)

Some law­makers say build­ing the full cost of doc­tors’ pay­ments in­to the budget baseline counts as in­creased spend­ing, and as long as the short-term patches are off­set, it’d be a hard sell to not pay for a per­man­ent one.

The earn­est search for a per­man­ent doc fix gained steam last year largely be­cause CBO slashed its cost es­tim­ate — from roughly $300 bil­lion down to roughly $140 bil­lion, then again to just $117 bil­lion.

In oth­er words, Con­gress has spent more on a dec­ade’s worth of Band-Aids than it would cost to fix the un­der­ly­ing prob­lem. Law­makers are well aware that the cost could go back up at any time — but they still couldn’t come to an agree­ment on how to off­set even the dis­coun­ted price.

A trio of con­gres­sion­al com­mit­tees spent months iron­ing out a re­place­ment for the ex­ist­ing for­mula, known as the Sus­tain­able Growth Rate or SGR, and House Re­pub­lic­ans had hoped to reach an agree­ment last sum­mer. In­stead, we ended up with an­oth­er year-end patch. This one ex­pires at the end of March.

A per­man­ent doc fix is by far the AMA’s top lob­by­ing pri­or­ity. The group stepped up its ef­forts after 2010 — the year health care re­form passed, without the pay­ment fix House Demo­crats tried to in­clude. Con­gress passed five short-term fixes that year alone, some last­ing as little as one month.

After years of ca­jol­ing, Hov­en said, in 2010 the AMA “sat down and said, ‘OK we’re go­ing to have to tell them what do.’ “

The emer­ging frame­work for a per­man­ent fix is pretty close to what the AMA wants. It would re­peal the ex­ist­ing for­mula — the SGR — and gradu­ally lay the ground­work for a new sys­tem that pays doc­tors based on their pa­tients’ health rather than the num­ber of pro­ced­ures they per­form.

The AMA has some qualms with the bills — it’s push­ing to get an­nu­al pay­ment in­creases from the House bills in­to the Sen­ate ver­sion, and to ad­just some of the met­rics used for trans­ition­ing in­to a new kind of pay­ment sys­tem.

Mostly, though, doc­tors want the SGR gone.

“You know what the prob­lem is, you know what to do about, it, so go ahead. Rem­edy the prob­lem. Re­peal the SGR “¦ and let us do oth­er things in this coun­try,” Hov­en said.

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