Critics call out Congress for choosing the good will of doctors over the good health of patients, as the House proposes to lower funding for unemployment health benefits while putting $22 billion toward a measure guaranteeing high doctor pay.
In an effort to garner votes on the American Jobs and Closing Tax Loopholes Act, which would extend tax cuts and lengthen unemployment benefits, Democrats are attempting to minimize the budget deficit impact of the bill by eliminating health care aid to states health insurance subsidies for the unemployed by $30 billion, while at the same time shoring up cash to subsidize freezes to planned cuts in Medicare payment rates for doctors for the next three years.
The proposals were bashed by Steven Pearlstein of The Washington Post, who placed the blame on fiscally conservative Blue Dog Democrats in the House who were willing to see people go without health care in order to “guarantee that American doctors don’t suffer any significant declines in their incomes just because of a little thing like a recession or a government budget crisis.”
Known as the “doctor fix,” the subsidizing of Medicare payment rates for doctors has been a tool of federal lawmakers for years. Under the Medicare Sustainable Growth Rate, a complex formula designed 13 years ago to rein in Medicare expenses and balance the federal budget, the government has the power to decide how much doctors were reimbursed for caring for patients 65 and older. The principle behind this was that doctors would rein in wasteful and unnecessary care because if they didn’t, they risked reductions in fees from Medicare patients.
The doctor fix has effectively neutered this program on a number of occasions. Each deferral of cuts to Medicare rates leads to an annual budget shortfall of about $20 billion that must be paid by the government to maintain current payment rates to physicians under Medicare. According to the Congressional Budget Office, if lawmakers called in the tab today, it would cost physicians $276 billion.
An automatic 21.3 percent cut in Medicare physicians rates was expected to kick in June 1, but angry calls by the American Medical Association to scrap the Medicare Sustainable Growth Rate altogether led to a compromise by Democratic leadership. Under the doctor fix compromise, the cuts will be frozen for three and a-half years. Instead, doctors will receive a 1.3 percent payment boost through the end of the year, an additional 1 percent increase in 2011 and may be offered additional increases in 2012 and 2013.
“Every time, Congress and the president have acceded to these un-Hippocratic ransoms,” Pearlstein said of the power of the doctors’ lobby in Congress. He went on to note that the high pay of American physicians and growing physician income from Medicare mean that doctors salaries should not be the spending priority of a legislature so worried about the federal deficit that it is cutting health care for the unemployed.
Pearlstein calculates that physicians actively participating in the Medicare program receive $20,000, and said that, although Medicare physicians fees have not entirely kept up with the other costs of running a doctor’s office, the modest gap has been more than offset by the increased volume of services.
The high salaries of doctors in the United States puts them above any other Western country, with the average earnings for an American general practitioner being more than $150,000 a year compared to about $110,000 in the United Kingdom. According to a 2008 report by the Society of General Internal Medicine, about 31 percent of the salary of American doctors comes from public funding, including Medicare.
The American Jobs and Closing Tax Loophole Act will add $50 billion to the deficit. Despite this, the proposed cut in aid to cash-strapped states to pay for Medicare will eliminate $24 billion. The Democrats’ plan also removes $7 billion dollars meant to continue providing subsidies to help those who had been laid off to keep up with health insurance premiums under the COBRA health plan.
Premium payments for a family policy will consume about 80 percent or more of a worker’s unemployment check without these subsidies, according to Families USA, a liberal advocacy group.
The provision, which will be voted on next week, also expands the list of services that are not eligible for reimbursement under Medicare.
“The irony” for Pearlstein is “that much of that money for Medicaid and COBRA would eventually have made its way into the hands of doctors and other health professionals. Instead, those clever Blue Dogs have found a way to get the docs the money to maintain their lifestyles, but without having to provide the extra care. That’s a lousy set of policy trade-offs, one that a Democratic Senate, and a Democratic president, should have the wisdom to reject.”