With BP oil leak updates growing more ominous by the day, we expected more bad news from the gulf on Saturday. The president delivered the bad news with his weekly address, but no mention was made of BP. The nation has another, completely unrelated crisis to deal with, and the problem needs to be addressed this week. What will be most enraging to taxpayers is that the crisis of the moment involves health care, and was purposely ignored in the gargantuan health care reform bill that the president just muscled through Congress.
The grim fiscal prognosis for Medicare is old news. The program is a textbook example of why the government should not be in the health care business. Still, Medicare does manage to deliver services to millions of seniors who are being held hostage by the pending 21% fee cut for Medicare providers.
Medicare’s Sustainable Growth Rate (SGR) System requires fee cuts or reductions in scheduled fee increases when physicians’ fees exceed the program’s spending targets. By 2002, expenditures had already surpassed the SGR benchmarks by $0.6 billion.  In 2004, a Medicare Trustees Report warned that provider fee increases would be in the red from 2006-2012, which would result in provider payment cuts of 31% for the period 2005-2012.  Excess expenditures grew to $24.4 billion by 2005, and $63.56 billion by 2008. 
Legislators have never passed a permanent solution to the problem. Congress has applied periodic band aids to forestall physician fee cuts, but with Saturday’s address the president has drawn a line in the sand. Cost estimates vary, but the Congressional Budget Office projected in November 2009 that H.R. 3961, the Medicare Physician Payment Reform Act of 2009, would cost $210 billion from 2010-2019. 
Republicans are adamantly adhering to “pay as you go” rhetoric that is laughably irrelevant in this type of scenario. House GOP Leader Boehner’s retort to the president’s address never mentioned Medicare. Instead, Boehner generalized about fiscal responsibility, ignoring the fact that this problem has persisted through both Democratic and Republican-controlled Congresses, and Democratic and Republican presidents. The real issue here is not fiscally responsible spending, but the misrepresentation implicit in the Democrats’ refusal to include the “doc fix” in their health care bill because it would have significantly raised the price tag.
President Obama has his own ideas on how to pay for the fix, stating in his address that “50% of the waste, fraud, and abuse” in Medicare would be eliminated by 2012 to help stem Medicare’s out of control costs. He has trotted out the “waste, fraud, and abuse” funding solution more times than we can count. Fortunately, it is not especially difficult to quantify “waste, fraud, and abuse” savings from Medicare, because no one really knows just how much waste, fraud, and abuse there is. One thing is certain. There will be a much larger incentive for fraud and abuse if the 21% cut goes into effect. There will also be a lot fewer seniors receiving health care services through Medicare as physicians wash their hands of the program. Both our seniors, and the physicians who were persuaded to support the health care reform bill, deserve better.
Fortunately, a resolution to the problem will probably come quickly, because there is bipartisan agreement that both parties will suffer if they fail to legislate a resolution. Cutting health care to seniors and punishing their doctors by refusing to negotiate the doc fix would be a very unpopular strategy. Congress may not give a damn about those they purport to represent, but faced with midterms in November, we can be certain they are concerned about their own shaky futures.
1..Congressional Research Service. The Impact of Major Legislation on Budget Deficits: 2001 to 2009. March 23, 2010. p. 18.
2..Government Accountability Office. Medicare Physician Payments. February 10, 2005. p. 7.
3..Congressional Research Service. Op. cit.
4. Congressional Budget Office Cost Estimate. H.R. 3961. Medicare Physician Payment Reform Act of 2009. November 4, 2009.