Will Congress Really Pay for Pending Health Care Plan?
When physical health system changes collide with fiscal health cost concerns, red ink is spilt. That's the mess Congress must face in meeting the president's health care reform standard of not adding one dime to the deficit. The cleanup effort will not end with enactment, but will take decades.
Even if the health care reform measure that finally clears Congress gets a clean bill of fiscal health from the Congressional Budget Office, it will be spirited to the White House on a wing and a prayer. That is not to impute to CBO some mystical, new-age spiritualism in divining estimated costs. It simply recognizes that the budget office bases its calculations on assumptions not only that the economy will perform a certain way over time but that Congress will perform as promised. Let's confine ourselves here to the latter assumption—that the road to physical and fiscal health will be paved not only with Congress' good intentions but by its concrete actions to honor them.
One way to fathom what Congress might do is to look at what it is already doing in the area of health care savings, starting with the "doc fix" of not cutting physicians' fees under Medicare as required by a 1997 deficit reduction act. Congress has been waiving those cuts annually since 2003 out of fear that more doctors will drop out of the system if not adequately compensated.
The main reason that the original House health care bill cost so much more than the Senate Finance counterpart was that it would have provided a permanent doc fix at a cost of $245 billion over 10 years, while the Senate bill kept payment rates higher for one year, after which they would drop by 21 percent.
At the urging of the American Medical Association, Senate Majority Leader Harry Reid (D-Nev.) tried to finesse this difference on Oct. 21 by spinning off a permanent doc fix (without offsets) into a separate bill—thereby not raising the price tag on the Senate health care bill. This little shell game did not fool the green-eyeshade crowd in Congress, who demanded: "Show us the pea!" The game was called on account of blame when Reid could not muster 60 votes to block an expected filibuster—losing 13 Democratic Senators in the process.
Last Thursday the House Democratic leadership unveiled its new, 1,990-page health care bill along with a separate, permanent, unpaid-for doc fix bill, thereby lowering the House health care bill's price tag to $894 billion—just below the president's magic $900 billion limit. The pea is back in play.
The House and Senate health care bills assume more than $400 billion in savings will be wrung out of Medicare over 10 years—all without cutting benefits. As the president assured seniors in his speech to Congress in September, "Not a dollar of the Medicare trust fund will be used to pay for this plan. The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud." This evokes eerie echoes of that Reagan-era golden oldie "the magic asterisk"—"*future savings to be identified" (if only we could locate that elusive "waste and fraud" line in the president's budget to delete).
Much of those savings will come from "efficiencies" that will lower payments to various Medicare providers. However, evidence that Congress will vigorously pursue these further cuts in Medicare is scarce. In addition to the doc fix, there are other harbingers of Congressional inclinations. In September the House passed a bill (currently stalled in the Senate) to suspend a scheduled Medicare Part B premium increase affecting some 11 million people. Ordinarily these premium increases are offset by Social Security cost-of-living benefit increases. But there will be no COLA next year. Consequently, the administration has proposed an alternative approach of giving all Social Security recipients a $250 un-COLA. Congress will likely go along. Unlike Job's lament that "the Lord gave and the Lord hath taken away," in Washington, "The Congress giveth, and the Congress giveth" (and, in election years, it keeps on giving).
Here are two more harbingers. At the very beginning of this Congress, the House of Representatives adopted a rule that suspended for this Congress part of a 2003 deficit reduction law. It requires an automatic vote on certain Medicare cuts if the Medicare board of trustees issues "a Medicare funding warning" based on excessive spending and the president subsequently submits legislation to remedy the situation. In each of the past two years, the House waived the requirement after the statute was triggered. Now the House has installed a two-year trigger lock without even seeing the target. Moreover, the House has rejected a similar approach in the pending Senate health care bill for a commission to report proposed Medicare savings for an up-or-down vote.
The president has impressed upon the American people that the health care reform challenge he is undertaking is especially difficult because there are so many moving parts (and here he usually does his Rubik's Cube pantomime). How do we begin to integrate all the existing federal and private programs with new layers of government and private bureaucracies, regulations and costs?
The people by now understand that doing nothing is unacceptable given rapidly escalating health care costs. Yet they remain skeptical that either the president or Congress fully grasps how to fix things without making them worse. Despite opinion polls showing support for health care reform generally, the people are not convinced that any of the pending plans will either lower costs or deficits. And public qualms do not convert to electoral alms.