Wednesday, April 28, 2010

Ezra Klein on Rep. Paul Ryan's Whiny "Doc Fix" Tantrum

Finally, the best explaination yet on a problem created by the Republicans when they cut doctors pay on Medicare. It's the "doc fix." Paul Ryan has been trying to pass their horrific, short sighted problem off onto the Democrats. But that's just another phony issue. Ezra Klein:

At the fiscal summit today, Rep. Paul Ryan argued again that the Affordable Care Act is a deficit-buster because the cost of the Medicare doc fix wipes out the savings from the bill. The easiest way to show that a bill increases the deficit is to show that revenues don't equal or exceed spending. So Republicans have had to come up with a way to change the arithmetic. That gives them two options: Either delete something that's in the bill on the revenues side or add something that's not in the bill onto the spending side.

In 1997, the Republican Congress wrote and passed the Balanced Budget Act, and President Clinton signed it into law. Tucked deep in the bill was a provision setting a "sustainable growth rate" for Medicare: The provision, written by the Republican chairman of the Ways and Means Committee, mandated cuts to doctor payments if the program's spending rose above a certain level.

The provision wasn't expected to save much money or be a very big deal. But the formula was based on bad assumptions, and soon SGR was requiring massive cuts. Democratic and Republican congresses alike have been delaying the cuts ever since.

Repealing the SGR formula and thus putting a more realistic estimate of Medicare's future costs into the budget is what people mean when they talk about the "doc fix." Importantly, though, it exists independently of health-care reform. To offer just one example of the Republicans understanding this when it suits them, consider that the Medicare Prescription Drug Benefit in 2003, which was passed by a Republican Congress, included a temporary fix. They did not, however, actually fix SGR, and nor did they add its cost into their bill, which is what they're saying Democrats need to do now.

But if this was around in 2003, how can it actually be part of health-care reform, which wasn't written until 2009? The answer is that it isn't. If we'd never passed the Affordable Care Act, we'd have still needed to pass the doc fix, just like we'd still have to pay for Medicaid and fund the continuing operations of the Department of Education. The government has its commitments, which are part of the baseline, and then there are new policies, which change the baseline. The doc fix is a baseline issue. The Affordable Care Act is a new program.

And that's where the trick of this argument comes in. When we say that something saves money, we're comparing it to a budgetary baseline. That is to say, we expect to spend this much (baseline) and the Affordable Care Act will change it by that much. The "doc fix" issue is an argument over that baseline: The reason we need to repeal SGR is so our budget projections are true to our actual spending. But if you add the doc fix into the baseline, then the Affordable Care Act ... saves the same amount of money.

What some Republicans are trying to do is add the doc fix into the Affordable Care Act. That is to say, they are trying to add the repeal of a Republican policy passed in 1997 into the cost of a Democratic bill being passed in 2010. But that's a bit like adding the cost of the Iraq War onto the bill, or maybe the Bush tax cuts. It's true that those were misguided, costly policies. But they're not part of the Affordable Care Act. They're part of the baseline that the Affordable Care Act changes.
As it is, the bill cuts the deficit by a little over the first 10 years and a lot over the second 10 years. The efforts to argue otherwise require suspending all the normal rules and saying either that Congress can't credibly offset legislation that costs money, which destroys the Republican agenda as surely as the Democratic agenda, or adding policies to the Affordable Care Act's price tag that don't belong there.
By Ezra Klein

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