The doc-fix deal would increase the deficit by $141 billion compared with current law over the next decade, according to an analysis by the Congressional Budget Office released Wednesday.
But spending would actually be $900 million less over that same period than if Congress simply froze Medicare payments rates for physicians over the same span.
The report is likely to provide fodder for both sides in the debate over permanently repealing Medicare's sustainable growth-rate formula for paying doctors. Opponents of the deal will seize on it as evidence that the plan is financially irresponsible. Supporters of the repeal package will point to the findings to support claims that it fixes an entrenched problem with substantive reforms.
“It doesn't change anything in either direction,” said Joe Antos, a healthcare policy expert at the conservative American Enterprise Institute, who opposes the SGR repeal package. “I think the bill is going to pass.”
The deal negotiated by House Speaker John Boehner and Minority Leader Nancy Pelosi is expected come up for a vote on Thursday in the House and will almost certainly pass. Its fate in the Senate remains uncertain as Senate Democrats have balked at some of the terms. But there seems to be increasing momentum behind the bill. If Congress doesn't take action by the end of the month, Medicare payments to doctors would drop by 21.2%.
President Barack Obama offered support for the initiative during remarks at the White House on Wednesday. “I have my pen ready to sign a good bipartisan bill," he said. And the Obama administration subsequently came out with a “statement of administrative policy” officially backing the deal.
Sen. Orrin Hatch (R-Utah), chair of the Senate Finance Committee, also endorsed the deal in a floor speech on Wednesday. “The time to act is now,” Hatch said. “I can't imagine another bipartisan opportunity like this coming around again anytime soon.”
The CBO typically only looks at how legislation would affect spending as compared to current law. But at the behest of the House, the nonpartisan agency also scored how the doc-fix deal would compare to freezing current payment rates.
That's a reasonable assumption given that Congress has acted 17 straight times over more than a decade to keep the SGR formula from taking effect and causing steep cuts in payments to doctors. Since 2003, annual updates to payment rates have ranged from a freeze to a 2.2% increase, according to the CBO.
The budget agency also looked at the effect the legislation would have over the second decade, which is typically beyond CBO projections. Those findings came with a caveat: “Considerable uncertainty exists about the evolution of the healthcare delivery and financing system that far in the future, so a precise estimate is not feasible,” CBO wrote. But the agency did conclude that the legislation would result in “small net savings” compared with freezing Medicare payment rates for doctors over the next two decades.
The CBO also determined that the doc-fix deal would have only a marginal effect on Medicare Part B premiums. Under current law, monthly premiums for most Medicare beneficiaries are expected to increase from $105 to $171 by 2025. CBO anticipates that the SGR repeal legislation will add an additional $10 to that increase over the next decade. By comparison, freezing payment rates would increase monthly premiums by an additional $7.50 compared to current law.
The CBO also looked at the revenue-raising and cost-saving components of the House legislation, totaling $73 billion. Nearly half of that amount, $34.3 billion, comes from raising premiums for Medicare beneficiaries with incomes of at least $133,000.
Cuts to post-acute-care providers are expected to generate $15.4 billion over a decade, while hospitals will lose nearly $20 billion in anticipated funding. Making the Transition Medical Assistance program permanent—which helps individuals transitioning between Medicaid and private health plans—is expected to save $2.8 billion over a decade. The spending on the transition program would be offset by reduced costs for other federal healthcare programs such as exchange subsidies.