Under an Honest Budget the Doc Fix Plan Adds to the Debt

Paul Winfree / Robert Moffit / March 23, 2015

On Friday night, House leaders released details of a proposal that would increase spending on doctors paid through Medicare (called the doc fix). Based on what is currently known without at official score by the Congressional Budget Office (CBO), the new spending would only be partially offset in both the 10-year “budget window” and over the longer term.

According to analysis by the Committee for a Responsible Federal Budget (CRFB), the proposal would add $400 billion to the debt by 2035. The CRFB estimate could be even higher if Congress cannot demonstrate the ability to control its bad spending habits and interest rates go up as a result.

Since 2003, savings elsewhere in the budget has paid for 98 percent of the new Medicare spending on payments to doctors.

Some are now criticizing the CRFB analysis as being “pure fantasy” by suggesting that if the president does not sign this proposal into law, Medicare spending would be increased anyway based on the past practice of dealing with scheduled cuts to these payments.

However, this completely ignores the fact that forcing Congress to confront the new Medicare spending associated with the scheduled payment reductions has been an effective budgetary constraint. Since 2003, savings elsewhere in the budget has paid for 98 percent of the new Medicare spending on payments to doctors.

More to the point, these critiques are based on a fantasy budget where Congress can just ignore new spending even when it’s not budgeted for in the CBO baseline. Fortunately, while everyone is entitled to their own opinion, not everyone is entitled to their own baseline.

The House and Senate will consider their budgets this week. The House budget assumes that the doc fix would cost about $140 billion over the next 10 years and includes enough offsets (within and outside of Medicare) to cover that new spending. The Senate budget assumes that the doc fix would be fully paid for over the next 10 years and the longer term. That is the correct policy. Any deviation would be fiscally irresponsible.