Congress Delays Cuts to Medicare Health Insurance Payments

As I predicted in my previous post, Congress rushed through an amendment to the health insurance reform bill eliminating the scheduled 21% cut in fees paid to doctors treating patients insured through Medicare. The new law prevented bookkeeping nightmares by applying retroactively to June 1, 2010, the date that the previous stop-gap measure expired. This is the tenth time Congress has blocked such cuts in the last eight years, including four times since January of this year.

As I also predicted, Congress did not attempt to pass a permanent change in the way the Medicare health care insurance payments are calculated, causing President Obama to comment, “Kicking these cuts down the road just isn’t an adequate solution to the problem.” House Speaker Nancy Pelosi agreed, criticizing the bill as “totally inadequate.”

The reason Congress balked at a permanent fix, of course, is an election-year phobia about deficits. Fixing the Medicare payment structure would add $245 billion to the deficit over the next ten years. To avoid that prospect, Congress went for a 6-month fix. In addition, the short-term doc fix bill is paid for with new taxes on corporations, Medicare savings, and anti-fraud measures.

The so-called savings are a bit of a shell game. Two-thirds of the Medicare doc fix is paid for with $4.2 billion trimmed from Medicare payments to hospitals—in other words, taking from one pocket and putting it into another. Are the hospitals going to play along? Or are they going to demand a “hospital fix?”

The corporate tax hikes sounds like another tax on the “rich,” but that’s not exactly the case. The new law allows corporations to increase their profits by decreasing their contributions to pensions. The taxes that pay for the doc fix will come out of these added profits. In other words, the Medicare doctors benefit and the corporations benefit—only the pensioners are hurt. Yet the White House blog touts the doc fix law as “Protecting Seniors’ Care.”