Deficit worries make it tough for Democrats to move the 'doc fix'

The cuts are scheduled to go into effect next month if Congress does not take any action, and lobbyists say they’ve heard lawmakers might not fix the problem for more than seven months in the tax extenders package currently under discussion.

Lawmakers failed to permanently overhaul the Medicare payment system in the health reform bill and have already had to pass three short-term “patches” this year to prevent the cuts. The current patch expires June 1 and if lawmakers do nothing, physicians will see a 21.3 percent drop in Medicare payments.

The political problem for lawmakers is the cost of putting off the cuts in payments.

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Under budgetary “pay-go” rules, lawmakers could prevent the mandated cuts for up to five years without offsetting the $88.5 billion tag, but some members are worried deficit-wary voters could make them pay a steep price at the polls.

“We’re still in discussions about what will be in this bill,” said Chris Van Hollen (D-MD), the assistant to Speaker Nancy Pelosi (D-Calif.).

Van Hollen said he personally would like to see a five-year fix, but made no commitment that’s going to happen.
“We’ll have to see,” he said. “We’re in discussions on that. The most important thing is to get off this month-to-month approach.”
Some Blue Dog Democrats – including Rep. John Tanner (Tenn.) – have raised concerns about the size of the pay-go exemption.

But other Blue Dogs seem happy to go along with it.

Rep. Allen Boyd of Florida pointed out that the House last year easily passed, 265 to 166, pay-go legislation exempting the fix to the Medicare Sustainable Growth Rate formula, or SGR.

“We helped formulate that statute. Why would we do something last year and then just throw it out the window now?” he said. “We need to fix SGR permanently. We’ve said all along, for years, that the SGR ought to be fixed.”

Month-long patches, Boyd added, are unsustainable.

“Nobody does business like that. It’s irresponsible,” he said. “There ought to be some certainty out there so people know what the federal government’s going to do.”

Likewise, Rep. Baron Hill of Indiana said simply: “I’m for five years.”

Some lobbyists suggest the roadblock is in the Senate, where Democrats need 60 votes to get anything done.

Senate Budget Committee Chair Kent Conrad (D-ND), a fiscal deficit hawk, gave added weight to that argument Thursday by saying his previous support for an unpaid-for five-year fix was conditional on the passage of other policies in his budget proposal. Conrad did not go into specifics, but his proposal calls for deeper cuts than those in President Barack Obama’s budget and requires that the elimination of the alternative minimum tax for middle-class taxpayers be paid for after 2012.

Conrad told The Hill that his support for the unfunded five-year doc fix was “part of a package.”

“But if the package falls apart,” he said, “that would change things.”

Democrats cannot afford to lose any members in the Senate, as even centrist Republicans have raised issues with an unpaid-for doc fix. Sen. Olympia Snowe (R-Maine) strongly hinted that the doc fix should be offset.

“That’s adding to the cost of government and more spending and using tax [increases] for other purposes other than trying to shrink the size of the” deficit, she said. “We need to bring down the deficit.”

Meanwhile, the American Medical Association has been pushing members to get behind a long-term fix. The group is scheduled to run print ads in Capitol Hill publications through the end of May warning that physicians will start to drop Medicare patients if their rates go down.

“It's critical that Congress replace the flawed formula with one that better reflects the costs of providing 21st century medical care,” AMA President James Rohack said in a statement.

“It took until 2009 for Medicare physician payment rates to catch up to where they were in 2001, while the cost of caring for seniors has increased by more than 20 percent. Physicians cannot continue caring for all Medicare patients if Congress continues to enact temporary patches that freeze payments at 2001 rates.”