‘Doc fix’ cut could yield extra $27B

Senate Democrats are pressing for the $200 billion tax extenders bill to be scaled back because of the nation’s $1.5 trillion budget deficit.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) and others in his party want to reduce the bill’s price tag by changing the “doc fix,” which at $65 billion accounts for nearly a third of the tax bill’s cost.

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The effort has set off a lobbying battle involving AARP and physicians groups, and complicates efforts in the House and Senate to complete work on the tax package by the end of the week. The legislation also includes an extension of unemployment benefits and several popular tax credits for individuals and businesses, including the research-and-development tax credit.

Conrad wants to reduce the bill’s price by freezing a scheduled cut in Medicare payments for two years instead of the three-and-a-half years planned in the initial bill.

Conrad said this would kick a final solution on Medicare pay to a fiscal commission set to recommend budgetary changes to Congress and the administration at the end of the year.

“I favor two years, everything at two years, and have the debt commission deal with everything on a permanent basis,” Conrad said Tuesday. “Makes sense to me.”

Slicing the doc fix by roughly a third of its original cost would save lawmakers approximately $27 billion but keep the issue as a political hot potato for future Congresses.

Even larger cuts might be needed to garner enough Senate Republican support to win a floor vote on the bill, according to sources, who said debate could drag beyond the Memorial Day recess. Senate Majority Leader Harry Reid (D-Nev.) and Speaker Nancy Pelosi (D-Calif.) had hoped to finish the legislation this week.

If Congress does not act before the break, physicians face a 21.3 percent cut in Medicare reimbursement rates on June 1. Many of them have said they’ll have to stop taking Medicare patients as a result.

Physicians groups and AARP continued on Tuesday to press for the longer-term fix, and warned that voters will punish lawmakers if they scale back the provision.

“Older Americans will be watching how you vote on this important issue,” AARP warned in ads that began running on Capitol Hill on Tuesday.

The issue could be politically explosive, particularly in the aftermath of the healthcare law, which was overall unpopular with older people.

House leaders on Tuesday showed no signs they’re willing to pare down the extenders package or the Medicare payment fix.

“That’s what we worked out,” Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) told The Hill in response to a direct question about changing the doc fix. “And that’s what we should pass.”

A Republican health policy consultant said Democrats are wary of letting down the American Medical Association after the physicians group supported passage of health reform earlier this year, despite serious misgivings about the legislation.

Lawmakers could punt the issue to the summer by passing a 30-day extension of the spending measures in the bill.

Several Democratic senators said Tuesday they remain undecided on the bill and want its costs to be offset with other spending cuts or tax increases.

“I’m not a definite yes at this point,” said Sen. Mark Udall (D-Colo.).

Centrist Republican Sens. Olympia Snowe and Susan Collins, both of Maine, have also said they want the doc fix to be offset with other spending cuts or revenue raisers, and some Democratic senators are balking at a tax on carried interest to help pay for the bill.

Things are equally dicey in the House, where leaders could need as many as 40 more votes to win a vote on the floor, sources told The Hill.

A number of those holdouts may vote for the extenders package if the Senate signals it has the votes to pass it, but approval in the upper chamber does not appear solid.