The federal government is not very good at saving money. Perhaps it’s more accurate to say that Washington doesn’t have the willpower to stop spending money. On occasion they try, but like an alcoholic who decides to take up a career as a bartender, the federal government always puts itself in situations that doom it to failure.
The most prominent example is the annual doc-fix dance that drives Americans nuts each year. It all started back in the late 1990s when both parties agreed that Medicare spending was growing out of control (yes, this problem has been known for decades and we still haven’t fixed it). In an attempt to slow it down Congress created a formula called the Sustainable Growth Rate (SGR), which tied Medicare spending to the overall rate of economic growth.
But as we all know, health care spending has grown much faster than the economy. That left Congress with two equally bad options. First, they could stick to the Sustainable Growth Rate and cut doctors pay under the Medicare program. The problem is that doctors who aren’t paid tend not to want to work, leaving Medicare patients in the lurch.
Predictably, Congress doesn’t want that to happen. So instead, they choose to appropriate additional funds to cover the gap between the SGR and the regular growth of health care prices. This ends up costing tens of billions of dollars each year, and the figure keeps on growing. The non-partisan CBO finds that a 10-year patch of the doc-fix would cost $298 billion; by comparison, in 2005, that figure stood at $49 billion.
Given this utter fiasco you’d think that Washington would be keen not to repeat the mistake. But in the weird mixed up world of spend-happy Washington you’d be wrong. In fact, Democrats have already done it! Tucked deep in the Obamacare bill is a provision that creates yet another doc-fix debacle, this time in Medicaid.
Currently, doctors who provide services to Medicaid patients are underpaid compared to their counterparts who serve Medicare patients and vastly underpaid compared to those paid by private insurance. As a result half of primary-care physicians and 35 percent of specialists either limit the number of Medicaid patients they see or refuse to accept new ones. This leads to longer wait times and worse health outcomes
So what does Obama do with this wonderful program? Does he use his signature health care bill to reform it? No. In fact, he makes Medicaid, warts and all, the cornerstone of the Obamacare bill by using it to cover 16 million more Americans.
In an embarrassing attempt to try and put a bandaid over a gaping wound, Obama did make a few changes to Medicaid. The Washington Post reports:
Right now, Medicaid pays doctors 34 percent less than Medicare, which, in turn, pays less than private insurance. Health policy experts worry that such low payment rates scare doctors away from the entitlement program, creating access issues for Medicaid patients.
The health reform law changes that: It raises Medicaid rates for primary care to match those of Medicare for 2013 and 2014. That, the Obama administration hopes, will lure doctors to accept Medicaid patients — and also prevent some costly emergency room visits down the line.
But there’s a problem: The payment boost runs out at the end of 2014. While the federal government estimates that it will spend $11 billion raising provider rates for 2013 and 2014, no additional federal funds are appropriated beyond that.
As Democrats should have learned from Medicare, once you start paying a higher price, doctors are going to fight tooth and nail to keep it. And with history as our guide, when faced with popular doctors and a large constituency, Congress will fold like a cheap suit, leaving states and taxpayers on the hook for tens of billions of dollars each year.
Obamacare was passed with the intent of bending the cost-curve downwards in order to save Americans from rising health care bills. But a spend-happy Washington somehow managed to turned savings for patients into higher taxes for all Americans.