More Phony Savings and Gimmicks in Democrats' "Doc Fix" Plan

Newt Gingrich may be grabbing headlines for his plan to build a lunar colony, but earlier this year another Republican had an even more ambitious plan – to cover the moon in yogurt.

Of course he wasn’t serious, indeed the entire point of the exercise was to demonstrate how fundamentally unserious Congressional Democrats are about solving our looming budget crisis. The analogy uncovered, through the use of an awesome analogy, the unsound logic behind using war “savings” as an offset for greater spending.

“We assume we’re going to be fighting this war for 10 more years, with over 100,00 troops in Afghanistan and oh, gosh, wait, we’re going to withdraw our troops in 2014. One trillion in savings. I’ve got a better idea. Let’s pass a bill to cover the moon with yogurt that will cost $5 trillion today, and then let’s pass a bill the next day to cancel the bill. We could save $5 trillion!”

Sadly, and I wish I was kidding here, one liberal blogger on the Daily Kos actually supported the idea of covering the moon with yogurt, saying it would “actually be stimulative.” Sigh.

But back to the point – the war “savings” gimmick is exactly that…a gimmick. It’s twisting the CBO budgeting rules, in which it assumes that annual war spending will continue at the 2011 rate in perpetuity, for political gain. Utilizing this loophole, Democrats can pretend that we are “saving” more than $1 trillion over the next decade, freeing that money up for any number of other things.

Democrats have made no attempt to hide one of the big-ticket items they’d like to buy with all those funny-money war savings – the Medicare “doc fix.”

The “doc fix” has a long and sordid history dating back to 1997 when Congress stumbled across a good idea…controlling health care costs. But as they are apt to do, they went about it completely the wrong way. Their solution for keeping costs down was to enact top-down price controls (these things never turn out well) that would tie physician reimbursement rates under Medicare to a formula based on inflation.

But as we know all too well, health care costs grow at a pace that far exceeds inflation, meaning that following the new formula meant huge pay cuts for doctors. Facing a rebellion from physicians who threatened to stop treating Medicare patients, Congress began the now-annual ritual of “fixing” the formula to ensure that doctors reimbursements don’t fall through the floor. And now, since the pricetag has grown with each passing year, enacting a permanent fix is nearly out of the question.

Which brings us to the present when it is once again time for Congress to get together and find a way to pass a doc fix.

House Republicans have already passed a year-long bill that would include the doc fix, among other “extenders” like the payroll tax cut and food stamp programs. Moreover, they found ways to complete pay for it through things such as means-testing certain entitlement programs, additional fees for Fannie and Freddie, and reforms to unemployment insurance.

As has become tradition with anything that is fully offset, Senate Democrats shot down the proposal and offered nothing in return. Now, nearly a month later, their plan, at least for the doc fix, is to “pay” for it using fake war savings. Alternatively, they’d like to pass a bill to cover Mars in marshmallow fluff and then repeal it the next day.

Jokes aside, it is a serious issue, one that demands more than a year-to-year patch. That’s why Republicans, spearheaded by Rep. Paul Ryan have proposed Medicare reforms that would eliminate the doc-fix problem altogether. Rather than clumsy attempts at bureaucratic cost-control, it would harness the power of the market, channeled through empowered purchasers, to keep Medicare costs in check.

Who knows, maybe with all those savings we may be able to afford a lunar colony, or at least restart our shuttle program.