By Mark Horne
Why would the fiscal cliff mean that doctors would suddenly take a thirty percent cut in their billing? Nothing was said about that last year when the deal was made. Part of the problem is that deal wasn’t made last year. It was made fifteen years ago and then hidden under fig leaves. Those leaves are going to fall away on January 1.
Inventing Another “Debt Ceiling” to Raise
Back to 1997, the basic bankruptcy of Medicare was too obvious for Congress to deny. They felt they had to do something about it. Basically, seniors were demanding using the program more and more, as is likely to happen when you give away free money. So Congress determined by law that every year that expenses went up above a certain amount, the Medicare reimbursements would go down to compensate. Basically, they tried to impose price controls on medicine in order to counterbalance the inherent price inflation and expansion that such “free money” programs naturally produce.
So, since 1997, every time that the Medicare expenses have expanded too much, Medicare has reduced the amount of money that they would pay for a procedure. This meant doctors became even less happy having to deal with Medicare. Medicare patients found doctors would not take their business or at least didn’t seem happy to do so. Medicare patients vote and make people in Congress want to make them happy in order to gain or stay in office.
In 2002, according to the formula passed into law in 1997, Medicare reimbursement was supposed to be cut four percent. Congress collectively decided they didn’t want to have to face voters who were angry about this, so they passed a law putting off the cut until the next year.
So now this is just like the “debt ceiling” that keeps being jacked up higher. Every year since 2002, Congress has put off the past cuts and also put off the new cut. So every year the percentage amount that reimbursements are supposed to be cut gets larger.
Right now, the amount that reimbursements are supposed to be cut is thirty percent. Unless Congress “does something” that is what will happen. Of course, all that Congress will try to do is put off more cuts. They aren’t just doing this for the sake of Medicare; they are doing it for propaganda purposes.
Hiding the Deficit
Imagine if, when Congress raised the debt ceiling they claimed they were going to bring it back down next year, and pay off all the extra debt, so that they really didn’t need to project that debt into the future. Basically, that is what has been happening with Medicare. Congress has not only refused to cut reimbursements, but has also calculated the projected deficit on the assumption that those cuts will be made next year. Every year they are not made and every year out official deficit hides yet another liability from public perception.
Image added to original post.