House Health Care Reform Adds $89 Billion to Debt When Medicare Adjustments Are Considered, Says CBO
November 21, 2009 - 3:31 PMWhile House Speaker Nancy Pelosi (D-Calif.) repeatedly has said that health care reform would be deficit neutral, the House of Representatives passed an additional Medicare reform bill last week that -- together with the health care reform bill -- would add $89 billion to budget deficits in the next decade, according to the CBO.
H.R. 3961, the Medicare Physicians Payment Rates Reform Act of 2009, is referred to as the “doc fix,” and is characterized on Pelosi’s Web site as “companion legislation” to the larger health care bill. Rep. Paul Ryan (R-Wis.) calls it a “fiscal shell game.”
According to the Congressional Budget Office (CBO), the legislation will cost $210 billion dollars over a decade to implement on its own. Taken together with the Affordable Health Care for America Act (the health-care reform bill), it would add $89 billion to the federal debt between 2010 and 2019.
"CBO estimates that enacting both H.R. 3961 and H.R. 3962 would add $89 billion to budget deficits over the 2010–2019 period," the CBO told Ryan in a Nov. 19 letter.
The bill amends the current “sustainable growth rate” (SGR), a mathematical formula that determines changes in the rate of pay to physicians serving Medicare patients. The payment rates were expected to get slashed in 2010, but this bill also prevents that from happening.
In a statement she released on the day the bill passed, Pelosi said, “Strengthening Medicare for generations to come is essential to our efforts to reforming health care for all Americans.”
Ryan, the ranking member on the House Committee on the Budget, asked the CBO to analyze how the bill would affect the House's overall health care reform effort financially.
CBO Director Douglas Elmendorf sent his response Thursday, with the new combined numbers. He wrote that the proposed changes to the SGR “would result in significantly higher payment rates for physicians than those that would result under current law. The CBO estimates that enacting H.R. 3961 (“doc fix”) by itself would cost $210 billion over the 2010-2019 period.”
Additionally, Elmendorf said H.R. 3962, the larger health care reform bill, “by itself, would reduce federal budget deficits by $109 billion over the 2010-2019 period through its direct effects on revenue and spending.”
Taken together, then, they “would add $89 billion to budget deficits over the 2010-2019 period,” according to the CBO.
By 2019, the combination of the House health care reform bill and the bill adjusting the Medicare payments to doctors would be adding $23 billion per year to the national debt, according to CBO. In the years after that, the amount the two bills would add to the debt would increase every year.
"The agency estimates that the two bills together would cost about $32 billion more in 2019 than H.R. 3962 alone and that the combination of the two bills would increase the budget deficit in 2019 by $23 billion relative to current law," said CBO. "Those increments would grow during the following decade."
Elmendorf said because of the uncertainties in the health of Americans and advances in medical technology, it would be difficult to predict specific budgetary effects outside the usual 10-year budget window, but did say “those increments would grow during the following decade.”
Pelosi, meanwhile, said the “doc fix” bill would include the “pay as you go” or PAYGO rule, which requires Congress to find new revenue or savings to pay for new policies they enact so as to avoid growing the deficit.
“As this legislation heads to the Senate,” the speaker said, “the statutory ‘pay as you go’ budget bill will be added to ensure that we put our nation back on a path of fiscal responsibility and begin to bring down the deep deficits that face our nation.”
However, while PAYGO would theoretically negate the deficit growth the CBO has estimated, the description of the bill posted on Pelosi’s Web site, speaker.gov, says that while PAYGO would appear in the text of the bill, it would not actually be applied.
“A previous Congress established the policy for paying Medicare doctors, so the update for 2010 is not a new possibility to be paid for,” the description reads.
Ryan, the top Republican on the Budget Committee, took to the floor of the House before the bill’s passage to call it a “fiscal shell game” that would make “a huge hole in the deficit.”
The Wisconsin congressman called it “ironic” that “the majority, which put in this huge PAYGO system, has just swept it aside, and has decided to say, ‘Nope, the CBO is wrong, this doesn’t increase the deficit, it costs nothing.”
Ryan said the decision was related to the larger health-care reform bill, H.R. 3962.
“Why did they do that? They did that because they’re trying to pass this health-care bill and suggest that it doesn’t cost anything,” he said. “I have a letter from the CBO today that simply says (that) when you merge these bills together -- because they are together in fact this doc fix bill was in the original bill in the first place -- it raises the deficit now and into the future.
“(That) breaks the president’s pledge and promise on (how) health-care reform will be conducted,” Ryan said.
Ryan said the ballooning SGR would only get more costly if people begin signing up for a government-run public option.
“What I also think is especially ironic,” he said, “(is) that some physicians say, ‘Fix this,’ but then create this new system, which is basically to have Medicare for everybody else.
“So if they think the SGR is a problem now, just wait until you see this system writ large throughout all of American health care. That is a mistake. We should do this in a bipartisan way -- fix it without cranking a huge hole in the deficit.”
A spokesman for Speaker Pelosi did not return requests for comment on whether the bill violated Obama’s desire to remain deficit neutral with health care reforms.
The bill was introduced by Rep. John Dingell (D-Mich.) and passed on a 243-183 vote, with just one Republican voting in favor -- Rep. Michael Burgess (R-Tex.), who is a physician.