Committee for a Responsible Federal Budget

Fiscal Fact Checker: Has the 'Doc Fix' Actually Become More Expensive?

Feb 1, 2012 | Health Care

A claim that has been popping up in some news circles over the past day is that the doc fix -- which freezes Medicare payments to physicians, instead of allowing them to be cut by 27 percent starting in March -- has become more expensive in light of CBO's new budget and economic outlook.

For example, an article in the National Journal states:

Permanent repeal of the flawed Medicare payment formula known as the sustainable growth rate just got a lot more expensive. According to the Congressional Budget Office, which released its new Budget and Economic Outlook report on Tuesday morning, a 10-year repeal of the growth-rate formula that froze doctors' rates at current levels would cost $316 billion, compared with $290 billion when CBO last calculated the rate in November.

It is true that the most recent estimate of the ten-year cost of the doc fix puts it at $316 billion and the previous estimate was $290 billion. Technically, Congress would have to come up with more savings to offset the cost. However, just citing the ten-year number ignores one fact: the ten-year windows are different.

One change that the new year ushers in is a shift in the ten-year budget window that CBO uses to evaluate costs. The most recent estimate evaluates the cost of the doc fix from 2013-2022, while the previous estimate from November uses 2012-2021. For a few reasons -- health care cost growth and the design of the SGR formula -- the doc fix costs much more in 2022 than it does in 2012, so shifting the budget window forward by a year automatically increases the doc fix's cost.

CBO Doc Fix Cost Estimates (billions)
Old Estimate$7.4*$18.3$21.4$24.5$27.6$30.5$33.4$37.2$40.9$44.7N/A$278.5
New Estimate$9.3$18.6$21.1$23.3$26.3$29.2$32.2$35.9$39.6$43.1$46.9$269.3

*Estimate is adjusted for the doc fix that was passed in December

As this table shows, using a comparable budget window (2013-2021), the cost estimate for the doc fix has actually gone down by about $9 billion. As we mentioned above, the doc fix costs significantly more in 2022 than 2012, so using 2013-2022 instead of 2012-2021 as the ten-year projection period increases the estimate's cost by almost $40 billion by itself.

So is the doc fix actually more expensive in the new CBO estimate? While it's true that it is more expensive in the 2013-2022 period than in the 2012-2021 period, over a comparable period the new estimate actually shows a cheaper doc fix.