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

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)
  2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2013-2021
Old Estimate $7.4* $18.3 $21.4 $24.5 $27.6 $30.5 $33.4 $37.2 $40.9 $44.7 N/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
Difference $1.9 $0.3 -$0.3 -$1.2 -$1.3 -$1.3 -$1.2 -$1.3 -$1.3 -$1.6 N/A -$9.2

*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.

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