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.
