03.19.2015 1

Unpaid for doc fix could add $2.3 trillion to Medicare unfunded liabilities

By Robert Romano

dollarbomb“Simply writing off the cost of repealing the sustainable growth rate is foolish.”

That was from the Committee for a Responsible Federal Budget, noting that any permanent repeal of Medicare’s sustainable growth rate — a 1997 reform intended to put the failing program on a sustainable footing before its trust fund was exhausted — could add as much as $2.3 trillion to the unfunded liabilities of Medicare Part B over the next 75 years.

That is, if it is not offset.

As it turns out, in the course of 17 so-called doc fixes — which temporarily repeal the sustainable growth rate — there have been partial offsetting spending reductions that prior Congresses had included in the provisions.

According to the Committee, “Lawmakers deficit-financed the first ‘doc fix’ back in 2003, but since then have offset 120 out of the 123 months of doc fixes with equivalent savings. That’s 98 percent. Even ignoring the couple times small gimmicks were used, policymakers still paid for these delays 95 percent of the time — with almost all of those savings coming from health care programs.”

But what about now? The House Budget Committee in its most recent budget has proposed eliminating the sustainable growth rate altogether. But the only anticipated budgetary reductions to the program would come via means testing, and then not until 2024.

Meaning, for the next nine years, the so-called doc fix might not be paid for with any offsetting reductions in the program itself. But with the Medicare trustees reporting that the program’s trust fund might be exhausted as soon as 2030, would the program even get that far before it got into trouble?

This is an issue Republicans should be well aware of, since, as noted by the Daily Caller’s Sarah Hurtubise, the party has consistently called for offsetting reductions to coincide with any doc fix.

And, notes Hurtubise, House Speaker John Boehner (R-Ohio), then House Minority Leader, slammed Democrats in 2009 for proposing to do precisely the same thing: “Speaker Nancy Pelosi and House Democrats have voted to add nearly $300 billion to the deficit just days after the national debt topped $12 trillion for the first time in U.S. history. This irresponsible ‘doc fix’ proves once again that out-of-touch Washington Democrats simply cannot help themselves when it comes to piling debt on our kids and grandkids.”

So, will the permanent doc-fix now under consideration put Medicare into the red?

It is hard to say as of this writing. The actual proposal has not been released and the Congressional Budget Office has not taken a crack at it yet. Some ballpark estimates being reported have suggested the proposal might add as much as $200 billion to the deficit.

Quite simply, if the proposal adds to the deficit over the next nine years, then it was not paid for. Therefore, the devil will be in the details.

As it is, both Boehner and Pelosi are said to be close to a deal to permanently repeal the sustainable growth rate. We’ll find out soon enough if they remembered to pay for it, or if they are just speeding the bankruptcy of the Medicare trust fund.

Robert Romano is the senior editor of Americans for Limited Government.

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