House Speaker John Boehner and Minority Leader Nancy Pelosi find themselves in an unlikely alliance this week as they prepare to roll out a plan to change the way Medicare pays doctors.
But, Boehner’s proposal puts him at odds with conservative groups who are criticizing the speaker’s deal for adding to the federal deficit.
Boehner, R-Ohio, and Pelosi, D-Calif., have reportedly agreed to a $200 billion package that would eliminate the Sustainable Growth Rate—a formula for Medicare payments—and implement a new payment system for physicians.
The deal would also extend the Children’s Health Insurance Program for two years.
If Congress doesn’t agree to a solution by April 1, Medicare doctors could take a 21 percent cut in payments.
Though the deal has the support of the House Democratic and Republican leaders, only $70 billion of the $200 billion deal would be paid for during the first 10 years. Half of that $70 billion would come from cuts to providers including hospitals, acute care providers and insurers over time, Politico reported. The other half would come from cuts to those benefiting from Medicare, specifically high-income recipients through additional means testing.
That means the bulk of the money for the deal—$130 billion—would be added to the deficit.
Though Boehner and Pelosi’s plan has yet to be officially released and few details have been revealed, that level of funding without offsets elsewhere in the budget has two prominent conservative groups pushing back.
In a statement to The Daily Signal, a spokesman with The Club for Growth said any bill that fails to replace the Sustainable Growth Rate with spending cuts would likely be opposed by the conservative organization.
“The Club’s long standing position is that getting rid of the [Sustainable Growth Rate] formula is fine, but Congress has to pay for it with legitimate spending cuts,” the spokesman, Doug Sachtleben, said. “No gimmicks. We would likely oppose any bill that doesn’t do that.”
Similarly, Dan Holler, a spokesman for Heritage Action for America, the sister organization of The Heritage Foundation, said elimination and replacement of the Sustainable Growth Rate needs to be paid for.
“Based on what we know, this deal is a non-starter for conservatives,” he told The Daily Signal. “Americans don’t hand Republicans a historic House majority to engage in massive deficit spending.”
“Based on what we know, this deal is a non-starter for conservatives. Americans don’t hand Republicans a historic House majority to engage in massive deficit spending,” said @DanHoller.
“Far from a gimmick, the annual Medicare ‘doc fix’ process has saved taxpayers $165 billion since 2003, and any permanent solution must be financed with permanent Medicare savings. The failure to offset this new spending would be a resounding failure,” Holler continued.
Boehner had previously advocated for any reforms to the Sustainable Growth Rate to fully offset the cost of a bill. In a 2009 statement following what he called an “irresponsible ‘doc fix’” that added $300 billion to the deficit, the Ohio Republican advocated for “fiscally responsible” changes that didn’t increase the deficit.
Implemented in 1997, the Sustainable Growth Rate governs payments to Medicare doctors. The formula calculates the Medicare budget each year by tying the program’s spending to the growth of the economy.
At first, the concept worked well. However, as the costs of health care have outpaced the economy, Medicare often has a multi-billion-dollar shortfall. To keep payments to doctors stable and avoid slashes to their pay, Congress has appropriated additional funds through a series of patches, or “doc fixes,” 17 times over the last 14 years.
Republicans and Democrats alike agree that the Sustainable Growth Rate is largely unworkable. However, fixes to the formula have created fault lines between the two parties in the past, and replacing the Sustainable Growth Rate will cost at least $175 billion over the next decade, according to the Congressional Budget Office.
Lawmakers and lobbyists originally expected another three- or six-month patch, and news of a possible deal comes as Republicans are preparing to roll out their budget for fiscal year 2016.
A vote on the replacement for the Sustainable Growth Rate could come next week.