Don’t Get Too Giddy About Baucus Bill

By October 8, 2009November 2nd, 2009Commentary

The Congressional Budget Office has released its initial reaction to the Baucus bill, finding that it will reduce the Federal deficit by about $81 billion over the ten year period from 2010-2019.  (CBO Analysis) While this will improve the bill’s chances of passage and hearten reform proponents, the CBO identified a number of uncertainties which could affect its analysis.  The major one, which will likely ultimately make this bill add to the deficit when changed, is Congress’ recent actions on scheduled physician payment reductions.  The Sustainable Growth Rate calculation has been prevented from going into effect for the last few years and this year calls for over a 20% reduction in physician payments.  The Baucus bill purports to delay the reduction for 2010 but then allow a 25% decrease in 2011.  Is there anyone who really believes that America’s doctors are going to accept a 25% cut in their Medicare payments or that Congress won’t once again bend to their wishes?

A more reasonable assumption is that there will be no reductions in the current payments to physicians for the forseeable future, and perhaps even some increases.  Similarly, the other proposed reductions in provider payments will face serious political obstacles.  If the the provider reductions can’t be sustained through final passage of the bill, it will certainly add to the federal deficit, not decrease it.

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