Either John Boehner Or Nancy Pelosi Is Very Wrong About What Their Medicare Bill Will Do

03/26/2015 07:34 pm ET | Updated Mar 26, 2015

The new Medicare bill that the House passed on Thursday would weaken the program.

No, wait. The new Medicare bill that the House passed on Thursday would strengthen the program.

Many liberals believe the latter, while plenty of conservatives believe the former. Their shared faith in the bill -- for very different reasons -- helps explain why the House gave it such a huge bipartisan majority, why the Senate might pass it and why President Barack Obama has pledged to sign it.

Of course, the predictions from the right and the left can’t both be true. A bill that bolsters traditional Medicare can't simultaneously undermine it. But years will probably pass before we find out which side has guessed wrong.

The legislation's formal name is the Medicare Access and CHIP Reauthorization Act. Its main purpose is to replace an old, highly unpopular and pretty crude formula for limiting what Medicare pays physicians. That scheme, known as the sustainable growth rate, or SGR, became law in 1997, as part of a sweeping effort to balance the budget. Heeding protests from the health care industry, Congress has since 2003 passed a series of measures (17, to be precise) temporarily blocking the payment cuts from taking effect.

The debate over these measures has rarely been easy. If Congress wants to pay more for doctor visits, outpatient procedures and medical tests than the federal budget anticipates, then Congress has to find the money to cover those extra fees. Members of Congress predictably have different ideas on how to do that, which is why they’ve sometimes held up enactment of a new “doc fix” until the very last minute -- literally hours before the cuts were scheduled to go into effect, or even slightly after. Usually Congress has ended the drama by settling on some combination of cuts to other programs, more moderate limits on physician fees, and accounting gimmicks that basically add the cost to the deficit.

For years, lawmakers and policy experts have dreamed of a more permanent solution -- a replacement that would spare Congress from this debate, and the flood of lobbying it releases every time. The compromise that House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.) quietly put together this year would appear to do that. Instead of curtailing Medicare’s physician payments according to the SGR formula, their bill would impose a different set of limits, reducing the fees in a less severe way and with a formula that eventually takes into account measurements of quality care. The bill would offset some, though not all, of the cost by (among other things) asking the wealthiest Medicare beneficiaries to pay higher premiums and reducing payments to some other parts of the health care industry. Most of these changes would start in 2018.

According to the Congressional Budget Office, the net effect of the bill would be to increase the federal deficit by $141 billion over the next 10 years, at least relative to what it would look like if the SGR cuts took effect. That’s a lot of money and it has raised the ire of groups like the Committee for a Responsible Federal Budget, which supports replacing the SGR but only with a measure that pays for itself completely. As Loren Adler, the committee’s research director, recently told Bloomberg’s Alex Wayne, the SGR “always gets derided because it’s annoying and it’s flawed. It doesn’t work as intended, it’s a little bit silly in some ways and it’s a lobbying bonanza. That being said, it’s accomplished what was intended -- it’s controlled the cost of Medicare.”

Interest groups and prominent intellectuals on both the left and right largely agree that, in an ideal world, the bill would include enough new revenue to offset the entire cost. But many (not all) have coalesced behind the Boehner-Pelosi bill anyway, in part because they have totally divergent views of how the reforms will play out -- and what might happen if the bill fails.

One big lure for conservatives enthusiastic about the Boehner-Pelosi package is those higher payments from wealthier Medicare beneficiaries. The right’s long-term goal for Medicare is to privatize it -- by replacing the traditional government-run program with a voucher-like system, in which everybody would get some kind of “premium support” and then choose among competing private insurance options. Conservatives who support the bill believe that requiring more seniors to pay more of their own premiums would make such a transformation more likely.

“Some conservatives say this plan increases the national debt, is too timid, and is a giveaway of key leverage to extract annual spending cuts,” Ryan Ellis, director of tax policy at Americans for Tax Reform, wrote in National Review this week. “Other conservatives (myself included) think this bill will reduce the unfunded liabilities of Medicare without raising taxes, is a good down payment on even more entitlement reforms, and is well worth supporting.”

Liberals obviously aren’t thrilled about the higher premiums for wealthy seniors, for the very same reasons that conservatives laud them -- those premiums threaten to undermine support for the traditional government-run program. But many advocates and experts on the left value some of the bill’s other provisions, starting with its funding for the Children’s Health Insurance Program and other initiatives that help low-income Americans. Securing that funding will likely be difficult -- and require other, potentially more serious sacrifices -- if the Boehner-Pelosi package fails.

Liberals also value the bill’s provisions tying future Medicare payments to quality. The hope is that, by making it more efficient, these changes will make it easier to sustain traditional Medicare and fend off the very challenges that conservatives covet.

“The alternative -- a never-ending series of short-term patches that are fully paid for -- would likely result in deeper and more painful cuts to the Medicare program over time,” a group of health care experts at the left-leaning Center for American Progress wrote on Wednesday. “While we would like to see this legislation strengthened ... this compromise legislation takes an important step in Medicare payment reform and ensures continued funding that improves the health and welfare of millions of children, families, and seniors.”

It’s not every day that liberals and conservatives look at the same policy proposal and imagine it playing out in such very different ways. But in an era of unprecedented polarization, maybe such disagreement is the only way that bipartisan legislation can happen.

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