(Bloomberg View) — In a welcome break from political stasis, Congress may be on the verge of passing important bipartisan legislation to fix the way Medicare pays doctors. A bill before the Senate this week, which the president is willing to sign, would shift toward paying based on how well doctors care for their patients, rather than on how much care they provide. The fix isn't perfect, but it's far better than most of us expected from a polarized Congress.
Yet much of the commentary about the bill is very negative. Stranger still, it comes in the form of two contradictory arguments — both wrong.
Every year, to avoid the steep declines in Medicare payments to doctors that would automatically kick in under the existing "sustainable growth rate" formula, Congress provides a temporary "doc fix." It suspends the payment cut one year at a time — a sure sign of a dysfunctional political system. The legislation that has passed the House and is now before the Senate would permanently end the threatened payment cuts and shift doctor payments to a system in which more emphasis would be placed on quality, value and accountability. This would reinforce the broader movement in health care away from fee-for-service payments, which is crucial to continuing the slow growth in costs we've been enjoying.
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At the same time, the legislation would impose higher fees on some high-income Medicare beneficiaries and would restrict a specific type of supplemental insurance that allows beneficiaries to escape deductibles. Such insurance has been shown to raise overall costs, because when people can avoid cost-sharing, they tend to boost their consumption of health care.
The bill would also extend for two years two effective programs: the Children's Health Insurance Program, which provides crucial benefits for low-income children and their parents, and the Maternal, Infant and Early Childhood Home Visiting Program, which provides for regular home visits to improve maternal and child health. Empirical evidence shows how successful the latter program has been, and we should be doing more to promote such strategies.
So what's not to like about the permanent doc fix? The critiques come in two forms.
