Megan McArdle says all the right things about the doc fix.
Recall one of Obamacare’s key assumptions was that it would start paying doctors at something called the Sustainable Growth Rate. The SGR was cooked up a few years ago to index doctor and hospital payments, but every year the medical lobby has successfully staved off implementation. This annual event is called the doc fix.
Now the situation has gotten so out of whack that switching over to the index would reduce reimbursements by 25%. Rather than grapple with it during the health care debate, the Democrats pushed the issue to this month, then quickly kowtowed to the medical lobby.
To Congress’ credit, I suppose, they didn’t just blow a hole in the budget on this one. They found a way to pay for the doc fix. They are cutting subsidies that will help consumers pay for the insurance that the new law is forcing them to buy.
So at 30,000 feet, here’s what happened. Doctors and hospitals will be getting paid more at the expense of the middle class. As I’ve argued before, to reform our health care system, every party will have to be squeezed. Health insurers are being required to hit 80%+ loss ratios, and agents are getting pinched, too. But providers will have to feel the squeeze, too, but I’m still waiting for that to happen.
Instead we get this Congressional slice and dice. If that doesn’t change, health care reform is doomed.