Caveat Emptor: New Budget Projections Assume End Of ‘Doc Fixes’

Updated at on Aug. 25 at 3:48 p.m.

New figures released by the Congressional Budget Office today include a budget assumption that almost never comes true:  The imposition of steep Medicare cuts for physicians.

The CBO’s new baseline projections of the federal budget find reason to be hopeful, estimating that cumulative deficits will reach $3.5 trillion between 2012 and 2021 — a much shallower budget hole than the $6.7 trillion CBO projected in March. But that estimate — provided by the agency so that Congressional budget planners can work from a common set of numbers — assumes that sharp reductions in Medicare physician payment rates will go into place at the end of this year, since it is prescribed by current law.

Assuming Capitol Hill follows the past practice of stopping those scheduled cuts,  this fall lawmakers will not only be dealing with the debt deal’s “super committee” spending cuts – or lack thereof — but also be scrambling to find billions for another “doc fix.”

“As the CBO report shows, it is impossible to look at the federal budget in any serious way without acknowledging the budget hole that has been created by the broken Medicare physician payment formula,” AMA President Peter W. Carmel, M.D., wrote in an e-mail to KHN.  “As recently as 2005 the cost of permanent reform would have been $48 billion, but today it is estimated to be nearly $300 billion. If action is not taken now, the cost will continue to escalate to $500 billion in only a few short years.”

“The CBO report’s discussion of outlays and the deficit and debt underscore the steep hill leading to a permanent Medicare physician payment fix,” said former American Medical Association lobbyist Julius W. Hobson Jr., now a senior policy advisor for the firm Polsinelli Shughart.

In its report CBO also notes that should the Medicare physician payment cuts and other budget assumptions, such as expiration at the end of 2012 of Bush-era tax cuts and President Obama’s stimulus package, not occur, “much larger deficits and much greater debt could result.”