David Gratzer

On a quiet Friday afternoon this summer, the central justification for President Obama’s health-care overhaul died a quiet death. On that day, a bipartisan coalition in Congress reversed the scheduled Medicare cuts to physician payments, ensuring that, over the next decade, the White House’s reforms will cost many billions more than advertised. After over a year of debate and lofty rhetoric, the reality is this: the president’s goal of “bending” the health-care cost curve has unraveled in just a few months.

The president and his supporters argued that we need ObamaCare in order to tame the federal budget deficit. When he signed the bill into law, the president touted the importance of the legislation in reducing long-term deficits. Democrats cited Congressional Budget Office scoring showing that the health legislation would reduce the deficit over ten years to the tune of roughly $130 billion. But that was back in March.

In May, the CBO released its quantitative analysis showing that discretionary spending not accounted for in the previous scores would cost $115 billion. The CBO director himself expressed significant doubts about potential deficit reduction. Speaking to the Institute of Medicine, he said: “Rising health costs will put tremendous pressure on the federal budget during the next few decades and beyond. In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure.”

That brings us to the quiet Friday afternoon of June 25. By cancelling scheduled Medicare cuts, the president and his Congressional allies have made the fiscal problem even worse: Not only do those fiscal problems remain, but White House reforms meant to address them will push net federal-government health expenditures further into the red. Any notion of fiscal balance has been lost.

Yet cancelling these scheduled Medicare cuts is nothing new. Time and again, Republican and Democratic leaderships in Congress have haphazardly voted to undo scheduled cuts.

Congress reversed planned Medicare physician cuts in 1999—and 2004, 2005, 2006, and 2008. In fact, since 1997, when members of both parties agreed to automatic cuts if spending rose faster than population and economic growth, the program has been cut just once, in 2002. Maybe it’s the pressure of the doctors’ lobby. Maybe it’s the seniors’ lobby. Maybe it’s both.

And this Democratic Congress has been no better. In fact, just months after passing Obama’s health-reform legislation, Democrats vigorously and successfully pushed to postpone the Medicare cut until November (they had previously voted to delay it from April to June 2010).


David Gratzer

Dr. David Gratzer, a physician, is a senior fellow at the Manhattan Institute. David Gratzer's most recent book is Why Obama's Government Takeover of Health Care Will Be a Disaster (Encounter Books, 2009).