Sen. Charles Grassley (Iowa), senior Republican on the Senate Finance Committee, has asked the Joint Committee on Taxation to analyze the future effects of the Democrats’ tax increase. Specifically, Grassley is wondering why the proposed hike isn’t indexed to inflation, leaving more and more Americans to fall subject to the increase each year.

“The unintended consequences could be significant,” Grassley warned.

If that scenario sounds familiar, it’s because the Alternative Minimum Tax — designed decades ago to target just a tiny sliver of high-income households — was similarly not indexed to inflation. As incomes have risen over the years, more and more upper-middle-class families have fallen into the bracket under which they have to pay the AMT. Some liberals don’t see a problem with that. But Congress, fearing a backlash at the polls, has stepped in each year with the so-called AMT patch, providing billions of (borrowed) dollars to prevent the tax from hitting those families.

The Democrats’ motivations are easy to surmise: Had they indexed the tax to inflation they would have generated much less revenue to pay for their health-care reform bill. And the proposed payroll tax increase is much less than the AMT. Still, it’s not too far a stretch to imagine that the lawmakers of the 2030s, also wanting to appease the voters, would also find it tempting to come up with the Medicare-payroll patch.

Let’s be clear: the task force’s recommendation will have absolutely no impact on the bills we in the Senate write, debate or vote on.  [HHS Secretary Kathleen Sebelius] has also assured me there that nothing in Medicare or Medicaid will change as a result of the recommendation, and that’s the way it should be.

Yet the Senate bill says explicitly that, as a part of newly proposed minimum benefits requirements, every insurer  ”shall provide coverage for … evidence-based items or services that have in effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Services Task Force.” The House bill contains a nearly identical provision.

The task force guideline recommending that women between ages 50 and 74 receive biennial routine mammograms, instead of annual checkups, received a “B” rating.

That in no way means that women wouldn’t have access to annual mammograms. Again, the essential benefits package represents the minimum coverage insurers would have to offer. The task force is clear that the ultimate decision on the frequency of screenings should be made by women and their doctors.

Still, there’s also the fear that private insurers will lean on the task force recommendations to justify a scaling back of coverage for routine mammograms. Julius Hobson, former lobbyist for the American Medical Association and now a senior policy analyst at the Washington law firm Bryan Cave, said it’s “inevitable” that private insurance companies will look at those guidelines, and may change their coverage policies based on what they see. Certainly, they would like the potential cost savings if women were getting routine mammograms every two years instead of every one.

“It’s almost inevitable that that’s going to happen,” Hobson said last week. “The government doesn’t move that fast, but the health insurers do.”

That has some members of Congress concerned about the threat to women’s health. As Rep. Jerrold Nadler (D-N.Y.) said in a phone interview last week, “Cancers can progress very far in two years.”

The count was 243 to 183, with 11 Democrats voting against the measure, and just one Republican — Rep. Michael Burgess, a Texas physician — voting in favor of it.

The proposal has been the top legislative priority of the American Medical Association for years, and Democratic leaders are hoping today’s vote might entice the powerful doctors lobby to get behind the broader health reforms moving through Congress.

The $210 billion doc-fix bill, however, stands little chance in the Senate, where budget hawks on both sides of the aisle have been unwilling to support the measure unless it’s paid for. (The House bill is not.) Indeed, just last month the upper chamber killed a similar proposal because it was unfunded. The vote in that case was a lopsided 47 to 53 — well shy of the 60 supporters it needed to pass.

The vote count was 47 to 53 — 13 votes shy of the 60 needed to defeat a GOP filibuster.

Though many opponents support the underlying policy, the new spending wasn’t offset, leaving lawmakers on both sides of the aisle to blast the legislation as fiscally irresponsible.

“Americans are increasingly alarmed by the expansion of our national debt and this spending binge that we’re putting on the national credit card,” Senate Minority Leader Mitch McConnell (R-Ky.) said prior to the vote.

At issue was the sustainable growth rate, a Medicare formula that’s called for physician payment cuts in almost every year of the last decade, threatening seniors’ access to care and leaving Congress to step in with temporary fixes — effectively kicking the can down the road. Sponsored by Sen. Debbie Stabenow (D-Mich.), the bill would have eliminated the formula once and for all, allowing Congress to establish a new method of updating doctor payments that better reflects the cost of treating Medicare patients.

“This is about strengthening and protecting Medicare,” Stabenow said just before the vote.

Wednesday’s vote means that Democrats will have to find another way to prevent a 21.5 percent pay cut from hitting Medicare doctors next year, likely with a temporary patch that will eliminate the cut but keep the formula in place. The Senate Finance Committee bill includes a one-year band-aid, at a cost of just under $11 billion.

Senate Majority Leader Harry Reid (D-Nev.) said before the vote that, if the measure failed, Democrats would push a multi-year solution at an unspecified later date.

A Senate leadership aide says the vote is expected to fail. The reason? The bill is unfunded, and Republicans are already lining up against in opposition to the idea of adding a quarter of a trillion more to the debt, while several Democrats are vowing their disapproval as well.

Question is, will the doctors lobby sign on to health reform without it?

A note: We reported on Friday that the bill would come straight to the floor without a cloture vote. And at the time, that was the thinking among Democratic leaders. Since then, however, the negotiations over amendments to the bill broke down. And Republican leaders, believing the doc-fix bill should be paid for, have now made a political calculation to oppose the bill outright. Hence, today’s cloture vote.

With Democratic leaders hoping to bring up legislation to fix, once and for all, the formula to pay doctors who treat Medicare patients, a great deal of attention is being paid to the inconvenient fact that Democrats have not presented a plan to pay for the bill’s $245 billion price tag. Newspaper editorials are attacking the plan as disingenuous; Republicans are blasting it as a bait-and-switch; and even some Democrats are vowing to withhold their support unless the bill is offset with spending cuts elsewhere.

The Washington Post’s Dana Milbank this morning summarizes the GOP reaction:

Republicans, who had been losing traction in their effort to fight a health-care overhaul, could hardly believe the gift the majority had given them.

“I have never witnessed something more sinister!” an agitated Sen. Bob Corker (Tenn.) declared on the Senate floor Tuesday morning. Citing a report that the “doc fix,” as the $250 billion measure is called, was created to buy the American Medical Association’s support for the main health-care bill, Corker accused the AMA of prostitution. “We all know that the selling of one’s body is one of the oldest professions in the world,” Corker said. “The AMA is engaged in basically selling the support of its body.”

It wasn’t supposed to happen that way. When Sen. Debbie Stabenow (D-Mich.) introduced the bill hastily last week, Democratic leaders hoped to pass the proposal quickly, so as to disassociate it from the larger health reform proposal also moving through the chamber.

“We’re doing the doc fix first so as not to get it confused with health care reform,” Sen. Tom Harkin (D-Iowa) told reporters last week. “We’re going to try to pass it as an emergency-type of spending so that it doesn’t … connect to the health care reform bill and figure in as a cost of it.”

The reasons are clear: President Obama has vowed not to sign a health reform bill that adds to deficit spending, and divorcing Stabenow’s doc-fix bill from the larger effort means the White House can make good on that promise. It doesn’t hurt that the move would likely bring the American Medical Association — the nation’s largest physician organization — on board as an influential supporter of the later-to-be-tackled health reform bill.

Still, adding a quarter of a trillion dollars to the debt is no minor occasion. Why Democrats thought they could do it without attracting either media attention or Republican criticism remains a mystery.

The House already passed pay-go legislation this year, exempting four expensive items — including the doc-fix — but only if one of three conditions were met. Either statutory pay-go has to be in law (the Senate hasn’t passed it); the doc-fix proposal has to be paid for (it’s not); or statutory pay-go has to be attached to the bill as a rider.

Hoyer explained the strategy Tuesday.

In consideration of those exceptions, you must pass and put in place statutory pay-go so that we cannot do it for other things. So we can take some very substantive, important steps forward in bringing fiscal discipline to this nation, which needs it.

They’ll have some time to work things out. The Senate, which was expected to take up the doc-fix bill Tuesday, has delayed the floor debate while chamber leaders continue to negotiate amendments.

The so-called doc fix is being rushed to the Senate floor this week in advance of health reform not because it has nothing to do with health reform but because it has everything to do with it. The political imperative is twofold: to make certain that Republicans don’t use the physician payment issue to bring down the larger bill and to placate the American Medical Association.

Indeed, as we pointed out today, the AMA, the nation’s largest physicians lobby, has so far declined to endorse the Senate health reform legislation. Having lost the insurance industry’s support recently, Democratic leaders are doing everything they can to ensure that the doctors won’t also jump ship. But it comes at the potential cost of adding nearly a quarter-trillion dollars to already enormous federal deficits. From The Post:

This latest maneuver only heightens the fiscal irresponsibility of what already was a fiscal sleight of hand. The measure passed by the Senate Finance Committee patched the problem for one year, at a cost just shy of $11 billion. The argument was that the rest of the problem could be dealt with — and, at least in theory, paid for — later. Now, Mr. Reid proposes not to pay for any of it, not even $11 billion, but simply to write a $247 billion IOU.

The Senate plans to take up the bill this week. The big question is whether it has the legs to get past the fiscal hawks in both parties.

Sen. Debbie Stabenow (D-Mich.) (WDCpix)

With the nation’s insurers having dropped their support for the health reforms moving through Congress, Senate Democrats are taking daring steps to rally the backing of another powerful medical lobby: doctors.

The Senate this week is set to take up a $245 billion proposal, introduced hastily just a week ago by Sen. Debbie Stabenow (D-Mich.), to prevent scheduled pay cuts for doctors who treat Medicare patients – a long-term fix to the physician pay quandary that dwarfs the one-year patch contained in the Senate Finance Committee’s reform bill. The proposal has long been advocated by the American Medical Association, the nation’s largest physicians lobby, which has so far declined to endorse the broader Senate health bill. Although the group is also fighting Democrats over malpractice reform, the Stabenow bill would go a long way toward getting the doctors to support the top domestic priority of the Obama administration this year.

Illustration by: Matt Mahurin

Despite the allure of getting the AMA on board, however, the Democrats’ move is not without its pitfalls. For months, party leaders in Congress and the White House have vowed to keep the cost of health reform below $900 billion over 10 years, while also promising that the legislation won’t add “one dime” to the nation’s debt. The Stabenow bill, however, is not paid for, leaving Democrats in the uncomfortable position of claiming that a complete overhaul of the way doctors are paid under Medicare is somehow not a part of health care reform. That pickle has created an urgency: the faster Democrats can pass the physician pay measure, the better chance they have of distancing it from the broader reform effort.

Robert Blendon, professor of health policy at Harvard University, said the Democrats’ success in forging that divide likely “depends on the visibility of the issue.”

“So much attention is on putting the [Finance and HELP committee health reform] bills together that this could go under the radar,” said Blendon, an expert on the Clinton administration’s failed attempt to pass comprehensive health care reform in 1993. “[But] if it gets a lot of media attention, it’s going to be clear to anyone who reads the story that the additional $250 billion is in fact related to health reform.”

At issue is the so-called sustainable growth rate (SGR), a complex, 12-year-old formula designed to prevent Medicare doctor payments from bankrupting the program by indexing reimbursements to the growth of the economy. Because health care inflation has risen much faster than GDP in recent years, the SGR has called for physician cuts every year since 2002. Congress, however, has usually stepped in with temporary patches to prevent those cuts, which the AMA says would force doctors to drop Medicare patients.

Years of kicking the can down the road, though, has caused the cuts to compound. Indeed, next year, the SGR calls for a 21.5 percent reduction in physicians’ Medicare payments, with an additional 5.5 percent cut in each of the four years thereafter. The Finance bill provides roughly $11 billion to address 2010, but lends no long-term relief — a dance that sidesteps one of the most sensitive and expensive problems facing the entire health delivery system.

Enter the Stabenow bill — all 18 lines long — which scraps the SGR altogether, erases the accumulated cuts and provides a 0 percent pay update “for 2010 and each subsequent year.” That means in perpetuity. The idea is to have the broader health reform bill complement Stabenow’s proposal by creating a new physician payment formula that better reflects the true costs of treating Medicare patients.

Calls to AMA were not returned, but the group has launched an enormous ad campaign in support of the strategy.

That this fix costs roughly a quarter of a trillion dollars hasn’t dissuaded Democratic leaders. Instead they’re hoping that, by considering the doc-fix bill on a separate track, they can divorce it from the broader issue of health reform. Last Friday, Sen. Tom Harkin (D-Iowa), chairman of the Health, Education, Labor and Pensions Committee, told reporters just that.

“We’re doing the doc fix first so as not to get it confused with health care reform,” Harkin said. “We’re going to try to pass it as an emergency-type of spending so that it doesn’t … connect to the health care reform bill and figure in as a cost of it.”

Republicans, though, aren’t buying it. Although they acknowledge that the SGR is seriously flawed, they also want to cover the costs of fixing it. Sen. Charles Grassley (Iowa), the senior Republican on the finance panel, told The New York Times last week that Stabenow’s bill “undermines the president’s commitment to making sure health care reform won’t add a dime to the deficit when one of the most expensive problems in the Medicare program is removed from overall reform legislation.”

Republicans are not alone. Moderate Democrats are also criticizing the proposal for lacking offsets. Sens. Kent Conrad (N.D.) and Evan Bayh (Ind.), for example, have already indicated that they plan to vote against the measure. And in the House, Speaker Nancy Pelosi (D-Calif.) last week reiterated her previous vow to support an SGR fix this year only if the bill follows pay-as-you-go rules.

The criticisms haven’t been lost on Senate Democratic leaders. Last Thursday, Senate Majority Leader Harry Reid (D-Nev.) scheduled a Monday cloture vote on the Stabenow bill, only to scrap that plan a day later for lack of support. GOP leaders, meanwhile, want to amend the bill by attaching offsets as well as provisions addressing medical malpractice reform.

The stalemate over the SGR fix comes as no surprise to health policy experts. “People have known for many, many years that this was a screwed up policy – that it doesn’t work at all,” said Leighton Ku, public health policy professor at George Washington University. The sticking point has not been whether to fix it, Ku added, but how to pay for it.

That the Democrats have chosen not to offset the Stabenow proposal means the bill likely won’t pass the Senate, according to Julius Hobson, former AMA lobbyist and now a senior policy analyst at the Washington law firm Bryan Cave. Hobson said the bill should get plenty of floor time, but probably won’t get the 60 votes likely needed to waive the Budget Act — a vote required to allow the unfunded proposal to proceed.

Asked about attaching offsets during the floor debate, Hobson pointed out that the broader health reform bill has already plucked the low-hanging fruit. “When you look at the Medicare bill,” Hobson said, “what offsets are left?”

Senate Majority Leader Harry Reid (D-Nev.) filed a motion yesterday to hold a cloture vote on the bill Monday — the procedural move required to defeat filibusters. But Stabenow spokeswoman Nkenge Harmon indicated today that a deal has been worked out to bring the bill directly to the floor Tuesday instead.

“Right now we’re figuring out what the debate and amendment process will be,” Harmon said in an email.

No word yet from GOP leaders why they’ve agreed not to fight $245 billion in new deficit spending.