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WASHINGTON, D.C. — Caught up in the congressional politics swirling around a pending tax bill are two proposals to extend — once again — subsidies for COBRA health insurance and a "fix" of Medicare payments to doctors. Without action by the end of the month, those laid off after June 1 would have to pay the entire cost of continuing their health insurance and doctors could see their Medicare payments slashed by 21 percent.

The tax "extenders" bill extends a number of popular tax cuts and funds small business loan programs. It would preserve special federal Medicaid payments to states and provide extra unemployment payments, among other things. Congress is considering several solutions on the COBRA and Medicare payment issues.

Doc Fix

In 1997, Congress put in place the Sustainable Growth Rate formula to set Medicare's physician payments and curb the growth in health care costs. Based on the formula, whenever physician costs grew faster than the economy, doctors' Medicare reimbursements would be reduced. However, every time – except once in 2003 – when this scenario has played out, lawmakers have intervened to delay the unpopular cuts.

Here are some of the options being considered:

• A deal crafted by Democratic leaders and announced Thursday that would include a fix to payment rates for three years. Specifically, it would allow increases to the payment rates through 2011. In 2012 and 2013, rates would keep pace with Medicare's growth and an extra allowance would go to primary care doctors. The Congressional Budget Office is estimating how much this fix will cost. It could be considered by the House early next week.

• A five-year, $88.5 billion plan that would give doctors scheduled pay increases. This was initially popular among some House Democrats but has less traction in the Senate and among some moderates because of the cost.

• A delay of the 21 percent cut until the end of the year.

• Or, a one-month delay in the cuts. Congress opted for such a short-term fix on April 15.

The political dilemma is that members on both sides of the aisle are increasingly skittish about adding to the deficit in a year that has already been marked by lots of spending. And the powerful American Medical Association has steadfastly opposed shorter-term fixes, instead calling for a permanent solution.

Dr. James Rohack, president of the AMA, said in a release Thursday that a three-year fix would "provide temporary stability" for seniors and their physicians, but that the AMA is disappointed that Congress again won't permanently fix the physician payment formula. "Achieving full repeal of the payment formula is apparently not feasible at this time, and Congress could have permanently solved this problem five years ago at a cost of $49 billion, less than the price of the short-term remedy now under consideration in Congress."

The Congressional Budget Office has estimated the cost of the permanent fix to be $276 billion through 2020.

COBRA

Congress has extended the COBRA subsidies for unemployed workers four times since February 2009.

COBRA is the federal program that allows laid-off workers to stay on their employer's health insurance, usually for as long as 18 months. But the former employee has to pay all the costs, something that is often cost-prohibitive. The COBRA benefits subsidy pays 65 percent of the insurance premium costs for laid-off workers for 15 months.

The last extension of this subsidy was in April, for a month, and pending legislation would make it available to people laid off through the end of the year, at a cost of $7.8 billion. If Congress doesn’t act, those laid off on or after June 1 would have to bear the full cost of their COBRA coverage.

Although a popular provision, the COBRA subsidy extension is caught up in the politics of the larger bill and worries about government spending.

Judy Conti, federal advocacy coordinator for the National Employment Law Projects, says she sees COBRA being extended for as long as high unemployment rates continue, but she thinks it'll be a tough fight to keep the subsidy going into next year, saying there are some lawmakers "who think that we've done enough and that this is it and no more," she said. "But I don't think that's going to win the day."