This afternoon, Congress failed to protect physicians who treat Medicare patients from a scheduled 21% reduction in payments. The so-called Stabenow amendment would have reversed the cuts scheduled under the statutory Sustainable Growth Rate (SGR) and given doctors “$247 billion more than they would otherwise get for their Medicare services over the next 10 years.” The amendment was not paid for and failed 47-53, “13 short of the 60 needed to advance the measure” to a final vote. Thirteen Democrats joined all Republicans to oppose the measure.
Congress created the SGR in 1997 to check rising health care costs. According to the formula, “the amount Medicare pays doctors for an average Medicare patient can’t grow faster than the economy as a whole.” In 2002, medical inflation outpaced economic growth and Congress stepped in to avert the cuts. Between 1999 and 2008, Congress patched the SGR formula six different times.
This year, as Democrats attempted to patch the cut by offering a floor amendment outside of the major health care reform bills, Republicans and some conservative Democrats argued that “the $247 billion Medicare bill would violate Mr. Obama’s vow that health care legislation not add ‘one dime’ to the budget deficit. Senate Majority Leader Mitch McConnell (R-KY) accused Obama of breaking his campaign pledge:
And now the Democrats in Congress are proposing that we put another quarter of a trillion dollars on the government charge card in order to prevent a cut in the reimbursements for doctors who treat Medicare patients. All of us want to keep this cut from happening, but the American people do not want us to barrow another cent to pay for it. And they don’t want Democrats to pretend that this quarter of a trillion dollars isn’t part of the cost of health care reform. Because it is. It is also a clear violation of the President’s pledge that health care reform wouldn’t add a single dime to the deficit over the next decade.
But McConnell supported paying for the SGR patch with deficit spending before he opposed it. Since Congress began fixing the formula in 1999, he — and the majority of the Republican party — rarely objected to barrowing “another cent to pay for it.” McConnell has voted to patch the SGR five different times, three of his votes resulted in increased deficits:
|Year||Name Of Bill||Provisions||Vote||Did It Add To Deficit?|
|1999||Incorporated into an omnibus bill||Eliminated Medicare reimbursement cuts for 2000 through 2002.||Senate: 74-24
|2003||The Medicare Modernization Act of 2003||Eliminated Medicare reimbursement cuts for 2004 and 2005.||Senate: 54-44
House: 220-215 Nays
|YES, provision added 600M in 2004; $1.2B in 2005.|
|2005||Deficit Reduction Act of 2005||Averted a scheduled 4.4% cut.||Senate: 51 – 50
|NO, generated $39B 2006-2010.|
|2006||Tax Relief and Health Care Act of 2006||Averted a scheduled 5.0% cut.||Senate: 79-9
|YES, added $29 billion.|
|2007||Medicare, Medicaid, and SCHIP Extension Act of 2007||Averted a scheduled 10.1% cut.||Senate: Unanimous Consent
|YES, full bill added about $1.4B.|
|2008||Medicare Improvement for Patients and Providers Act of 2008||Averted a scheduled 11% cut.||Senate: 70-26
|NO, Congress overrode Bush’s veto; Reduce deficits by $0.1B|
Ultimately, the SGR fix has little to do with health care reform. After all, the patch is not adjusting unsustainable growth in health care spending or some other system imbalance. It is fixing a failed complex formula that Congress created to control health care spending.
The formula is ineffective in holding down physician expenditures because it “does little to counter the inherently inflationary nature of fee-for-service payment” (which encourages physicians to prescribe more care) and treats every physician in every region exactly the same. “It neither rewards physicians who restrain volume growth nor punishes those who prescribe unnecessary services.”
Congress should eliminate the scheduled pay cut and fix the formula, but physicians should not receive a blank check. Instead, they should be required to adopt efficiencies and delivery system reforms. After all, if the purpose of the SGR is to reduce health care spending, physicians should play their part.