Medicare Can’t Keep Up

In the coming weeks, you’ll hear a lot about the different facets of the Senate health care debate. It’ll get wonky to be sure — but there are a few key points up for debate that you should be aware of. One of these is the flawed Medicare doctor payment system.

It’s something you’ve probably heard about several times over the last few years, usually coupled with dire warnings about what could happen if we don’t stop it. These warnings should be taken seriously — cuts to physician payments would mean that it wouldn’t be financially feasible for many doctors to keep seeing Medicare patients, meaning elderly Americans may have to switch doctors at a point in their life when such changes are most disruptive.

The formula for Medicare also forms the basis for TRICARE, the U.S. military’s health care plan. So any cuts to Medicare doctor payments would also mean our veterans and our service men and women and their families could also face a lack of doctors.

These cuts come up every year (this year, the cut is expected to be 21 percent in January), and every time, Congress votes to put a temporary stop to them. It all started back in 1997, when Congress created a formula called the “Sustainable Growth Rate” or SGR. The Wall Street Journal does a great job of giving a simple explanation of the SGR:

The SGR says essentially that the amount Medicare pays doctors for an average Medicare patient can’t grow faster than the economy as a whole. (It isn’t quite that simple, but that’s the basic idea.)

So it’s fine if total payments to doctors go up because the number of Medicare beneficiaries rises. And it’s fine if the average payment per beneficiary rises along with the economy. But if growth in payments per beneficiary grows more than the economy as a whole, the SGR says you have to lower payments to doctors across the board to keep costs under control.

For the first few years, everything was fine — the economy was humming along, and the increases in payments per beneficiary were no problem as far as the SGR was concerned. But as the economy slowed and health-care spending skyrocketed early in this decade, finances started to get dicey and reimbursements were cut in 2002. Every year since then, the SGR has called for more cuts, and every time Congress has stepped in to block the cuts.

Blocking the cuts is a good idea, but fixing the SGR is an even better idea. President Obama included it in a Rose Garden speech about health insurance reform: “And we are working to fix the flawed Sustainable Growth Rate formula by which doctors are reimbursed under Medicare.”

The current version of the health care bill stops the 21 percent cut that would otherwise happen in January — but it’s another temporary fix. What we really need is a complete overhaul of the SGR system, so we don’t need to worry about stopping the cuts every year. And there’s no better time to do it than when we’re already reforming health care.

As the debate rages on in the Senate, take a moment to stand up for Medicare and TRICARE recipients and urge your Senators to include a permanent fix for the doctor payment cuts in their health care reform bill!

Read more: health policy

Disclaimer: The views expressed above are solely those of the author and may not reflect those of
Care2, Inc., its employees or advertisers.

Annie F.

7:59PM PST on Dec 17, 2009

great article for those of us approaching the medicare years. :)

send a green star

Paul P.

9:24AM PST on Dec 11, 2009

The bottom line is that if government fixes reimbursement rates, and they end up too low, we will trade higher prices for less doctors.

JoAnna B.

9:17AM PST on Dec 11, 2009

Thank you..

Catman P.

6:16AM PST on Dec 10, 2009

Thanks for the post.

Ross L.

6:56PM PST on Dec 8, 2009

Storm W
I agree with you. Its called corporate greed. That is what happened and I'd say it became more and more rampant in the last 40 years. The insurance companys and those in their pocket (repugs) will fight any reform to reduce costs, tooth and nail. Some repugs have stated that plainly. "This must not pass not matter what" or something to that extent and that was back when there were more bills floating around. Very sad. These are the "real Americans" Palin refers to.

3:26PM PST on Dec 8, 2009

Great article, and I always like seeing the Wall Street Journal referenced. It's my favorite news source.

Lilith G.

2:15PM PST on Dec 8, 2009

Thanks for the info.

Elizabeth M.

1:40PM PST on Dec 8, 2009

thank you, lianna d for posting this important information. i work with a primary care physician and every single day i hear the obama administration being blamed for this. you have given me the info i need to inform those that ask me about this crucial issue. and ant m, if obama is, as you say, fixing our health care system "behind closed doors", how can you disapprove if you don't know "what they're hiding"? i just don't follow your logic. shouldn't you determine what it is you don't approve of before trashing it? it is because of attitudes like this that the obama administration has had such an amazingly difficult time getting this much-needed reform through.

Barbara V.

10:28AM PST on Dec 8, 2009

I see Ant m is off the beam again. Who do you think has been bucking Obama on his health care plan? The guy can't get anything done without flack from the Republicans and their lobbyists. If it were up to the Republicans, we would all be expected to "eat cake." I only hope they sort out any potential problems with Medicare; without it, I'd be dead meat along with others on Main Street.

Richard N.

8:48AM PST on Dec 8, 2009

hmm....