Summary by The Market Institute of Heritage Issue Brief #4172
The Heritage Foundation recently issued a brief detailing current efforts to repeal and replace the Medicare Sustainable Growth Rate formula (SGR). Congress is presently considering two different pieces of legislation to update physician payments. The current formula has been prevented from going into effect since 2003 to keep allowing seniors access to healthcare. The current legislation being considered would bring much need stability to physician reimbursement, but it would be at the expense of more federal deficit spending. Also, the legislation does not significantly reverse the trend—accelerated by Obamacare—toward greater federal supervision and control over medical practice.
The House bill to repeal and replace the SGR is estimated by the Congressional Budget Office to add an estimated $138 billion in new Medicare spending. To offset these costs, Republicans have proposed delaying the individual mandate until 2019, which would net the savings necessary, but the measure would ultimately only be a temporary solution to a longer term fiscal problem. Past 2020, this bill would add $49 billion to the deficit. The Democrats solution is not even realistic, Rep. John Tierney (D-MA) proposed using discretionary military spending to offset the new SGR costs, but the CBO has already said that idea is untenable.
The Senate Democratic response to a SGR fix is even more fiscally irresponsible. Their solution does not include any cost offsets, meaning there would be $177 billion in new Medicare funding. Sen. Orrin Hatch (R-UT) has proposed a full repeal of the individual mandate, which would net 10-year decrease in the deficit of $282 billion. The Heritage Foundation supports Medicare benefit modernization (combining Parts A and B and rationalizing co-payment), raising the age of eligibility, or reducing taxpayer subsidies to the wealthiest Medicare recipients, all of which have long attracted bipartisan support, and such permanent changes would guarantee permanent Medicare savings.
Full Brief:
http://www.heritage.org/research/reports/2014/03/medicare-sgr-replacement-is-not-worth-more-deficit-spending
