The Medicare doc fix and the costs of health reform

Washington Post blogger Ezra Klein opined on Rep. Paul Ryan's (R-Wis.) April 28 comments regarding a permanent Medicare doc fix and the costs associated with health care reform.

In short, Ryan says the cost of a permanent fix to the sustainable growth rate (SGR) mechanism used in the Medicare payment formula needs to be factored into the costs of health care reform. The new health law will cut the deficit over the next 10 years, according to the Congressional Budget Office. But, if you add the $250 billion to $300 billion needed to eliminate the SGR -- health reform will add to the deficit.

Klein, a liberal blogger, disagrees with this is an argument, which is being made by other Republicans.

The SGR was created in 1997 by a Republican Congress and was signed into law by President Clinton. Ryan and other Republicans are "trying to add the repeal of a Republican policy passed in 1997 into the cost of a Democratic bill being passed in 2010," Klein says. "But that's a bit like adding the cost of the Iraq War onto the bill, or maybe the Bush tax cuts. It's true that those were misguided, costly policies. But they're not part of the Affordable Care Act. They're part of the baseline that the Affordable Care Act changes."

Regardless of who is right and who is wrong, the costs of fixing the SGR is a major hurdle in Washington. Lawmakers are very conscious of federal debt and deficits these days.

At the same time, physician practices want Congress to quit stalling and just fix the thing. The flawed payment formula has called for cuts to Medicare payment rates every year since 2002 (see chart below). The 2011 SGR cut is projected to be about 26%. 

There's an online petition sponsored by the Texas Medical Association with nearly 60,000 electronic signatures urging Congress to reform the payment formula. The signatories want "a rational Medicare physician payment system that automatically keeps up with the cost of running a practice and is backed by a fair, stable funding formula." The current system does the opposite.