Repeal SGR, but Don’t Privatize Medicare

The bipartisan “Doc Fix” legislation (H.R. 1470, now H.R. 2) and proposed amendments will undermine traditional Medicare and advance the goal of privatization, according to Dr. Don McCanne in a series of posts to his popular health policy blog, the Quote of the Day. If enacted as it presently reads, it will:

1. Limit choice of physician in traditional Medicare. Physicians in traditional Medicare would be subject to onerous new documentation requirements for payment and financial incentives to avoid complex patients under the proposed “Merit-based Incentive Payment System.” The additional paperwork burden will push physicians to stop seeing patients with traditional Medicare, retire, avoid older and sicker patients, or go to work for large organizations using “alternative payment models” (which are exempt from the requirement and more likely to have contracts with private Medicare plans).

2. Reduce access to care in traditional Medicare. Imposes a deductible that cannot be covered by Medigap insurance (starting in 2020) to encourage patients to join a private plan. The current Part B deductible is $147 annually, although that figure has been rising in recent years; 95 percent of traditional Medicare beneficiaries have supplemental insurance that covers the deductible and other cost sharing in Medicare. The only way to avoid the deductible in the future will be to join a private Medicare Advantage plan.

3. Raise Medicare’s costs by driving more patients into private Medicare Advantage plans. Private plans have already cost Medicare an excess of more than $282 billion since 1985. Mandatory deductibles and reduced access to physicians in traditional Medicare will drive more patients into private Medicare Advantage plans, which are more costly than the cost of caring for patients in the traditional fee-for-service program. Although Obamacare was supposed to reduce the amount the private plans are overpaid (the “Medicare cuts” in Obamacare), these have been mostly offset by “adjustments” and “quality awards” by the Department of Health and Human Services.

4. Undermine Medicare’s popular support by requiring higher income seniors to pay higher premiums (means testing). Under means-tested premiums, higher-income individuals will be required to pay larger premiums, undermining the support of this influential group for Medicare program. Although the income subject to extra premiums is high, it can always be reduced in the future.

5. Ending the SGR should cost $20 billion, not $210 billion. These drastic measures aren’t even necessary. According to Bruce Vladeck, a former top administrator at Medicare, “Since the Sustainable Growth Rate (SGR) was implemented in 1998, total Medicare physician expenditures have exceeded the allowed amounts by only $20 billion (on a total of almost $1 trillion). To recoup that all in one year would require a 21 percent reduction in fees for one year. And those reduced fees would then become the base for payment levels in all subsequent years. In a rational world, Congress would write off the $20 billion as a relatively small policy error and establish a more realistic prospective formula. But under Congressional budget rules, the cost of doing so is not $20 billion, but $20 billion per year, compounded by inflation, times 10 years.”

6. The GOP sees this bill as a step towards their longer-term goal of turning Medicare into a voucher program for private plans, shifting more costs onto patients. Rep. Mick Mulvaney, R-S.C., a staunch conservative, told the Washington Post he is supporting the bill because it will lead to much greater savings beyond the traditional 10-year time frame for estimating costs. Newt Gingrich stated the GOP’s goal succinctly in 1996: “Now, we don‘t get rid of it [Medicare] in round one because we don‘t think that that’s politically smart, and we don‘t think that’s the right way to go through a transition. But we believe it’s going to wither on the vine because we think people are voluntarily going to leave it — voluntarily.”

7. Other features:

Continues funding for safety-net programs
* Two-year extension for CHIP
* Two-year ($7.2 billion) extension for Community Health Centers

Restricts abortion, adds funds for war
* Makes Hyde Amendment permanent law. Since the ACA is a permanent statute, any amendment to any part of the ACA becomes part of U.S. Code.
* $94 billion in additional military spending in an “off-budget account.”

Dr. Ida Hellander

Dear colleague,

I urge you to take action today to contact your members of Congress and your medical society and urge them to stop the rush to pass the “doc fix” bill in its current form.

As Dr. Don McCanne, PNHP’s senior health policy fellow, noted his Quote of the Day this morning, “In the fervor to finally rid us of the flawed SGR model of setting Medicare payment rates, Congress is about to pass legislation (H.R. 1470) that includes ill-advised, misguided and detrimental policies that could cause irreparable harm to our traditional Medicare program.” (Yesterday the working version of the bill became H.R. 2 and was renamed the Medicare Access and CHIP Reauthorization Act of 2015.)

Those harmful changes are summarized above, in the “Backgrounder on the 2015 SGR ‘doc fix’” prepared by Dr. Ida Hellander, our director of health policy and programs.

To contact your representative or senator, call the U.S. Capitol Switchboard: (202) 224-3121. An operator will connect you. (You can find more ways to contact your representative here and your senators here. For detailed recommendations about needed changes to the legislation, see Dr. McCanne’s comment today.)

Please let your medical society know of your concerns as well.

Time is of the essence; the vote is likely to take place tomorrow.

Needless to say, we wouldn’t be facing this kind of problem if Congress had enacted single-payer legislation such as H.R. 676, the Expanded and Improved Medicare for All Act.

Cordially,

Robert Zarr, M.D., M.P.H.
President
pres.zarr@pnhp.org