NCPA - National Center for Policy Analysis

The "Doc Fix" Dilemma Calls for Immediate Medicare Reforms

March 7, 2012

Once again, Congress has stopped a scheduled 27 percent payment cut to physicians who serve Medicare patients.  This frequent exercise serves as a perfect example of the need to move Medicare away from its current price-control model toward a market-based, premium support model, says Nina Owcharenko, director of health policy studies at the Heritage Foundation.

  • The scheduled payment cuts that occur in accordance with the Sustainable Growth Rate (SGR) will make participation in Medicare unaffordable for many doctors, leaving millions of seniors without doctors.
  • While Congress has not allowed these scheduled cuts to go into place since 2003, delays only compound the problem by making the next round of cuts more drastic to keep up with budget projections.

The best way to "fix" the SGR is to end it by transitioning Medicare to a more sustainable and rational market-based, premium support system.  When the current SGR patch expires later this year, Congress should use the opening to secure immediate structural reforms that move toward premium support, including:

  • Raising the retirement age.
  • Increasing the premiums for Parts B and D.
  • Adding a premium to Part A.
  • Tightening the income thresholds.

Making Medicare sustainable for the long term is the key to reforming the program.  The only permanent solution for the SGR is to end it and adopt a Medicare premium support model that is free from government price controls on doctors and hospitals.

Source: Nina Owcharenko, "The 'Doc Fix' Dilemma Calls for Immediate Medicare Reforms," Heritage Foundation, February 28, 2012.

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