NCPA - National Center for Policy Analysis

Curing Medicare in Congress

November 6, 2014

Fifty-two million Americans, both seniors and the disabled, are currently enrolled in Medicare, an entitlement that is in need of reform. Heritage Foundation Senior Fellow Robert Moffit outlines what the new Congress can do to reform the Medicare program and make it more financially sustainable:

  • Repeal the SGR formula. Congress created the Sustainable Growth Rate (SGR) formula in 1997, which automatically cuts Medicare's payments to doctors each year. However, Congress has also overridden the cuts every year since 2003. The formula is flawed, and continuous cuts to doctors will only reduce access to care for those in the government health care program. Moffit says a new Congress must replace the SGR without forcing taxpayers to pick up the tab.
  • Tackling Medicare cuts. Obamacare cuts Medicare payments in order to create $716 billion in alleged savings; however, those cuts only make it more difficult to meet health care providers' costs. The CMS Actuary has shown that, due to the cuts, half of all hospitals and two-thirds of skilled nursing facilities will have negative total facility margins by 2040, and providers will have to cut back services, withdraw from Medicare entirely or shift costs to private payers.
  • One-third of seniors are enrolled in Medicare Advantage, a system of competing health care plans. Seniors are highly satisfied with these plans, yet the administration targeted the program for cuts. Moffit says the program should be protected, and the new Congress should put more free-market reforms into the program.

Moffit says Americans should expect to see a great deal of debate over the Medicare program come January.

Source: Robert E. Moffit, "Can Congress Find a Cure for Medicare's Growing Troubles?" Heritage Foundation, November 3, 2014.


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