NCPA - National Center for Policy Analysis

Making the "Doc Fix" Permanent

December 2, 2014

There are 10,000 baby boomers entering Medicare each day. The program is a financial disaster, yet the depth of its fiscal problems are partially hidden from taxpayers, write Brett Healy, president of the MacIver Institute, and Patrick Gleason of the Americans for Tax Reform.

To curb Medicare spending growth, in 1997 lawmakers enacted a formula known as the Sustainable Growth Rate (SGR). The SGR established a set of cuts to physician reimbursement rates in order to keep Medicare spending from exceeding U.S. growth rates -- basically, it established a schedule to cut payments to doctors participating in Medicare.

2003 was the first year that the SGR cuts were supposed to take place. What happened? Congress overrode the SGR, preventing the doctor cuts. In fact, explain Healy and Gleason, lawmakers have continued to delay the cuts 17 times since 2003. These delays are known as the "doc fix." Those delays, however, are not included in Congressional Budget Office estimates; instead, the CBO generates spending projections based on the assumption that the cuts will take place, generating numbers that do not reflect the true cost of Medicare.

Ensuring that doctors are reimbursed for care is important -- otherwise, more doctors are going to refuse to treat Medicare patients. But a year-to-year doc fix is not viable solution, say Healy and Gleason. Instead, they contend Congress should enact a permanent doc fix. What would happen without one? They use Wisconsin as an example, noting that there are 15 doctors per 1,000 Medicare beneficiaries in Wisconsin, and without a permanent doc fix, physicians treating Medicare patients will see a 24 percent pay cut.

Source: Brett Healy and Patrick Gleason, "It's Time for Truth in Medicare Accounting," MacIver Institute, December 1, 2014. 


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