Mar 17, 2015

5 Reasons True Conservatives Should be Cheering the Medicare Reform Plan

Texas physicians, of course, are applauding the news reports that a bipartisan plan to repeal Medicare’s Sustainable Growth Rate (SGR) formula is picking up steam.

Physicians are tired of the never-ending uncertainty, the never-ending threats to cut Medicare pay, the never-ending need to lobby Congress on the same, never-ending problem. Our patients are tired of the never-ending fear of losing their doctor. Eighteen years and 17 patches is enough.

If history is any guide, the current threatened Medicare pay cut – 22.4 percent scheduled to take effect April 1 – won’t take effect. Congress will either finally repeal the SGR, or they’ll put yet another last-minute patch on it, perhaps with some retroactive shenanigans that will wreak havoc with our cash flow and our bookkeeping.

Meanwhile, what the Wall Street Journal calls “faux fiscal hawks” are threatening to scuttle the deal brokered by U.S. House Speaker John Boehner and Minority Leader Nancy Pelosi because they don’t like the budget numbers behind it. That’s the Wall Street Journal, not The New York Times, we’re quoting. Recent editorials in the Journal and Forbes, and from Americans for Tax Reform, the American Action Forum, and the National Center for Policy Analysis give us five solid reasons real conservatives should be embracing this plan and lobbying hard for its passage:

1.      The SGR is a failed attempt at government price control.

The SGR has never held down the cost of providing health care to patients on Medicare and TRICARE. Government-imposed price controls don’t work. As conservatives know, price controls distort the free market; in this case they’ve simply forced physicians to find creative ways to bill Medicare for the services their patients need.

2.      The “cost” of repealing the SGR is fake.

As Americans for Tax Reform reminds us: “Congress has delayed the onset of SGR 17 times over more than a decade. It is blindingly obvious to everyone who pays attention to this in Washington that Congress will continue to not impose SGR cuts. To pretend that it will, and then demand spending cuts to ‘pay for’ repealing it, is cognitive dissonance of the highest order. … Getting rid of it is simply not a budgetary event.”

The Wall Street Journal calls it “a two-decade budget cheat” and explains that Congress has “paid for” the previous 17 patches through “the failed habit of fiddling with this or that price-control dial in Medicare.”

3.      The SGR hides the true cost of Medicare.

Pretending that the SGR will someday take effect and someday hold down Medicare spending, Americans for Tax Reform says, “makes the solvency and sustainability of Medicare look stronger than it actually was. That allowed for the Obama Administration and allies on Capitol Hill to justify the creation of Obamacare (paid for in large part by Medicare cuts, incidentally) because of this rosy long-term cost scenario for government in general.”

Or, as the Journal, puts it, “The practical result has been to disguise future spending from the federal budget and thus hide Medicare’s true cost.”

4.      The SGR repeal bill makes important and significant changes in Medicare financing.

The package does more than eliminate the SGR; it profoundly reforms how Medicare pays physicians for health care services. The Journal describes it as “a reform to reward doctors for providing more valuable care, rather than cutting the same fee-for-service check regardless of performance.” That will keep taxpayers healthier in more ways than one.

Secondly, the plan pays for some of the cost of repealing the SGR with changes in Medicare premiums and Medigap coverage for the wealthiest retirees. Long-term, those are some huge savings.

“Because these policies are phased in, they don’t affect Medicare much in the first 10 years,” said Douglas Holtz-Eakin, president of the American Action Forum and budget director under President George W. Bush. “But the savings will continue to rise, grow faster than physician reimbursements, and on balance lower projected Medicare spending indefinitely into the future. A rough projection is that the combination of the Medigap policies and the reduced premium subsidies will cut Medicare outlays by $230 billion over the second 10 years, 2026-2035.”

The American Action Forum research puts the 20-year savings at $295 billion.

5.      The SGR stands in the way of real health care reforms.

The constant patches and negotiations over the “doc fix” bills distract Congress from the significant structural reforms conservatives want.

“If you’re a conservative interested in repealing Obamacare, reforming Medicare, or block granting Medicaid to the states, removing the SGR kabuki theater from the congressional agenda is absolutely essential,” says Americans for Tax Reform. “Put bluntly, we will never, ever get to do all the cool entitlement reforms we want to do if ‘doc fix’ is on the congressional agenda ahead of them every year.”

As the Journal editorialized, “Congress is close to repealing a two-decade budget cheat and reforming the entitlement state for the first time in the Obama Presidency.”

Let’s not let fake government accounting get in the way.


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