30 March 2009

End it, don't mend it

Doctors Call For Rebasing Medicare's Sustainable Growth Rate (SGR) - Health Blog - WSJ
Every year or so, we hear that some big Medicare pay cuts for doctors are on the way. Almost every time, Congress swoops in at the last minute to block the cuts. Leaders of the AMA and other big doctor groups have been in Congress lately asking for a change to the underlying system that keeps creating these near misses.

At issue is the “Sustainable Growth Rate,” a formula Congress created in 1997 to try to keep payments from spiraling out of control.

[...] Testifying at a recent Congressional hearing, leaders from the AMA, the American College of Physicians and the American College of Surgeons praised the budget. The AMA official called for setting a new, higher baseline for SGR.
I've also written about the SGR in the past.   Put simply, it was an index placed on physician compensation under medicare, enacted (IIRC) as part of the Deficit Reduction Act of 1997, designed to prevent medicare's physician costs from exceeding a certain fraction of the GDP.

Makes sense, when you think about it in the abstract, doesn't it?   But it never worked.  The number of beneficiaries grew, and they lived longer with more chronic illnesses, new technologies and services were developed, and GDP growth slowed, so the formula was triggered, and in 2002, physician compensation was cut by 2%.   Then in every subsequent year, the formula called for larger and larger cuts.   Three years ago, the cuts mandated were 10%; this year, the cuts mandated under the SGR total 21%!   But every year the Congress steps in at the last minute (and sometimes later) to stop the cuts.   Changing the physician compensation formula is such a daunting and politically exposive task, that they never take it on: just kick the can down the road to next year.

I've always thought that doctors were unfairly singled out with the SGR to begin with.  Why is it that there was a cap placed on the growth in expenditures for physicians, but not hospital expenses, nor medical devices, nor pharmaceuticals?   The real answer is because the AMA is a laughably impotent lobby. There's no rational basis for capping the growth of one expense -- the smallest -- and not the others, other than political strong-arming and opportunism.

Which is why I'm annoyed to see our leaders on Capitol Hill calling for setting a new, higher baseline for the SGR.   It was a bad idea, unfairly applied, and did not work.   To the degree that physician compensation is addressed in healthcare reform, the position of the physicians' lobby ought to be that the SGR should be ditched and not replaced.  Cost containment should not be applied to just one sector of the health care industry, and certainly not in such a blunt, indiscriminate manner.


  1. You need to go here...


    all your answers lie there

  2. Perhaps I am missing something here SF....you see how unfair and poorly run Medicare is, but in the next breath you are pushing for gov't run one party health care. I can't help but see a major disconnect here. Why in heavens name do you expect anything from gov't health care except more of the same crap we got, get, and will continue to get from medicare, medicaid, VA medicine, and all the other gov't programs that we already have?


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