August 22, 2014

Permanent Fix on Medicare Payments Remains Elusive

  • The American health care system is a patchwork of public and private programs that serve citizens in different ways, depending on their age, military...

The President signed a measure yesterday that postpones sharp cuts in Medicare payments to health care providers for another year. This represented an unfortunate end, for now, to the bipartisan effort to find a permanent replacement for Medicare’s Sustainable Growth Rate (SGR) formula.

Without congressional action, payments to physicians were scheduled for a 24 percent cut.

House leaders sent the measure to the Senate after a surprise “voice vote” last week that tricked some opponents of the bill and enabled other lawmakers to pretend they opposed it. The Senate approved the legislation Monday on a 64-35 vote.

Lawmakers’ failure to find a permanent solution came despite widespread recognition among Republicans and Democrats alike that a better payment system -- based on quality rather than quantity of care -- could help reduce federal deficits and curb the growth in medical costs.

On the positive side, some of the offsets for the short-term fix represented real attempts to sensibly reform health care spending. Yet those efforts were marred by an offset gimmick in which already scheduled savings were accelerated so they can be counted within the traditional 10-year “budget window.”