Vetoing Congress’s Medicare Mess

Robert Moffit / July 14, 2008

If the government controls the entire health care system, the recent congressional debate over Medicare is a tart foretaste of what Americans can expect.

Last week the Senate passed the Medicare Improvement for Patients and Providers Act of 2008 (H.R. 6331) just weeks after the House passed the same bill by lopsided majorities. It could not have happened without congressional Republicans. In the face of the special-interest pressure, the Republican leadership in the House simply collapsed. In the Senate, the Republican leadership was simply abandoned. In his dramatic July 10 entrance on the Senate floor, an ailing Sen. Ted Kennedy (D-Mass.) cast the decisive vote to invoke cloture, which, amidst giddy camaraderie, resulted in the defection of nine Republican senators, thus ending debate and guaranteeing the bill’s final Senate passage. Nonetheless, against all political odds, President Bush is going to veto the legislation, perhaps as quickly as tomorrow.

The main rationale for the Medicare bill’s enactment is to stop a scheduled 10.6% payment cut for doctors practicing in the Medicare program. Why scheduled? Because Congress mandated a complex Medicare payment system (covering approximately 8,000 medical services delivered by doctors in Medicare), and that payment is annually updated by a formula called the Sustainable Growth Rate (SGR). This bizarre formula ties Medicare payment increases for physicians to the growth of the general economy. In other words, Medicare physician payment would be tied to a variety of external factors utterly unrelated to the supply and demand for medical services, such as, for example, the impact of price fluctuations in the international oil market. In any case, under this congressionally ordained formula, the Medicare doctors are automatically scheduled to get a cut in payment this year of 10.6%, and perhaps twice as much next year. (more…)